Infineon to acquire Wolfspeed

Investor Presentation 14 July 2016

Key facts of the deal

› Transaction perimeter:

´s SiC wafer substrate business (excluding LED)

› Purchase price: US\$ 850m
› Transaction type: cash and debt free
› Financing: US\$ 720m bank loans
US\$ 130m cash-on-hand
› Signing date: July 13, 2016
› Expected closing date: ~ end of calendar year 2016

Key facts about the acquired business

Recent performance:

› Revenues of US\$173m in the twelve months ending 27 March 2016

Outlook:

› Revenue CAGR of ~20% and gross margin* of ~55% expected going forward

Core competence in compound semiconductors:

› SiC**-based products for power applications
› GaN-on-SiC***-based products for radio-frequency (RF) power applications
› SiC wafer substrate business; third party business will be continued

Market position:

› Power: #1 in SiC
› RF power: #2 in GaN-on-SiC

Profile:

› More than 28 years part of Cree
› Headquartered in Research Triangle Park (North Carolina), USA
› ~550 employees worldwide, thereof ~500 at two major US sites
› Strong IP portfolio of ~2,000 patents and patent applications

* According to US GAAP, excluding effects from purchase price accounting; ** SiC = silicon carbide

*** GaN-on-SiC = gallium nitride on silicon carbide

Deal rationale

	t fi al ci n a n Fi	Margin and adjusted EPS accretive from day 1 ›
		› Expected gross margin*: › Incremental revenue CAGR: 55% 20%
		› Become #1 in RF power
	t Fi c gi e t a r t S	Create #1 in SiC power › further strengthen automotive and industrial businesses › › accelerate SiC adoption expand power semi market beyond Si ›
* According to US GAAP, excluding effects from purchase price accounting

5G redefines global connectivity: high bandwidth and speed enabled by SiC

› 5G redefines
automotive connectivity
manufacturing concepts (Industry 4.0)
transportation systems
energy networks
healthcare monitoring

The promise of 5G

4k video streaming anywhere

mission critical connectivity

Compound semiconductors are a necessity to deploy 5G cellular infrastructure

Infineon is the only player with the full suite of RF power technologies necessary for 5G

Technology roll-over paves the path to global #1 in RF power by ~2020

2020/21: GaN for 5G large-scale deployment

Compound semiconductors allow for novel topologies increasing the semi market

Silicon carbide components offer benefits on system level (e.g. in solar inverter)

Reduction of cost, higher semi-value:

› 15 to 20% lower bill of material for inverter manufacturer
› 2x to 3x higher semiconductor content as compared to Si-based design
› ~1.5%-points additional growth on top of Si-based industrial semiconductor market

Reduction of system size:

› SiC allows for simpler topologies (2-level instead of 3-level) with less control effort
› SiC allows for higher switching frequency with smaller transformers
› Handling of same power in smaller box size results in significant cost reduction

GaN and SiC enable higher efficiency through faster switching with lower losses than Si

* PV = photovoltaic inverter; ** OBC = onboard charger

Further strengthening cost-performance leadership in power semiconductors

	Infineon today				Acquired business	Infineon in future
	Si	GaN-on-Si	SiC		SiC	Power
n o ti si o p e v ti ti e p m o C	#1 in Si* › relative market share of >2.7 › › › › applications	with Technology leader Industry-leading system and application know-how Industry-leading package and module know-how Global sales force and customer access across all	#2 in › SiC** › Trench MOSFET		#1 in SiC** › › Planar MOSFET Vertically › integrated › Substrate business	Stronger › leadership in power semis Cost › performance leadership in all tech nologies Vertically › integrated in SiC, allowing optimization from system to substrate

^* Source: IHS Markit; ** source: Yole

Infineon accelerates the silicon carbide market with cutting edge products

› Leverage Infineon's global customer access and application know-how on Wolfspeed's SiC product portfolio
› Combine Wolfspeed's technologies with Infineon's superior packages and modules

› Optimize products across substrate, device and application

› Lower system cost triggers faster introduction of SiC-based components in early-adopter markets and creates additional semiconductor opportunity

Silicon carbide can help accelerate the adoption of plug-in (hybrid) electric vehicles

* Source: IHS Markit, "Alternative Propulsion Forecast", Jan 2016 (includes BEV, PHEV, HEV, mild-hybrids)

Electro-mobility, photovoltaics and drives trigger demand for SiC-based components

› Roll-over driven by multiple tipping points

Source: IHS, "SiC & GaN Power Semiconductor Report – 2016", 2016; * PV = photovoltaic

Transaction is expected to be margin and adjusted EPS accretive from day 1

55% 20% Gross margin*: Revenue growth CAGR:

› Fits perfectly into Infineon's growth and margin expansion strategy

› Supports 8% long-term revenue growth target

* According to US GAAP, excluding effects from purchase price accounting

Solid balance sheet after cash-/debtfinanced transaction

› Financed with US\$720m (~€652m*) of new debt, plus US\$130m (~€118m*) cash-on-hand
› Bank financing split into different maturities:
3-year, 4-year, 5-year
largely US\$-denominated

Deal is preserving Infineon's well balanced maturity profile

Note: In addition other debt with maturities between 2017 and 2023 totaling €149m.

Summary of deal rationale

› Become #1 in RF power amplifier market by ~2020 with most complete technology portfolio by capitalizing on technology disruption in cellular infrastructure
› #1 in silicon carbide for power, strengthen automotive and industrial and accelerate market introduction with cutting-edge products as cost-performance leader and create thereby a higher addressable market for Infineon
› Deal is margin and adjusted EPS accretive from day 1 with expected 55% incremental gross margin* and 20% incremental revenue growth of the acquired businesses GM 55%*