reinhard ploss ceo of german semiconductor manufacturer infineon poses before the companys annual shareholder meeting in munich germany february 20 2020 berlin german chipmaker infineon said on thursday it was facing challenges to meet auto industry demand for microcontrollers due to capacity constraints at the contract manufacturers it relies on but the top automotive chip supplier said it was coping with the rising demand for power chips and sensors that it makes itself and forging closer direct ties with carmakers like volkswagen to better serve their needs semiconductor shortages are being felt in the overall automotive supply chain and the recovery is happening faster than expected ceo reinhard ploss said after infineon reported forecastbeating quarterly results advt it will take time to bring more capacity online a snapback in demand from automakers that choked production early in the coronavirus pandemic has strained supply lines with foundry partners that infineon and others rely on like tsmc struggling to keep pace a shortage of chips could put about 670000 units of global light vehicle production at risk in the first quarter of this year data firm ihs markit said warning that weakness could extend into the third quarter while infineon makes most of its power chips analysts say it outsources over half its production of cmos complementary metal oxide semiconductor products like microcontrollers that are used to run industrial and automotive applications momentum gains infineon furloughed some staff last year and stockpiled inventory helping it to report sales and profit that beat market expectations in its fiscal first quarter and to raise its outlook for the year to sept 30 revenue rose 6 from the previous quarter while segment result a measure of profitability across its operating divisions that is managements preferred metric grew 29 to 489 million euros 587 million that beat expectations of 414 million euros in a survey of analysts published by the company ploss said infineon would raise investments in new capacity and bring forward the launch date of its new power semiconductor plant in villach austria to late summer advt infineon operates eight socalled frontend production sites that chiefly make powermanagement chips and cmos products and 14 backend sites that mount its chips in finished products the company said in its last annual report its reliance on contract manufacturers had risen since its 10 billion takeover of us cypress semiconductor direct sales asked about recent comments by vw that it would seek to buy more chips directly ploss said that while infineon mainly deals with big automotive component suppliers it had a good relationship with the german car maker its not only about microcontrollers its about the whole architecture of the car he told analysts on a call the share of infineons business directly chosen by carmakers has been steadily growing having made up around a third of its automotive division in 2018 citi analyst amit harchandani estimates infineon already deals directly with hyundai in south korea and it joined vws strategic supplier network in 2019 for