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I added shares of Infineon (IFNNY) to my Jubak Picks Portfolio on May 7. The chip maker hasn’t exactly been tearing up the track since then, scoring a 26.59% loss.

But on June 3 Infineon acquired another chip maker Cypress Semiconductor (CY) for $10.1 billion in cash. The deal, expected to close at the end of 2019 or in early 2020, will create the No. 1 supplier of semiconductors for automobiles by combining Infineon’s sensors, power and security chips with Cypress Semiconductor’s microcontroller and connectivity chips. NXP Semiconductors (NXPI) is currently the No. 1 automotive chip supplier. After the deal Infineon will be the eighth largest semiconductor company in the world.

I added Infineon to my Jubak Picks Portfolio as a play on disruption in the auto industry. When I made that pick I wrote: “Last pick for a winner from auto industry disruption comes at the top, you could say, of the supply chain–silicon chips for cars in general and electric cars in particular. And my pick here is Infineon Technologies (IFNNY), a 2000 spin off from Siemans and one of Europe’s top chip makers with special strengths in the automotive and industrial chip markets. The company has been gradually increasing its share in top automotive markets. For example, in 2018 Infineon grew its auto business in Japan by almost 25%, growing faster than any other of the top ten automotive semiconductor suppliers in Japan, according to Strategy Analytics. (Japan accounts for about 10% of global auto production.) One added bonus you get with Infineon comes from the overlap in the transistor market for use in electric cars and in solar installations. The same kind of transistor is  key component in inverters used in electric cars and solar panels that convert direct current into alternating current for use in powering lightbulbs and electric cars. There’s been a severe shortage of transistors that has seen wait times at manufacturers that use the transistors in their produces soar from 8 weeks to 50 weeks. Now new production added by companies such as Infineon and Vishay Intertechnologies (VSH) has cut wait times down to 45 weeks. But that still indicates a lot of pent-up demand. On March 27 Infineon cut its guidance for 2019, saying that the rebound it had projected for the first half of 2019 now looked like a second half event. (This has been a general sentiment among chipmakers recently.) The company now sees revenue at 8 billion euros, up from 7.6 billion euros in the 2018 fiscal year. Previous guidance called for year-on-year growth of 9%. On February 8, 2019 Infineon reported fiscal first quarter 2019 earnings of 0.24 euros a share, a year over year gain of 20%.

Due to the downtrend in chip stocks in general thanks to the turmoil from the U.S.-China trade war, I’m cutting my target price on Infineon to $25 a share from the previous $27.50.