On February 5th, Infineon issued a price increase notice to its customers, stating that demand for its power switches and integrated circuit products has surged, leading to shortages, driven by the deployment of AI data centers. Due to the need for significant additional investment in wafer fabs for capacity expansion, coupled with the continued rise in raw material and infrastructure costs, the company will adjust the prices of some products starting April 1, 2026. Infineon pointed out that in the past, the company has always responded to increased input costs through internal efficiency improvements, but it has now reached a stage where it can no longer fully absorb these costs. Therefore, it must share this cost increase with its valuable customers and partners. Infineon stated that for power switches and IC products affected by the earlier investment and increased manufacturing costs, the company has taken all feasible measures to keep the price adjustment to a minimum.
The new prices will take effect on April 1, 2026, and all new orders placed on or after that date, as well as existing orders shipped on or after that date, will be subject to the adjusted prices. In its price increase letter, Infineon stated that to meet the continuously rising market demand, it needs to make substantial additional investments to increase wafer fab capacity. According to the company's investment plan, capital expenditure for fiscal year 2026 will be increased to €2.7 billion to expand data center chip production capacity. The company expects its AI business revenue to reach €1.5 billion this fiscal year and €2.5 billion in the next fiscal year.
Infineon CEO Jochen Hanebeck stated, "Amid relatively sluggish markets elsewhere, strong demand for artificial intelligence has provided a significant boost to Infineon. Currently, power solutions for AI data centers remain our focus; in the coming years, the expansion of grid infrastructure will also be a new key area. To better serve our customers, we are adjusting manufacturing capacity to meet the continued growth in demand in this area and investing in related fields in advance. A large portion of this will be used to accelerate the mass production process of our new Smart Power Fab in Dresden. This Fab will officially open this summer, perfectly aligned with market developments." Infineon's revenue last quarter was €3.66 billion, slightly higher than analysts' forecast of €3.62 billion. Its segment profit margin (Infineon's preferred metric for measuring operating profitability) also exceeded expectations, reaching 17.9% in the first fiscal quarter ending in December.
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