Chipmaker Infineon has grown faster than the chip industry in the 2016 fiscal year and for the years ahead, CEO Reinhard Ploss is even sure that he can increase the company's profitability in an almost stagnant global market. However, his high-flying plans depend on one factor that is not yet completely certain.

The yearly figures presented by the German chipmaker are rather unspectacular, but positive: 12% overall revenue growth (7% resulting from organic growth), segment result up 9.5%. The interesting aspect in these figures is twofold: First, it has been achieved in an environment characterised by almost zero growth for the semiconductor industry. And all four of Infineon’s business units—automotive, industrial power control, power management and multimarket, and chip card and security--contributed to the growth and the profit. This was not always the case. The chip card and security business, years ago the company’s problem child, continued its recovery and actually turned out to have the highest profitability with a segment result margin of 19.3%. This reflects the fact that in Europe, Infineon’s security chips are provided to 70% of all ID card and passport projects, the company said.

The success was widely driven by Infineon’s focus on applications that help customers to improve their energetic sustainability, be it in the area of electromobility or energy efficiency in industrial environments. What all these application fields have in common is the demand for efficient power electronics. Riding the wave of this demand, Infineon achieved 60% of its revenue with power electronics—MOSFETs and IGBTs, and in the future, increasingly compound semiconductors (SiC); the planned takeover of SiC specialist Wolfspeed is expected to further boost the company’s position in this field.

The advent of electromobility across the globe provided the tailwind for rising demand for power semiconductor. In this context, the success of the electromobility did not only create rising demand in Infineon’s automotive business but likewise in its industrial business, because this segment sells components for the charging infrastructure as well as for public transportation like hybrid and electric buses and trams.

In the automotive segment, radar chips where in particularly high demand, and the growth is indeed breathtaking. In FY 2016, Infineon sold 12 million 77GHz radar chips, more than in the previous six years combined. And the demand is expected to continue: For FY 2016, Ploss plans to sell between 25 and 30 million units. To meet the rising demand for these products, Infineon has started to increase its (actually rather old) fab in Regensburg, Germany.

Lidar is another technology Infineon is betting on. Half a decade ago, lidar sensors had the size of a flowerpot and carried the price tag of a compact car—a prohibitive price for volume vehicles. Recently, Infineon announced the takeover of lidar technology company Innoluce, which will enable them to make lidar sensors affordable, compact and robust enough for everyday use. “It is our goal to turn lidar into an affordable option for every new car worldwide, like we already have done with radar,” Ploss said.

For the year ahead, Infineon expects a slower growth of some 6%—which seems moderate, but it still is higher than the expected overall semiconductor market growth. In the long run, the company plans to outgrow the total market by 8%. A cornerstone of this plan is the strategic investment in compound semiconductors—and here we are again at Wolfspeed. Once this takeover is home and dry, it will provide significant contributions to Infineon’s future plans in the areas of electromobility, 5G mobile networks, connected cars and Internet of Things. The Wolfspeed takeover is the condition for the Munich-based chipmaker to develop power semiconductors for frequencies up to 80GHz, which are needed to establish the cellular infrastructure for 5G networks.