Technology - European Semiconductors: Structural Re-rate Has Further to Run

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Technology - European Semiconductors: Structural Re-rate Has Further to Run

Idea

May 28, 2026 04:00 AM GMT

Morgan Stanley & Co. International plc+MTechnology - European Semiconductors | Europe Lee Simpson

Equity Analyst

Structural Re-rate Has Further Lee.Simpson@morganstanley.comShawn Kim +44 20 7425-3378

Shawn.Kim@morganstanley.com +44 20 7677-1018

to Run Nigel van Putten

Nigel.Putten@morganstanley.com +44 20 7425-2803

What’s Changed Amelia M Scicluna

Research Associate

Infineon Technologies AG (IFXGn.DE) From To Amelia.Scicluna@morganstanley.com +44 20 7425-6694

Price Target €63.00 €91.00

Technology - European Semiconductors

STMicroelectronics NV (STMPA.PA) Europe

Price Target €46.00 €74.00 Industry View In-Line

Cyclical recovery is clear but structural drivers remain

underappreciated for Infineon and STMicro. We gain confidence

on Infineon's power semi deployment in the data centre and

STMicro's exposure to opticals and low-earth-orbit satellites.

Key Takeaways

We lift our Infineon Technologies PT to €91 on higher power semi dollar content

per rack.

We move to a SOTP valuation framework for STMicroelectronics and lift our PT

to €74, recognising the optical and LEO drivers.

Cyclical recovery supports this as both companies talk to lower inventories,

improved lead times and rising orders.

While Infineon and STMicro have had a strong performance YTD (+100% and

+147% respectively), we think the structural drivers remain undervalued.

Structural tailwinds drive our Analog PTs higher. While cyclical recovery is

important, the main lever of our PT hikes is upside from structural drivers. For

Infineon this is power semi deployment in the data centre, whereas for

STMicroelectronics this is optical networking and low-earth-orbit satellites. As we