Given that Infineon’s high-performance power chips have an ubiquitous usage, the chipmaker has a bright future despite small road bumps.

On Tuesday, German chipmaker Infineon Technologies AG stated, a slump in demand which had led to increased inventory levels is likely to plateau only this summer; this means that till then its profit margins will continue to remain under pressure.

Infineon makes high-performance power chips that are used across industries ranging from cars to server farms and smartphones; the chipmaker faced a slowdown in sales due to lower demand from China. It has already lowered its revenue guidance twice this year.

Declaring that the industry boom was over, Infineon’s CEO Reinhard Ploss stated, he expects sales to rise by 5% to $8.96 billion (8 billion euros) by Sept. 30; he went on to add, margins had held up better than expected.

Ploss said, expects inventories to peak in the summer.

“But at the end of the year, we still assume a high level of inventories compared to our target inventory level,” said Ploss on a conference call with analysts.

Infineon is basing its forecasts for fiscal 2019 on an expected low- to mid-single-digit percentage decline in unit car production.

The semiconductor industry has lowered expectations of a rebound in demand, leaving market valuations looking stretched after a steep rally in technology stocks this year.

On Tuesday, Infineon’s shares dipped by 0.6% although they are still ahead by 16% in the current year to date.

Despite lower demand from traditional cars, Infineon stated, demand for electric powertrains and assisted driving technology remained strong, despite reductions in Chinese subsidies for environmentally friendly battery-powered vehicles.

It has won Germany’s Continental as its first customer for a more powerful, 48-volt automotive power systems, known as MOSFETs, that will enter production in 2021.

Pressure on margins is expected to persist with the chipmaker slowing production to work off gross inventories that rose to 2 billion euros in the quarter to March, said Ploss.