Infineon Technologies AG — Investor Presentation 2004

Dec 16, 2004

Fiscal Year-end Roadshow

November / December 2004

Dr. Wolfgang Ziebart President and CEO

Peter J. Fischl Executive Vice President and CFO

Disclaimer

Please note that while you are reviewing this information, this presentation was created as of the date listed, and reflected management views as of that date.

This presentation contains certain forward-looking statements that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to the Risk Factors noted in the Company's Earnings Releases and the Company's filings with the Securities and Exchange Commission.

Agenda

Personal IntroductionPersonal Introduction

Financial Update and Outlook Financial Update and Outlook

Regional Strategy Regional Strategy

Business Group Highlights Business Group Highlights

Discussion of Integrated Discussion of Integrated Infineon Infineon Business Model Business Model

Agenda

Personal Introduction Personal IntroductionRegional Strategy Regional Strategy Financial Update and Outlook Discussion of Integrated Discussion of Integrated Infineon Infineon Business Model Business Model Business Group Highlights Business Group Highlights Financial Update and Outlook

[EUR]m	03FYFY03	04FYFY04	ChChangeange
NtlesaesGh(%)trow	6152,	7195,	1043,17%
Girossmargn	2%5	3%5
R&Di%flnosaes	1089,18%	1219,1%7	130
SG&A%filnosaes	679%11	718%10	39
EBIT%filnosaes	()299(%)5	256%4	555
Thiiidterenmparmenanildhttt-tanrsreaecargesu	(126)	(345)

Operating and free cash flow significantly improved

[EUR]m	FY03FY03	FY04FY04
OihfltOihfltperangcasowperangcasow	307307	18571857,,
CCapexapex	(82)7()872	()1163()1163,,
(1)()1OhitttOthitternesmensvernvesmens	8989	()488(488)
fFhlFhflreecasowreecasow	()53(3)5	206206

Outlook for first quarter of fiscal year 2005

• Expectations for a slowdown in several application segments due to higher inventory levels compared to the previous quarters. Expectations for a slowdown in several application segments due to higher inventory levels compared to the previous quarters.
• For automotive electronics, continuing price pressure and no major changes in demand for semiconductors expected, but weaker market for the industrial segment. In combination with seasonal effects, slight reduction in revenues and earnings expected. For automotive electronics, continuing price pressure and no major changes in demand for semiconductors expected, but weaker market for the industrial segment. In combination with seasonal effects, slight reduction in revenues and earnings expected.
• In Wireline Communications no growth expected due to continuing pricing pressure and marketplace inventory corrections. EBIT loss expected to be significantly reduced if and when sale of Fibre Optics to Finisar is closed. In Wireline Communications no growth expected due to continuing pricing pressure and marketplace inventory corrections. EBIT loss expected to be significantly reduced if and when sale of Fibre Optics to Finisar is closed.
• For Secure Mobile Solutions significant reduction in revenues anticipated, driven mainly by market slowdown and higher inventories in the Asian mobile phone market. For Secure Mobile Solutions significant reduction in revenues anticipated, driven mainly by market slowdown and higher inventories in the Asian mobile phone market.
• For Memory Products business in line with normal seasonal demand expected. Based on additional capacities from Inotera joint venture, Infineon anticipates an increase of bit production. For Memory Products business in line with normal seasonal demand expected. Based on additional capacities from Inotera joint venture, Infineon anticipates an increase of bit production.
• Non-recurring US-Dollar 153 million license income from ProMOS agreement expected to positively impact the quarter. Non-recurring US-Dollar 153 million license income from ProMOS agreement expected to positively impact the quarter.

Agenda

Strong growth in Asia and Japan

Increasing proportion of employees in lower-cost regions leads to lower personnel expenses

Slide 11

Agenda

Copyright © Infineon Technologies 2004. All rights reserved.

2004 Year-endRoadshowSlide 12

Memory Products:

Significant margin improvement

• Sequential revenue decrease was mainly caused by a lower ASP and a weakening US-Dollar, which could not be completely compensated by higher sales volumes.
• Sequential EBIT increase before antitrust-related charges was driven by higher bit shipments in combination with cost reductions attributable to a higher 110nm share that was more than offsetting the price decline during the quarter.

(1) Excluding antitrust-related charges

Copyright © Infineon Technologies 2004. All rights reserved.

Key facts on 110nm: Key facts on 110nm:

• Best wafer yield >93.9% Best wafer yield >93.9%
• Know-how in 193nm litho extended Know-how in 193nm litho extended
• All process parameters well established All process parameters well established
• More than 80% of all capacities converted to 110nm end FY04 More than 80% of all capacities converted to 110nm end FY04

Ndoe	Sttasu
110nm	Mdtiassproucon-
	256MDDR

Kitii90Kitii90eynnovaonsnnmeynnovaonsnnmd70d70annm:annm:90Nlllt90Nllltnmeceao":wyunmeceao":wyu--SGfThithHillThihHSGfilltrencwrencw--BlhdhtttBttlhdthoesaperencoesaperenc----f70Hihillithf70Hihillith"nm:gκnrencnm:gκnrenc"----
Ndoe	Sttasu
90nm	Clftsomersampesromu-20012MDDR5mm:fTt300liranseromne-Rtdampupexpece--id2005m
07nm	Fidtttrsemonsraors-3001225MDDRonmm:

110nm: Basis for global 300mm ramp-up in 2005

Add resources in South East Asia

Capacities in South East AsiaCapacities in South East Asia

Based on the additional capacities from SMIC, Inotera and Winbond we plan to increase the share of capacities SEA from around 5% in the current fiscal year to up to 50% in FY07 0%

Development center in Xi'an, China Development center in Xi'an, China

• More than 1,000 engineers planned by 2007
• Close cooperation with local universities for improved know-how transfer
• First product development activities started for memory products

Bit shipment share of non-computing applications increased to more than 30% in Q4 FY04

* Desktop PCs, Notebooks and Workstations; ** Infrastructure, Consumer, Mobile Applications

• ÖA leading supplier to server manufacturers
• ÖLeading with Mobile-RAMs
• ÖIncreasing shipments of Graphics RAM
• ÖIncreasing share of shipments for set-top boxes

Automotive & Industrial:

Record revenues and stable margins at a high level

• Sequential revenue increase was mostly due to increased sales of products for power management & supply, high-power applications and sensors.
• Sequential EBIT increase reflected primarily higher sales volumes.

Copyright © Infineon Technologies 2004. All rights reserved.

AI –Complete coverage of customers' needs

Defining automotive intelligence

Applications: Applications:

• Powertrain Powertrain
• Safety management Safety management
• Body & convenience Body & convenience
• Infotainment Infotainment

Products:

• Sensors
• Microcontrollers
• Power devices
• Wireless chipsets
• Silicon discretes

Converting and controlling power

Applications: Applications:

• AC/DC conversion AC/DC conversion
• DC/DC conversion DC/DC conversion
• Consumer drives Consumer drives
• General-purpose drives General-purpose drives
• Tuners Tuners

Products:

• Sensors
• Microcontrollers
• Thyristors / diodes
• Discrete power
• IGBT modules and bipolar modules
• Power ICs
• Tuner ICs

Copyright © Infineon Technologies 2004. All rights reserved.

Silicon discretes

Leading positions by increasing market shares in both segments

IfiAi2003ttfIiAtti2003nneonuomovenneonuomoveN2WldN1EUN3USSN2WldN1EUN3Uoorooooroo,,,,			IfiP2003fIiP2003nneonowernneonower114SNWldNEUNUSN1WldN1EUN4Uoorooooroo,,,,
		2003	2002			2003	2002
1	Flreescae	129%	134%	1	Ifi(4)nneon	81%	66%
2	Ifi(2)nneon	8%7	82%	2	IR	80%	6%7
3	STM	6%7	66%	3	STM	%79	%63
4	Renesas	0%7	na	4	Fihildarc	74%	67%
5	Bhosc	%64	%52	5	Thibosa	72%	86%
6	Thibosa	61%	62%	6	Vihsay	61%	63%

6.1%

Market: USD 13.1 bn 5Y CAGR: 7-8%

6.0%

Philips 5.7% 5.9%

Source: Strategy Analytics, 2004 Source: IMS, 2004

NEC

* Business Unit "Discrete Power"

Market: USD 9.4 bn 5Y CAGR: 10%

3	STM	79%	63%
4	Fihildarc	4%7	6%7
5	Thibosa	2%7	86%
6	Vihsay	%61	%63
7	Renesas	50%	na
8	Fjiu	50%	40%

Copyright © Infineon Technologies 2004. All rights reserved.

Secure Mobile Solutions:

Strong revenue growth and EBIT margin improvement

• Sequential revenue improvement was mainly driven by higher demand for mobile solutions. Mobile phone manufacturers have aggressively purchased components in anticipation of a strong holiday season.
• Sequential EBIT increase was mostly due to higher sales volumes, especially of chips for mobile solutions.

IFX WirelessIFX Wireless

Revenue growth CY03 vs. CY02

• Improved to No. 3 from No. 5 within one year Improved to No. 3 from No. 5 within one year
• Increased market share to 7.3% Increased market share to 7.3%

Revenue growth CY03 vs. CY02

• Clear No. 1; IFX as large as next three competitors combined Clear No. 1; IFX as large as next three competitors combined
• Increased market share to 41.2% Increased market share to 41.2%

Source: Gartner, June 2004 Source: Gartner, April 2004

Continuedto gain market share in RF and baseband

Significant growth potential from a rapidly growing contactlessmarket through a complete product portfolio

WirelineCommunications:

Strategic measures initiated to achieve profitability

• Sequential revenue increase was mainly driven by higher sales of broadband access ADSL products.
• EBIT loss increased sequentially mainly due to impairment charges of Euro 80 million, predominantly related to the acquisition of Catamaran Communications, Inc.

Transforming from the leading traditional telecom voice vendor into a data- and home-networking solution provider

Agenda

Discussion of Integrated Discussion of Integrated Infineon Infineon Business Model Business Model

Infineon has the technical competencies to target converging markets of the future

Infineon's Infineon'sexposure to product and industry segments exposure to product and industry segments

Integrated manufacturing to maximized flexibility and minimized cost

Maximize: Opportunities during market upturns Minimize: Impact of downturns and investments

• Internal flexibility: Between MP and Advanced Logic Cluster
• External flexibility: Silicon foundries and subcontractors
• Cost optimization: Reuse of depreciated equipment for power technologies

Flexibility: Silicon foundries and subcontractors

Never stop thinking.