Infineon Technologies AG

Earnings Release • Jul 28, 2010

Third Quarter FY 2010

Quarterly Update

Infineon Technologies AG Investor Relations

Infineon Results and Outlook

Business Highlights

Financial Snapshot: Progress on all Counts

Revenues +17%	Net Result 10% 8%	in EUR m	Q2 FY10	Q3 FY10
1,209 1,035		Revenues	1,035	1,209
		Segment Result	110	163
	126 79	Net result	79	126
Q2 FY10	Q3 FY10	Employees	25,216	25,978
		Free Cash Flow	141	134
		Gross Cash Position	1,667	1,514
		Net cash	995	1,108
		Equity ratio	52%	54%

Notes: Employees excluding temporary employees; Free Cash Flow from continuing operations.

Further Increase in Revenue and Earnings in Q3 FY10

Revenue Increase in all Segments; IMM and WLS Very Strong

Revenue in EUR m Share of total

Copyright © Infineon Technologies 2010. All rights reserved. Note: Other operating segments, central functions and eliminations represent 4% share of total revenues (€ 47m). 28 July 2010 Page 5

All Divisions Profitable; IMM and WLS Strongly Improved

Segment Result (SR) in EUR m				SR Margin
		Q2 FY10	51	16%
ATV		Q3 FY10	52	16%
		Q2 FY10	59	19%
IMM		Q3 FY10	82	22%
		Q2 FY10	3	3%
CCS		Q3 FY10	6	5%
		Q2 FY10	9	3%
WLS		Q3 FY10	24	7%

Note: Other operating segments, central functions and eliminations Segment Result: € -1m.

OpEx Growth Moderate and Below Sales Growth

S and G&A R&D [EUR m] 100 99 108 ¹³⁰

Working Capital Declined Again

For definition of working capital, inventories, trade receivables, and trade payables, please see slide 30 in appendix.

Higher Investments in Response to Demand

1) For definition please see slide 30 in appendix.

2) As of April 28, 2010, Infineon anticipated that investments will exceed EUR 300m compared with the prev. guidance of up to EUR 250m. As of July 28, 2010, Infineon anticipates investments to exceed EUR 400m for FY 2010.

Gross Debt Reduced Significantly; Net Cash Position Rose to EUR 1.1bn

* Consists of CB 2014 (nominal value EUR 196m; book value EUR 151m).

• CB 2010 with a nominal value of EUR 255m redeemed entirely in June.
• Large part of remaining debt consists of in-the-money CB 2014.
• Strong improvement of net cash position given strong free cash flow from continuing operations of EUR 134m in Q3 FY10.

IFX Targets for Liquidity and Capital Structure

• 1. Sales of last twelve months, i.e. sales Q4 FY09 through Q3 FY10 = EUR 4,040m.
• 1. EBITDA of last twelve months, i.e. EBITDA Q4 FY09 through Q3 FY10 = EUR 720m.

Strong Outlook for Q4 and FY 2010 Due to Strong Operating Performance

Outlook Q4 FY10 (compared to Q3 FY10)

Infineon Revenue

Revenue to increase by a high single-digit percentage.

Revenue to grow by a mid to high 40"s percentage.

(compared to "high 30"s percentage" before)

Combined Segment Result Margin

Margin to increase by one to two percentage points.

Margin to be a low teens percentage.

Infineon Results and Outlook

Business Highlights

Revenue Split by Focus Area

9-months FY10 revenue split

Infineon Holds Leadership Positions in All Target Markets

Copyright © Infineon Technologies 2010. All rights reserved. 28 July 2010 Page 15

units.

Automotive Segment (ATV)

Revenue and Segment Result from Q1 FY08 to Q3 FY10

Major recent developments

• Revenue increase driven by continued high demand in all regions. US and Chinese car production remained strong. Shift in mix to premium cars in Europe, but also worldwide.
• Exports out of Europe have risen 44% y-y in H1 CY 2010 thanks to strong demand from China, India and the U.S.

Unparalleled Capabilities in Core Competencies and Unique System Know-how

Analog / Mixed-signal RF

Infineon is Best-Positioned to Capitalize on Market for Hybrid and Electric Cars

Infineon is Addressing All Automotive Applications of Electro-Mobility

Industrial & Multimarket Segment (IMM)

Revenue and Segment Result from Q1 FY08 to Q3 FY10

Major recent developments

• Growth was driven both by power and non-power products; beginning to see pronounced increase in drives demand (i.e. pumps, elevators, escalators, all kinds of small machines/electric motors) generally.
• Renewable energies remain in boom; target: close to 10% of IMM sales in FY10.
• Power MOSFET package cooperation with Fairchild on PowerStage 3x3. Introduction of .XT technology for high-power packages.

IMM Driven by Diverse Range of Power Electronics Growth Markets

Variable speed drive

• Hundreds of millions of motors to be replaced
• Low penetration of VSD
• Replacement cycle to continue for decades

Infrastructure

• Trains
• Power transmission and distribution
• Smart grid

Renewable energies

• On-shore and off-shore wind parks
• Photovoltaic system

Power management

• Power supplies
• Digital power management

LED lighting

• Architectural lighting
• Street lights
• Bulb replacement
• LCD backlighting

One Out of Four Industrial Drives is Equipped With Infineon"s IGBT Technology

Variable speed drives (VSD) with growth potential for decades to come

• Hundreds of millions of motors in use.
• Performance range from few watts up to megawatt.
• Huge potential, since only few motors equipped with VSD.
• Increasingly more new motors equipped with VSD.

Chip Card & Security Segment (CCS)

Revenue and Segment Result from Q1 FY08 to Q3 FY10

Major recent developments

• Revenue driven by growth in payment (e.g. card replacements) and government ID applications (e.g. electronic car registration certificates and resident permits). Segment result improved due to better product mix.
• High-security SLE 78 contactless chip family received certificate from German Federal Office for Information Security for being compliant with the highest security requirements.
• Volume shipments started on 90nm process; target: 20% of unit volume by end Q4 FY10.

Focus on New, High-Margin Applications

Government identification

• e-passports
• National e-ID cards
• e-health care cards
• e-drivers license

Payment

• Contactless payment
• Mobile payment / NFC
• Transport / ticketing

Embedded security

• Trusted platform module
• Authentication in consumer applications
• M2M communication
• Automotive applications (e.g. digital tachograph)
• Emerging security applications (e.g. smart metering)

Wireless Solutions Segment (WLS)

Revenue and Segment Result from Q1 FY08 to Q3 FY10

Major recent developments

• Revenues driven by very successful ramps of new smartphones and entry-level phone platforms at several customers.
• Successful launch of 65nm HSUPA plattform XMM™6160 with a number of large OEMs.
• Roll-out of 65nm ULC platform XMM™1100 and 65nm EDGE-platform XMM™2130. Both are shipping to several large OEMs by now. Dual-SIM support of XMM™1100 helps customers address Indian and Chinese markets.

WLS Capitalizing on Mass-Market, Smart Phones and Connected Devices

Mobile phones

• Trend towards system-on-chip solutions.
• Ramp of single-chip platforms (XMM™ 1100/2130) at Nokia and other tier-1 OEMs.
• 3G entry and Dual-SIM platforms.
• Leading customer base.

Smartphones

• Ramp of HSUPA platforms XMM™ 6160 and XMM™ 6180 at several tier-1 OEMs.
• Slim modems: lowest power consumption and smallest size.
• Entry-level smartphone platform.
• Leading customer base.

Connected devices

• Strong market growth.
• Leading position in M2M.
• Slim modems with lowest power consumption and smallest size for tablet PCs and other connected devices.

Strong Ramps at Nokia in 2010 and 2011

Leading Smartphone Customer Base

Selected smartphone models using Infineon platform or RF

Notes

Investments =

• "Purchase of property, plant and equipment"
• • "Purchase of intangible assets, and other assets" incl. capitalization of R&D expenses

Working Capital =

• ("Total current assets"
• "Cash and cash equivalents"
• "Available-for-sale financial assets"
• "Assets classified as held for disposal")
• ("Total current liabilities"
• "Short term debt and current maturities of long-term debt"
• "Liabilities classified as held for sale")

Net Inventory Reach (days of inventory; quarter-to-date) = ("Net Inventories" / "Cost of goods sold") * 90

DSO (days of sales outstanding; quarter-to-date) = ("Trade accounts receivables (net)" / "Revenue") * 90

DPO (days of payables outstanding; quarter-to-date) = 
("Trade accounts payables" / ["Cost of goods sold" + "Purchase of property, plant and equipment"]) * 90

Infineon Consolidated Statements of Operations (IFRS) (unaudited)

	3 months ended		9 months ended
in Euro million	Jun30, 09	Mar 31, 10	Jun 30, 10	Jun 30, 09	Jun 30, 10
Revenue	761	1,035	1,209	2,172	3,185
Cost of goods sold	(561)	(682)	(789)	(1,761)	(2,098)
Gross profit	200	353	420	411	1,087
Research and development expenses	(108)	(136)	(147)	(350)	(413)
Selling, general and administrative expenses	(99)	(115)	(121)	(302)	(342)
Other operating income	4	3	3	22	12
Other operating expense	(9)	4	(15)	(59)	(107)
Operating income (loss)	(12)	109	140	(278)	237
Financial income	20	8	4	100	23
Financial expense	(31)	(30)	(12)	(118)	(80)
Income from investments accounted for using the equity method	2	1	5	5	7
Income (loss) from continuing operations before income taxes	(21)	88	137	(291)	187
Income tax expense	(5)	(7)	(16)	(6)	(31)
Income (loss) from continuing operations	(26)	81	121	(297)	156
Income (loss) from discontinued operations, net of income taxes	3	(2)	5	(388)	115
Net income (loss)	(23)	79 -	126 -	(685)	271 1
Attributable to:
Non-controlling interests	1	–	–	(48)	1
Shareholders of Infineon Technologies AG	(24)	79	126	(637)	270

Basic and diluted earnings (loss) per share attributable to

shareholders of Infineon Technologies AG (in Euro):

813	1,087	1,087	813	1,087
813	1,171	1,172	813	1,087
(0.03)	0.07	0.11	(0.36)	0.14
–	–	0.01	(0.42)	0.11
(0.03)	0.07	0.12	(0.78)	0.25
(0.03)	0.07	0.11	(0.36)	0.14
–	–	–	(0.42)	0.11
(0.03)	0.07	0.11	(0.78)	0.25

Infineon Consolidated Statements of Financial Position (IFRS) (unaudited)

in Euro million		Sep 30, 09 Mar 31, 10 Jun 30, 10
Assets Current assets:
Cash and cash equivalents	1,414	1,228	1,452
Available-for-sale financial assets	93	439	62
Trade and other receivables	514	557	685
therein: Trade accounts receivables	449	484	591
Inventories	460	504	551
Income tax receivable	11	18	19
Other current financial assets	26	26	9
Other current assets	114	126	145
Assets classified as held for sale	112	21	24
Total current assets	2,744	2,919	2,947
Property, plant and equipment	928	804	808
Goodwill and other intangible assets	369	375	384
Investments accounted for using the equity method	27	36	39
Deferred tax assets	396	400	416
Other financial assets	124	121	135
Other assets	18	18	30
Total assets	4,606	4,673	4,759
in Euro million		Sep 30, 09 Mar 31, 10 Jun 30, 10
Liabilities and equity
Current liabilities:
Short-term debt and current maturities of long-term debt	521	378	127
Trade and other payables	393	490	577
therein: Trade accounts payables	384	484	572
Current provisions	436	523	483
Income tax payable	102	113	119
Other current financial liabilities	50	38	54
Other current liabilities	147	124	247
Liabilities classified as held for sale	9	16	14
Total current liabilities	1,658	1,682	1,621
Long-term debt	329	294	279
Pension plans and similar commitments	94	99	103
Deferred tax liabilities	13	6	8
Long-term provisions	89	58	59
Other financial liabilities	5	4	4
Other liabilities	85 -	106 -	134 -
Total liabilities	2,273	2,249	2,208
Shareholders' equity:
Ordinary share capital	2,173	2,173	2,173
Additional paid-in capital	6,048	6,048	6,048
Accumulated deficit	(5,940)	(5,796)	(5,670)
Other components of equity	(8)	(1)	-
Total equity attributable to shareholders of Infineon Technologies AG	2,273	2,424	2,551
Non-controlling interests	60	–	–
Total equity	2,333	2,424	2,551
Total liabilities and equity	4,606	4,673	4,759

Copyright © Infineon Technologies 2010. All rights reserved.

Infineon Consolidated Statements of Cash Flows (IFRS) (unaudited)

	3 months ended
	Jun 30, 09	Mar 31, 10	Jun 30, 10
(€ millions)
Net income (loss)	(23)	79	126
Less: net loss (income) from discontinued operations	(3)	2	(5)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating
Depreciation and amortization	128	97	96
Provision for (recovery of) doubtful accounts	(1)	1	3
Losses (gains) on sales of available-for-sale financial assets	2	-	1
Losses in connection with the deconsolidation of ALTIS	-	(8)	(4)
Losses (gains) on disposals of property, plant, and equipment, and other assets	1	(2)	(1)
Income from investments accounted for using the equity method	(2)	(1)	(5)
Dividends received from associated companies	-	-	3
Impairment charges	(2)	1	5
Share-based compensation	1	-	-
Deferred income taxes	-	(3)	(6)
Changes in operating assets and liabilities: Trade and other receivables	6	(85)	(123)
Inventories	23	(48)	(45)
Other current assets	1	(21)	(7)
Trade and other payables	68	87	85
Provisions	(4)	37	(36)
Other current liabilities	(12)	47	188
Other assets and liabilities	16	14	-
Interest received	1	4	5
Interest paid	(35)	(8)	(25)
Income tax received (paid)	(4)	(13)	(8)
Net cash provided by (used in) operating activities from continuing operations	161	180	247
Net cash provided by (used in) operating activities from discontinued operations	1	(7)	(7)
Net cash provided by (used in) operating activities	162	173	240
Cash flows from investing activities:
Purchases of available-for-sale financial assets	(31)	(375)	-
Proceeds from sales of available-for-sale financial assets	48	25	376
Proceeds from sales of businesses and interests in subsidiaries	-	-	1
Purchases of intangible assets, and other assets	(12)	(21)	(26)
Purchases of property, plant and equipment	(13)	(42)	(91)
Proceeds from sales of property, plant and equipment, and other assets	7	24	3
Net cash provided by (used in) investing activities from continuing operations	(1)	(389)	263
Net cash provided by (used in) investing activities from discontinued operations	(1)	-	-
Net cash provided by (used in) investing activities	(2)	(389)	263
Cash flows from financing activities:
Net change in short-term debt	(13)	8	(8)
Net change in related party financial receivables and payables	-	1	-
Proceeds from issuance of long-term debt	181	-	2
Principal repayments of long-term debt	(86)	(155)	(267)
Change in restricted cash	(7)	1	(1)
Net cash provided by (used in) financing activities from continuing operations	75	(145)	(274)
Net cash provided by (used in) financing activities from discontinued operations	-	-	-
Net cash provided by (used in) financing activities	75	(145)	(274)
Net increase (decrease) in cash and cash equivalents	235	(361)	229
Effect of foreign exchange rate changes on cash and cash equivalents	-	-	(5)
Cash and cash equivalents at beginning of period	532	1,589	1,228
Cash and cash equivalents at end of period	767	1,228	1,452

Financial Calendar and IR Contacts

Financial Calendar IR Contacts

• Nov 16, 2010* Q4 and Full Year FY10 Results
• Feb 17, 2011 Annual Shareholder Meeting
• Feb 01, 2011* Q1 FY11 Results
• May 03, 2011* Q2 FY11 Results
• Jul 28, 2011* Q3 FY11 Results
• Nov 17, 2011* Q4 FY11 Results
• * Preliminary Date

Ulrich Pelzer

Corporate Vice President Corporate Development & Investor Relations +49 89 234-26153

ulrich.pelzer@infineon.com

Joachim Binder Senior Director, Investor Relations +49 89 234-25649 joachim.binder@infineon.com

Aleksandar Josic Manager, Investor Relations +49 89 234-83045 aleksandar.josic@infineon.com

Disclaimer

This presentation was prepared as of July 28, 2010 and is current only as of that date.

This presentation includes forward-looking statements and assumptions about the future of Infineon"s business and the industry in which we operate. These include statements and assumptions relating to general economic conditions, future developments in the world semiconductor market, our ability to manage our costs and to achieve our growth targets, the resolution of Qimonda"s insolvency proceedings and the liabilities we may face as a result of Qimonda"s insolvency, the potential disposition or closure of our ALTIS joint venture, the benefits of research and development alliances and activities, our planned levels of future investment, the introduction of new technology at our facilities, our continuing ability to offer commercially viable products, and our expected or projected future results.

These forward-looking statements are subject to a number of uncertainties, such as broader economic developments, including the sustainability of recent improvements in the market environment; trends in demand and prices for semiconductors generally and for our products in particular, as well as for the end-products, such as automobiles and consumer electronics, that incorporate our products; the success of our development efforts, both alone and with partners; the success of our efforts to introduce new production processes at our facilities; the actions of competitors; the continued availability of adequate funds; any mergers, acquisitions or dispositions we may undertake; the outcome of antitrust investigations and litigation matters; and the resolution of Qimonda"s insolvency proceedings; as well as the other factors mentioned in this presentation and those described in the "Risk Factors" section of our most recent annual report on Form 20-F on file with the U.S. Securities and Exchange Commission.

As a result, Infineon"s actual results could differ materially from those contained in or suggested by these forward-looking statements. You are cautioned not to place undue reliance on these forwardlooking statements. Infineon does not undertake any obligation to publicly update or revise any forward-looking statements in light of developments which differ from those anticipated.