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Infineon Technologies AG

Investor Presentation Nov 29, 2005

222_ip_2005-11-29_dbb2246d-51af-485d-8f00-b180775ea76c.pdf

Investor Presentation

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Fiscal Year-end Roadshow

Roadshow FY 2005

Page 1

November / December 2005

Dr. Wolfgang Ziebart President and CEO

Peter J. Fischl Executive Vice President and CFO

Infineon Technologies 2005. All rights reserved.

Copyright ©

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.

Infineon FY05 roadshow: Contents

Infineon FY05 Roadshow: Contents

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Maintaining a solid financial position

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Roadshow FY 2005 Page 6

Infineon FY05 Roadshow: Contents

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Business Group Automotive, Industrial & Multimarket FQ4 Update

  • !Stable revenues driven by strong demand for industrial products, but continued pricing pressure in chip card and security business.
  • !Improved EBIT despite ongoing costs for Kulim and Perlach fabs due to strong seasonal improvement in industrial.

Roadshow FY 2005 Page 8

AIM fields of activities

Roadshow FY 2005 Page 9

In Automotive, Infineon leads the long-range route

Roadshow FY 2005 Page 10

Infineon strengthened No. 1 position in Power and improved to No. 4 in industrial applications

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Power Semiconductor Market Power Semiconductor Market 2003 Rank 2004 Rank Company Name 2003 2004 Change 1 1 Infineon 8,1% 8,4% 0,3% 2 2 IR 8,0% 7,8% -0,2% 4 3 Fairchild 7,6% 7,7% 0,1% 3 4 STM 6,7% 7,2% 0,5% 5 5 Toshiba 7,4% 6,7% -0,7% 6 6 Vishay 5,8% 5,9% 0,1% 7 7 Mitsubishi 5,1% 5,4% 0,3% 9 8 Fuji Electric 4,5% 4,7% 0,2% 8 =8 Renesas 4,7% 4,7% 0,0% 1010ON3,9%4,1%0,2%

IFX Industrial Products IFX Industrial Products

  • ! Power semiconductors
      • AC/DC, DC/DC
      • High power semiconductors
  • ! Microcontrollers
      • 8/16/32 bit controllers
  • !Chipcard products
      • RFID
      • Crypto and memory controller
  • !Sensors

  • !Wireless control products

  • ! Standard and customer/ application-specific products

Roadshow FY 2005 Page 11

Sources: (top) iSuppli, August 2005; (bottom) IMS Research, August 2005

Chip Card: returning to profits

MicroSlim MicroSlim

  • ! Inline pads vs outline pads ! Inline pads vs outline pads
  • !1-transistor-per-bit !1-transistor-per-bit

  • !Implementation along with smaller feature size !Implementation along with smaller feature size

  • !Qualified at top-5 customers !Qualified at top-5 customers

32-bit controller 32-bit controller

  • ! Introduced on 130nm !Introduced on 130nm
  • !Higher margin products !Higher margin products
  • !Volume roll-out since 2004 !Volume roll-out since 2004

Restructuring Restructuring

  • ! Cost cutting ! Cost cutting
  • ! R&D budget reduction ! R&D budget reduction
  • ! Yield and quality program started ! Yield and quality program started

FCOS FCOS

  • ! Higher mechanical stability ! Higher mechanical stability
  • ! Reduced packaging costs ! Reduced packaging costs
  • ! Roll-out since end of 2004 ! Roll-out since end of 2004

Design-win for Microsoft Xbox 360

Infineon products developed for Xbox 360 Infineon products developed for Xbox 360

  • !Wireless game-pad controller
  • !Advanced security chip
  • !Removable solid-state memory unit

Copyright ©

Infineon Technologies 2005. All rights reserved.

Discrete Semis: market focus & core competencies

Communication Communication

Mobile Phone, GPS, WLAN, Cordless

RF Bipolar/Diodes AFSi MMICs

HiPAC

/ MEMS

Consumer and Computer Peripherals Consumer and Computer Peripherals

Tuner, LNB, DSC, DVC, Computer, Ö

RF Bipolar/Diodes RF MOS

AF

Automotive and Industry Automotive and Industry

General Purpose Infotainment

Infineon FY05 Roadshow: Contents

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  • !COM revenue increased slightly given seasonally strong RF and baseband shipments.
  • !Significant improvement of EBIT as a result of higher loading, lower R&D costs and impact of restructuring.

(1) Excl. acquisition related expenses and net charges resulting primarily from reorganization measures.

Roadshow FY 2005 Page 16

COM fields of activities

Roadshow FY 2005 Page 17

Early innovation translates into design-wins

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Roadshow FY 2005 Page 18

Shares for 2003, 2004

Securing a solid No. 1 position in RF transceivers

IFX market share and ranking in RF transceivers IFX market share and ranking in RF transceivers

Highlights Highlights

  • ! Successful ramp-up of new RF transceiver product for a major OEM
  • ! 3G CMOS transceiver: 4 dual-mode mobile phone platform design-wins ramping-up in 2006
  • ! EDGE CMOS transceiver: 3 dual-mode and 4 EDGE mobile phone platform design-wins ramping-up in 2006
  • !GPRS CMOS transceiver:

    • In volume production since 2004
    • Customers: Panasonic, BenQ

Roadshow FY 2005 Page 19

Source: Gartner, Wireless Communications Semiconductor Market Shares for 2002, 2004

Competitive platform offering, strong execution lead to several design-wins

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Roadshow FY 2005 Page 20

Infineon FY05 Roadshow: Contents

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Business Group Memory Products FQ4 Update

  • ! Production growth in line with up mid teens q-o-q guidance, inventory broadly flat q-o-q
  • ! ASP was up slightly, fully loaded costs declined significantly q-o-q
  • ! On track with 90nm ramp, started Richmond 12î volume production

Strong roadmap, on track for 90nm, targeting faster 70nm

Continued mix and ASP optimization

Infineon FY05 Roadshow: Contents

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Infineon Business Group Q1 FY06 Outlook as of Nov 18th

  • ! Estimating revenues to increase slightly with stable EBIT margin compared to Q4 FY05.
    • ! Awaiting slight sales growth in auto, flat sales in industrial ICs. Ongoing price pressure in chip card ICs; continuing productivity measures.
    • ! Planned phase-out of production in Perlach and start-up costs for new site in Malaysia to negatively impact EBIT through end-CY06.

COM COM

AIMAIM

  • ! Expecting revenues to remain stable sequentially.
    • ! Anticipating EBIT loss to stay in the range of the EBIT loss of the Q4 FY05. EBIT including costs relating to Perlach closure.
  • ! Wireline business to be profitable again in 1Q FY2006.

MPMP

  • ! Expect bit-production to increase by more than 10% q-o-q given additional shipments from Inotera, foundry partners and ramp of Richmond 300.
  • ! Continue focusing on expansion of portfolio with higher margin products and increasing share of 512M and DDR2 products.
  • ! On track with 90nm ramp.

Infineon Group's FQ1 and FY06 Outlook as of Nov 18

Q1 FY06 sales: slight increase expected sequentially Q1 FY06 one-off charges: no significant amounts expected

FY06 Capex: expected range is EUR 1.2-1.4 bn FY06 Depreciation: expected at about EUR 1.3 bn

Roadshow FY 2005 Page 27

Infineon FY05 Roadshow: Contents

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Page 29

We Used to Have Synergies in Capacity Re-use

In future, technology changes will lead to declining synergies

Reduced synergies and benefits to be realized lead to Carve-out decision

Additional benefits from carve-out & IPO Additional benefits from carve-out & IPO

  • ! Aside from declining synergies, we see significant benefits ! Aside from declining synergies, we see significant benefits
      • Enhanced capital market access - Enhanced capital market access
      • Logic can use funds from IPO for selective acquisitions. - Logic can use funds from IPO for selective acquisitions.
      • Increased flexibility for cooperations - Increased flexibility for cooperations
      • Increased Focus - Increased Focus
      • More differentiated investing for shareholders - More differentiated investing for shareholders

Resulting decisions Resulting decisions

  • !Carve-Out: Establish Memory as legally separate entity 1-Jul-2006. !Carve-Out: Establish Memory as legally separate entity 1-Jul-2006.
  • !IPO: IPO of the Memory Products Group is our preferred solution. !IPO: IPO of the Memory Products Group is our preferred solution.
  • !Strengthening Logic: IFX may use IPO proceeds for selective acquisitions to strengthen logic businesses. !Strengthening Logic: IFX may use IPO proceeds for selective acquisitions to strengthen logic businesses.

Infineon FY05 Roadshow: Contents

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Core strengths in Logic

Roadmap: Shrink speeds diverging more and more

Roadshow FY 2005 Page 34

Source: ITRS, Infineon

Memory Memory

Moore's law fully valid, capital intensity remains high. Moore's law fully valid, capital intensity remains high.

Partnership model to continue to optimize CapEx and R&D. #Partnership model to continue to optimize CapEx and R&D.

Advanced Logic Advanced Logic

Required volume to fill 65nm/12ì fab increasing massively vs 8ì fab Required volume to fill 65nm/12ì fab increasing massively vs 8ì fab

No intention to build our own fab for 65nm and below #No intention to build our own fab for 65nm and below

Power and RF Power and RF

Shrinks less and less relevant, manufacturing and process capabilities a competitive factor. Shrinks less and less relevant, manufacturing and process capabilities a competitive factor.

Continued invest for in-house power and some RF capacity. #Continued invest for in-house power and some RF capacity.

New Automotive and Industrial power fab in Malaysia on track for 2006 ramp

First dedicated Logic fab right from the start! First dedicated Logic fab right from the start!

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Nodes: 0.22µ to 1.5µ

Capacity: ~100k WSPM on 8" by 2009

Products: Power ICs for automotive and industrial applications

Roadshow FY 2005

Page 37

Never stop thinking.

Copyright ©

Infineon Technologies 2005. All rights reserved.

Results for FY05 vs. FY04

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Roadshow FY 2005 Page 38

One-offës in FY05

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Infineon Financials FQ4 Update

Roadshow FY 2005 Page 40

Copyright © Infineon Technologies 2005. All rights reserved.(1) Excl. acquisition related expenses, antitrust-related charges and net charges resulting primarily from reorganization measures.

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