Summary

• Infineon generated record quarterly revenue of €4.172 billion as demand strengthened across its semiconductor businesses.
• Components used in AI servers and data centres drove the fastest growth within its Power & Sensor Systems division.
• Multi-year capacity reservations suggest infrastructure customers are securing power-semiconductor supply years before deployment.

Infineon has reported the highest quarterly revenue in its history as demand for the power systems behind artificial intelligence data centres became the German chipmaker’s largest source of growth.

Revenue reached €4.172 billion during the three months to 30 June, rising 9% from the previous quarter and 13% from the same period last year. Its segment result increased to €797 million, while the corresponding margin climbed from 17.1% to 19.1% quarter on quarter.

Although demand improved across all four operating divisions, the sharpest rise came from Power & Sensor Systems, which supplies components used to control and convert electricity in servers, data centres, consumer devices, and other equipment. Division revenue rose 14% from the preceding quarter to €1.442 billion, while its segment margin reached 24.9%.

Most of that increase came from servers and data centres built for AI workloads. Infineon now expects the division to grow significantly faster than the group as a whole during the financial year, while manufacturing investment is being directed towards power products required by data-centre customers.

Capacity is being reserved years ahead

Alongside the quarterly figures, Infineon disclosed that leading customers across the AI data-centre supply chain have signed, or entered negotiations over, multi-year capacity reservation agreements. Together, those arrangements represent a high-single-digit number of billions of euros in potential revenue and include some customer prepayments.

Such commitments provide greater visibility than a conventional order book because customers are attempting to secure manufacturing capacity before facilities and server deployments are completed. They also show how the AI infrastructure cycle is reaching beyond graphics processors into the less visible electrical systems required to operate dense computing equipment reliably.

“Our power supply solutions for AI data centers remain in very high demand and continue to be our most important growth driver,” Jochen Hanebeck, chief executive of Infineon, said in the company’s quarterly results.

Power semiconductors manage the conversion, distribution, and efficiency of electricity inside computing equipment. As rack power densities rise, operators need systems capable of moving considerably more energy through limited physical space without excessive heat or conversion losses, turning components that once attracted little attention outside engineering teams into a practical constraint on AI deployment.

Infineon is responding through its existing manufacturing programme rather than announcing a separate AI plant. The company expects investment of about €2.7 billion during its 2026 financial year, including work on a fourth manufacturing module in Dresden and further capacity aligned with demand for AI data-centre power products.

AI changes the semiconductor mix

The figures also show how data-centre demand is changing the balance of Infineon’s business. Automotive remains its largest division, generating €1.932 billion during the quarter, but growth there was slower at 6%. Orders for microcontrollers, Ethernet products, and components used in software-defined vehicles strengthened, although demand for high-voltage electric-vehicle products remained subdued.

By contrast, Power & Sensor Systems added €182 million of quarterly revenue, compared with an increase of €102 million from Automotive. Its operating profitability also moved well above the group average, indicating that data-centre demand is improving both the scale and composition of the company’s sales.

Infineon now expects annual revenue of about €16.3 billion, corresponding to growth of roughly 11%, while adjusted free cash flow is forecast at €1.85 billion. Fourth-quarter revenue is expected to reach approximately €4.7 billion, with a segment result margin of about 23%.

European semiconductor policy has often concentrated on advanced processor fabrication and the continent’s dependence on Asian and US supply chains. Infineon’s results point to a different part of the market, where European suppliers hold established positions in power management, industrial electronics, grid equipment, sensors, and control systems.

Those markets are becoming more closely connected as AI facilities place heavier demands on electricity generation and distribution. Infineon said grid-infrastructure investment was also providing a tailwind, while the company separately announced a collaboration with LS Electric in July to develop more efficient direct-current power systems for AI data centres.

That convergence creates opportunities, although it also raises the cost of expanding production ahead of demand. Capacity reservations and prepayments can reduce some of that exposure, while customers may still adjust deployment plans if computing economics, energy availability, or demand for AI services changes.

The evidence has now moved from forecasts into reported revenue. Infineon’s AI business is affecting factory investment, customer contracts, divisional margins, and the company’s financial outlook, making power semiconductors a larger part of Europe’s position in the AI infrastructure market.