Infineon bets high on power IC manufacturing

As an example of taking the road less travelled, Infineon Technologies has shifted its focus and is adding more muscle to its core business: power semiconductors. In fact, as a result of its manufacturing clout, the German company is riding high, thanks to a well-made decision.

EE Times' recent visit to Infineon in Munich and Dresden reveals the German company's renewed focus on power semiconductors and their production.

Against several of the financial community's shibboleths (get out of manufacturing, get rid of fabs, sell businesses with product development that demands endless investment), Infineon not only kept its fabs but upgraded them. The company turned an old 200mm fab in Dresden into the world's most highly automated. Infineon also made its 300mm fab in Dresden the first high-volume fab for power semiconductors worldwide.

Infineon's Dresden facilities. Far left is 300mm fab, the rest are 200mm fabs.

In doing so, Infineon proved that going fabless is no sure route to salvation.

Investors often urge chip vendors to bring "focus" to their business. Translation: Sell divisions with product development that is expensive, stick with segments where you're already winning, and take no risks.

Many semiconductor companies have taken this advice, chopped themselves into pieces, and turned lean and mean. The result has often been a shrunken chip vendor with shrinking business.

Infineon, a spinoff from Siemens AG, sold its wireless business to Intel in 2010, just after unloading its wired business in a deal with Lantiq. These reductions followed the decision in 2006 to split Infineon's memory business and form a separate company called Qimonda (which is now defunct). Today, Infineon's substantially narrowed businesses are down to only a handful of areas: automotive, industrial power control, power management and chip cards.

The questions now: How are the remnants of Infineon is doing today, and how sustainable is the company's business strategy over the long term?

Infineon in 2013 generated close to 45 per cent of its revenue from automotive, 26 per cent from power management and multimarket (power supplies for PCs, servers and mobile devices), 17 per cent from industrial power control (renewable energy generation, industrial drives, traction and home appliances) and 12 per cent from chip card and security.

Infineon's revenue split by segments in FY 2013 (Source: Infineon)

Of these segments, Infineon sees power electronics as a common thread. It sees its future as a leader in the global power electronics market.

Since Infineon is already one of the world's most prominent power semiconductor vendors, this outlook seems like a no-brainer.

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