European Semiconductors: IFX and STM From Trough to Throttle

HSBC upgrades Infineon and STMicroelectronics following data suggesting a strengthening analog semiconductor upcycle and positive pricing momentum. Both companies are expected to see significant margin recovery driven by AI-related demand.

Key Takeaways

• 1.Analog semiconductor upcycle is strengthening with further price hikes expected.
• 2.Infineon target price raised to EUR107; STM target price raised to EUR84.
• 3.Upside to revenue and margin expectations driven by AI demand and pricing power.

Table of Contents

• European Semiconductors
• Key changes to ratings and estimates
• Recent data points suggest strengthening demand recovery
• Another round of price increases coming
• Infineon: Raise estimates and TP on stronger demand backdrop
• Infineon: Changes to our estimates
• Infineon: Underlying gross margins (excluding underloading charges)
• Infineon – HSBC estimates vs Visible Alpha Consensus
• Infineon: Target price and bull bear scenario analysis
• Catalysts
• STMicroelectronics: raise estimates, lift TP to EUR84
• STMicroelectronics: Gross margins ex underloading charges
• STMicroelectronics: Revenue growth by end market
• Valuation and risks
• Financials & valuation: STMicroelectronics
• Financials & valuation: Infineon Technologies AG

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