Infineon Stakes Its Chips on Energy-Saving Technology, Renewable Power

Infineon Technologies AG, Europe’s second-biggest chipmaker, is betting on increasing demand for parts to make energy-efficient products and to control renewable energy generation.

“Today, we have 80 percent efficiency in power supply,” Arunjai Mittal, head of the industrial and multimarket unit, said in an interview. “We can raise that to 90 percent.” If another 5 euros ($6.41) worth of chips were put into each of the approximately 40 million computers sold in the European Union yearly, it would save electricity and remove CO2 emissions equivalent to eliminating 300,000 cars, Mittal said.

In power chips for consumer products, Infineon is neck-and- neck with Toshiba Corp. in market share, followed by STMicroelectronics NV, Mittal said, citing IMS Research. In chips for industrial use, Mitsubishi Corp. is biggest, followed by Infineon and Semikron Ltd. Infineon had 11 percent of the global power chips market in 2009, and has been increasing its share by 0.5 percent to 1 percent a year, Mittal said.

The company sees opportunities to increase sales of wind- turbine chips and gain revenue of 6,000 euros to 25,000 euros per turbine, Mittal said in the interview at the company’s headquarters in Neubiberg, Germany. With more than 70 turbine makers in China, there is a “very ambitious plan” to cover the uninhabited area north and north east of China with turbines, Mittal said. “We deliver to a significant portion” of these manufacturers, he said.

In the next 10 years, China plans to install 100 gigawatts of wind turbines, and depending on their size that could be as many as 28,000, Mittal said.

Asia-Pacific

The building of wind farms and strong growth in consumer products, such as computers and LCD televisions made in Taiwan and Korea, will help increase the share of Infineon’s revenue from the Asia-Pacific region, including Japan, Mittal said.

Solar and wind energy are predicted to grow by 700 percent and over 400 percent respectively between 2007 and 2035, Mittal said, citing the Outlook 2010 report of the U.S. Energy Information Administration. These energy sources may account for 10 percent of electricity consumed, and Infineon estimates it has about 50 percent of the market in chips for solar and wind applications, Mittal said.

The bigger the wind turbine, the higher the value of the chips that go into them. Wind turbines should become larger than they are today, as well as more efficient, Mittal said.

Acquisition Strategy

The average wind turbine of inland Germany produces between 1.5 megawatts and 2 megawatts, Mittal said. By comparison, each of the 140 turbines in the Greater Gabbard wind park, offshore from Ipswich in the U.K, produces 3.6 megawatts.

“These are taller than the cathedral in Cologne and the tip of these blades sees wind speeds that are more than that experienced by the tip of an Airbus 380, so they are extremely fast,” Mittal said.

Infineon is “very confident that with our technology and ideas we can grow organically faster than the market” and the company may expand partly through purchases, he said.

Any acquisition “has to deliver high added value,” such as “additional intellectual property and know-how,” Mittal said. As an example, he named Primarion, based in Torrance, California, which Infineon bought in April 2008 to gain strength in power-management applications.

Infineon will also increase revenue by creating new markets, Mittal said. Inductive rice cookers are one “market that we believe we have created,” with the IGBT chip, a power semiconductor device used in medium-to high-power applications, Mittal said.

Chinese Cooking

In China, “a high double-digit million number” of table- top induction cooking plates, including rice cookers, use Infineon chips, Mittal said. “Very popular are so called ‘hot pot’ restaurants where the guests cook their meal on an induction cooking plate in the middle of the table,” he said.

“For single table-top induction cookers, we’re the biggest player worldwide with a market share of more than 70 percent,” Mittal said. Infineon-powered rice cookers are more than 35 percent more efficient than conventional methods of cooking, Mittal said.

While sales and earnings have grown steadily in the past four quarters, they haven’t yet recovered to the high point of the fourth quarter of fiscal 2008.

“We have operated at full capacity since the beginning of this year,” Mittal said. “For the remaining part of this calendar year it’ll also be very high,” Last year, for some technologies, use of capacity was less than 50 percent.

Infineon will publish results on July 28 for the fiscal third quarter ended June 30.

To contact the reporter on this story: Ragnhild Kjetland in Frankfurt at rkjetland@bloomberg.net

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