Rail expansion powers growth for German firm

Demand for semiconductors widens China market for Infineon

German semiconductor company Infineon Technologies AG says it aims to maintain double-digit growth in China this year as it benefits in part from the overseas expansion efforts of China Railway Rolling Stock Corp, the country's railway vehicle and equipment maker.

Infineon, the producer of key semiconductors that help transform high-voltage electricity into power to drive CRRC's high-speed railways, posted revenue of 1.6 billion euros ($1.69 billion; 1.36 billion) in the Chinese mainland in its 2016 fiscal year ending in October, says Su Hua, president of Infineon in China.

Su says the company's Chinese revenue managed a year-on-year growth rate of 15 percent last year.

"I believe the growth momentum will continue in 2017," he says.

"CRRC has grabbed several big orders from foreign countries, which will help boost our revenue."

CRRC said in December it aimed to generate 35 percent of its sales from overseas markets by 2025, up from 7 percent in 2015.

According to Su, the German company will also benefit from China's burgeoning new-energy vehicles market, the energy sector and the Made in China 2025 initiative, which was designed to promote high-end manufacturing.

Infineon is the world's second-biggest semiconductor supplier to the car sector, with a market share of 10.4 percent, behind Netherlands-based NXP Semiconductors which accounts for 14.2 percent, data from Strategy Analytics show.

Globally, Infineon's automotive unit contributed more than 40 percent of its total sales. Its global revenue hit 1.65 billion euros, with operating profit of 246 million euros for the quarter ending in December.

Zhang Zhiyong, founder and CEO of Wenfeng Automobile Consultancy, says that as vehicles become increasingly smart and digital, they will become like smartphones with four wheels.

"That trend will spur a huge demand for auto chips. But Infineon will face stronger competition in the high-speed railway sector," he says.

masi@chinadaily.com.cn

(China Daily European Weekly 03/03/2017 page25)