The Race for Efficiency: HPQ Silicon, BYD and Infineon – Who Will Lead and Who Will Fall Behind?

HPQ Silicon: Commercialisation is the next milestone

HPQ develops silicon-based materials and related processes. In its battery business, the company works with French technology partner Novacium, in which it holds a 36.8% stake. Its silicon-based anode materials are intended to increase the storage capacity of lithium-ion cells. For customers, what ultimately matters is whether a finished battery stores more energy at a reasonable cost and works reliably in practical use. The focus is therefore on greater range, longer operating times and lower energy losses.

HPQ Silicon plans to spin off its North American battery business into an independent US company, Project ENDURA, to accelerate the transition from technology development to commercial production. The company recently announced this significant step. Plans include external financing of around USD 20 million, a cash payment of USD 4.2 million to HPQ and an initial investment of at least USD 8 million in production facilities and manufacturing capacity. In return for the transfer of certain rights and business agreements, HPQ is expected to hold 55% of the new company after the first financing round. A possible subsequent US stock market listing is also being considered.

HPQ also recently signed an agreement with US solar electric mobility company Aptera Motors to evaluate its high-performance HPQ ENDURA+ 21700 lithium-ion battery cells, which are based on silicon-based anode materials from technology partner Novacium. The planned laboratory tests mark an important step towards commercialisation, as the battery cells will be tested by a potential application partner for the first time.

Progress in military applications is even more evident. In the third quarter, Novacium delivered the first battery prototypes for tactical radios to the French Army's technical section, STAT. According to the company, the new batteries store 144 watt-hours, up from 72. Energy density increases from 160 to 261 watt-hours per kilogram. At a current share price of CAD 0.13, the company is valued at around CAD 60 million. Investors should closely follow further progress with Novacium and Project ENDURA.

BYD: Industrial scale does not protect against margin pressure

BYD has a strong position in electric vehicles and plug-in hybrids. In addition, the Chinese company produces batteries and is further diversified through its electronics business. The advantage of this strategic positioning lies in the close integration of key components and vehicle production. This allows it to implement technical improvements more quickly at scale.

However, BYD must defend this advantage against intense competition in its home market. The first-half figures show the strain, with revenue and earnings declining. By contrast, the more recent sales trend provides a tailwind. In September, BYD sold 463,561 vehicles, about 17% more than a year earlier. Overseas deliveries rose much more strongly. International expansion thus continues to gain importance as a counterweight to the difficult home market. With a 2027 P/E ratio of 11.7, the stock is moderately valued. Analysts see share price upside of over 60%.

Infineon: 70% upside?

Infineon supplies semiconductors to car manufacturers, industrial companies and providers of power supply systems. Power semiconductors switch and convert electrical energy. Alongside electric vehicles, AI data centres are becoming an important sales market. This has already boosted the share price significantly in recent quarters. The share price has risen about 40% since the start of the year. Analysts have high expectations for the stock and, on average, see upside of around 70% over the next 12 months.

Most recently, the group agreed with Wolfspeed on the supply of 200-millimetre silicon carbide wafers. The transition from 150 to 200 millimetres is intended to improve manufacturing economics and secure the supply base. In the third quarter, which ended in June, Infineon generated EUR 4.17 billion in revenue and EUR 797 million in segment profit, an adjusted operating metric. The corresponding margin reached 19.1%, and free cash flow amounted to EUR 599 million. The financial-year guidance published in August projects revenue of around EUR 16.3 billion and a segment profit margin of about 20%. Infineon will present its annual results on November 10.

Conclusion

The need for more efficient energy systems opens up opportunities for all three companies. HPQ is delivering one piece of good news after another. The planned move into the US is now particularly exciting. BYD already has industrial scale, but must once again translate this into more convincing earnings growth. Analysts expect Infineon to deliver a strong performance over the next 12 months.