FRANKFURT -- German chipmaker Infineon raised its outlook for the second quarter and for its 2017 financial year, citing better-than-expected orders for the chips it makes for cars.
Chips made by Infineon are used by carmakers including Tesla and Hyundai as well as auto suppliers Continental and Bosch to enable cruise control and cut emissions.
Infineon is the world's second largest semiconductor supplier to the car sector, with a market share of 10.4 percent according to Strategy Analytics, behind NXP with 14.2 percent.
Infineon said it expected 2017 revenue to rise by between 8 and 11 percent, with an operating margin of around 17 percent. Its chips manage functions such as enabling airbags and managing car power supplies.
It said in February it expected revenue to rise around 6 percent, with an operating margin of around 16 percent. Analysts said at the time the outlook was conservative, especially given its strong position in the automotive sector.
The automotive unit accounts for more than 40 percent of revenues at Infineon.
"Due to the stronger than expected development of revenues and order entry, higher investments in property, plant and equipment will be required," the company said in a statement on Friday.
Investments are expected to rise to 1.05 billion euros ($1.1 billion) in the fiscal 2017 year, up from a previously expected 950 million euros.
Like its peers NXP, STMicroelectronics, Renesas and Texas Instruments, Infineon is riding the automotive wave as carmakers rush to develop electric and self-driving cars, pushed by tougher anti-pollution rules and the emergence of new competitors from the technology sector such Alphabet's Google.