Infineon: Power semiconductor leader with strong structural drivers (AI power and China auto) amidst a cyclical recovery

Well diversified power semiconductor leader, coming out of a long downcycle riding many technological shifts + Western company benefiting the most from the rise of the Chinese auto sector

Welcome to the 15th investment case, 4th China and 6th AI & data center idea on Crack the Market (and the most comprehensive Infineon investment case you will find online)! The transition to electric and software defined vehicles, smart industries, AI data centers will require much more silicon content to function, and Infineon as the leader in automotive and power semiconductor is a foundational play on these multi-decade technological trends.

Twice a week, I will release deep dives into stocks and sectors that fit into the three themes that I see winning in this age of tariffs and deglobalization: resilience, sovereignty & reshoring, China. I will then deep dive into the opportunities in the AI data center value chain.

Take advantage of this once in a generation opportunity to build long term wealth by investing in great stocks that will deliver returns for your portfolio for years to come.

You can already read my first 14 deep dives, all of which I see as winners in this new world of tariffs and deglobalization:

• ASML (reshoring & China idea): The most innovative company in the world will 2.5x its EPS by 2030.

• LKQ (resilience idea): The most defensive business in the auto industry is a tariff winner and could become a compounder.

• Atlas Copco (resilience, reshoring & China idea): The best industrials business in the world is on sale, extremely resilient and will benefit from US reshoring.

• Badger Meter (resilience idea): The perfect business in the perfect end market, water meters are the definition of resilience.

• Knorr Bremse (resilience idea): Who knew making brakes was this lucrative? Rerating with self help story and upside from German infra plan.

• Flex (reshoring idea): The electronics manufacturing giant building Nvidia’s servers and enabling reshoring is becoming a better business.

• Itron (resilience & reshoring idea): Riding the grid investment super cycle and enabling smart grids.

• Roper (resilience idea): A resilient cashflow compounder in the software space with inflecting growth.

• RELX (resilience idea): The company to own forever – one of the very best businesses on Earth.

• CPKC (resilience & reshoring idea): The rail connecting Canada/US/Mexico and benefiting from reshoring.

• Novo Nordisk (resilience idea): The most exciting pharma company in the world is misunderstood and its growth engine is ready to roar back to life.

• Kurita (resilience, reshoring & China idea): Water services expert with improving margins and benefiting from reshoring of semiconductor production.

• Halma (resilience idea): High quality compounder in safety, health and environmental technologies.

• Quanta Services (resilience & reshoring idea): Countercyclical compounder riding a multi decade infrastructure buildout.

After reading this article, you will understand why this company is so special thanks to its unique breadth of products, expertise and clients coupled with best in class management and execution, what it does, why it is so integral to so many technological trends happening around us, why we are reaching a cyclical bottom after a volatile path post covid, and why it remains one of the best businesses to own for the next decade and an attractive way to gain exposure to the AI/datacenter, electrification and digitalization of mobility and industry and the rise of China megatrends.

In this article I go through:

1. Infineon’s business and how it dominates that automotive and power semiconductor market.

2. How the company is a major enabler of the electrification and digitalization of the world around us.

3. How the company aims to deliver 10% growth through the cycle thanks to many structural growth drivers.

4. How its unique position as a partner for Chinese automotive companies and the AI data center value chain makes it the most exciting company in the analog semi space.

5. Why it is now a good time to look at Infineon, with the bottoming of the cycle, a resetting of EV growth expectations and questions in the market about competition.

Infineon Investment Case