(Bloomberg) -- Infineon Technologies AG Chief Executive Officer Jochen Hanebeck said the company is seeing “very strong momentum” in China’s automotive industry and expects Europe’s electric-vehicle market to recover next year, sending the German chipmaker’s shares up the most in four years. 

The world’s biggest automotive chip producer projected revenue in the current quarter will rise to about €3.8 billion ($4.1 billion) from €3.6 billion last quarter, reversing two consecutive periods of declining sales and signaling that an slump in demand from EV makers is ending. 

Infineon shares were up 12% to €36.24 at 2:38 p.m. in Frankfurt, the biggest intraday gain since March 2020.

“In China, we have very strong momentum now. In contrast, Europe and US are weak,” Hanebeck said in a Tuesday call with reporters about the market for automotive chips, which make up more than half of Infineon’s revenue. “But in the EU, we believe that the market will pick up from 2025 onwards.”

China dominates global electric vehicle production, so the Asian market is critical for a turnaround in Infineon’s fortunes. The company and some of its peers had already predicted that a recovery in chip demand is near. Last month, Franco-Italian rival STMicroelectronics NV said this quarter will mark the low point. Its weaker-than-expected sales came as Elon Musk’s Tesla Inc. reported its first quarterly sales decline since 2020.

Still, the recovery has proven slower than Infineon had previously indicated. Revenue will be €15.1 billion for the year that ends in September, plus or minus €400 million, the German chipmaker said in a statement on Tuesday. That’s the second time it has cut its 2024 projections, and the forecast fell below analysts’ estimate of €15.7 billion. 

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The projection suggests weaker revenue and margins will bottom out in this fiscal year, mirroring what other chipmakers have already reported, analysts at Citigroup Inc. said in a note on Tuesday. 

Reports from electric vehicle makers are mixed. A combination of high interest rates, weaker economic growth and a lack of charging infrastructure has weighed on automakers, and a number have scaled back plans to switch from combustion engines to electric. Many European markets are also rolling back subsidies, which have been key to making the new technology affordable. 

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While BloombergNEF expects global sales of electric battery and plug-in hybrid vehicles to increase more than 20% this year to 16.7 million, that pace of expansion would be slower than last year’s 30%. BNEF trimmed its forecast by about 775,000 cars in December, citing General Motors Co. and Ford Motor Co. dialing back their EV ambitions and Tesla Inc.’s aging lineup.

Growth is more robust in China, where the government supports the EV market through policies and incentives that have helped make the technology cheaper. On Monday, Infineon announced an agreement with Xiaomi Corp. to supply advanced power semiconductors through 2027 for its new SU7 luxury car.

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Chipmakers have also been grappling with waning demand from industrial clients and for consumer applications as customers work through stockpiles. There are “green shoots” for the consumer business, although an industrial recovery isn’t expected until the end of this year or beginning of next, Infineon Chief Financial Officer Sven Schneider said in an interview with Bloomberg Television Tuesday.

Overall segment result margin is expected to be in the high teens percentage range in the third fiscal quarter, according to Infineon. That compared to analysts’ estimates of 20.9%.

--With assistance from Craig Trudell, Elisabeth Behrmann and Henry Ren.

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