Infineon Technologies forecast revenue of about 20 billion euros for its 2027 fiscal year, an increase of more than 20%, as the German chipmaker reported a record fourth quarter on Tuesday driven by power chips for artificial intelligence data centers.

The outlook matters well beyond Munich. Infineon's 2027 spending plan includes more silicon carbide capacity in Kulim, Malaysia, and expanded assembly and test sites in Melaka and near Bangkok. Its chief executive also said electric vehicles are gaining traction especially in Europe, India and Southeast Asia, markets that feed demand for its automotive chips.

Record quarter at Infineon

Revenue in the three months to Sept. 30 rose 13% from the previous quarter and 19% from a year earlier to 4.706 billion euros, according to the company's results release. The segment result, Infineon's main profit gauge, climbed 56% year on year to 1.119 billion euros, lifting the segment result margin to 23.8% from 18.2% a year before. Profit from continuing operations reached 531 million euros, more than double the 239 million euros of the year-earlier quarter.

The power and sensor systems segment led the gains. Its revenue jumped 25% from the third quarter to 1.796 billion euros, and the company said demand for products for AI servers and data centers remained the main growth driver. The segment's margin rose to 30.8%. Automotive revenue grew 8% to 2.089 billion euros on chips for software-defined vehicles and electric cars. The smaller connected secure systems unit shrank 9%, which Infineon put down to swings in project business for identity documents and payment cards.

For the full year, revenue rose 12% to 16.353 billion euros, or 15% at constant exchange rates, Chief Executive Jochen Hanebeck said in his speech at the electronica trade fair in Munich. The segment result margin improved to 19.7% from 17.5%. Adjusted earnings per share were 1.73 euros. The board plans to propose a dividend of 0.38 euro a share, up 0.03 euro, at the annual meeting in February 2027.

Data center power sales set to near 4 billion euros

Hanebeck said revenue from power supply products for AI data centers more than doubled again in fiscal 2026 to 1.7 billion euros, slightly more than 10% of group sales, even though the company could not meet all customer orders. Conventional data centers added about 500 million euros. Infineon expects combined data center power revenue to rise from 2.2 billion euros to close to 4 billion euros this fiscal year.

The CEO said multiyear supply agreements and capacity reservations with customers, both signed and under negotiation, now exceed 10 billion euros in combined revenue volume. Infineon works with Nvidia on gallium nitride power conversion for 800-volt data center designs, he said.

For fiscal 2027, Infineon expects the power systems division to grow much faster than the group, automotive revenue to rise by a mid-teens percentage and edge systems by a low-teens percentage. It forecasts an adjusted gross margin in the mid-to-high 40s and a segment result margin in the mid-20s, about 5 percentage points above fiscal 2026. The guidance assumes an exchange rate of $1.15 per euro.

The first quarter will be softer. Infineon expects revenue of about 4.6 billion euros in the three months to December, nearly flat on the previous quarter, which it described as much better than usual seasonality, with a segment result margin of about 23%.

Asian factories in the spending plan

Infineon plans investment of 3 billion to 3.5 billion euros in fiscal 2027, up from 931 million euros in the fourth quarter alone, depending on customer demand. Besides equipment for a fourth building at its Dresden plant and the start of 300-millimeter gallium nitride production in Villach, Austria, the release lists expanded silicon carbide capacity in Kulim and larger back-end sites in Bangkok and Melaka. Hanebeck said the new hub near Bangkok, which handles assembly and testing, makes the production network more resilient and regionally flexible. The investments add to a manufacturing base that has helped Malaysia's Penang and Johor post record chip exports.

On Monday, Infineon said it had processed 300-millimeter silicon carbide wafers into working power devices at Villach, using existing silicon equipment. A 300-millimeter wafer yields 2.3 times as many chips as a 200-millimeter one, the company said, though it will set the timing of any production ramp with customers while continuing its 200-millimeter roadmap.

The forecast excludes the planned sale of Infineon's NOR flash and F-RAM memory business to Winbond. If the deal closes, expected in the second half of calendar 2027 subject to regulatory approval, pre-tax proceeds would add up to 1 billion euros to free cash flow. Infineon expects free cash flow of about 1.8 billion euros in fiscal 2027, or about 2.2 billion euros adjusted for large factory buildings. Net debt stood at 4.713 billion euros at the end of September.

Infineon's management is due to meet investors at a JPMorgan technology conference in Hong Kong on Nov. 17 and 18. First-quarter results are provisionally scheduled for Feb. 3.