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Infineon Technologies AG

Investor Presentation • Aug 25, 2005

222_ip_2005-08-25_b2d118d2-c292-4498-9064-c8fa02aba2d5.pdf

Investor Presentation

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Infineon On The Move

Moors & Cabot Conference ñ August 11, 2005

Mark Tyndall VP, IR & Business Development

Moors & Cabot

San Francisco

August 11, 2005

Slide -1-

Achim Schneider Sen. Director, IR & Financial Communications

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.

Moors & Cabot San Francisco August 11, 2005 Slide -2-

Agenda

Quarterly Update & Financials Quarterly Update & Financials

Automotive, Industrial & Multimarket Automotive, Industrial & Multimarket

Communication Communication

Memory Products Memory Products

Outlook Outlook

Moors & Cabot San Francisco August 11, 2005 Slide -3-

Overview ñ Market Environment And Results in F3Q

Infineon Group Infineon Group

  • !Stable revenues compared to F2Q w/ increased memory sales !Stable revenues compared to F2Q w/ increased memory sales
  • ! Significant ASP-decline in memory market of approx. 30% !Significant ASP-decline in memory market of approx. 30%
  • !Rapid decline of market demand in security and chip card IC area !Rapid decline of market demand in security and chip card IC area
  • !EBIT loss increased to EUR234mn incl. EUR81mn one-off charges !EBIT loss increased to EUR234mn incl. EUR81mn one-off charges
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Moors & Cabot San Francisco August 11, 2005 Slide -4-

Results For Q3 FY05 Vs. Q2 FY05

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Moors & Cabot San Francisco August 11, 2005 Slide -5-

Maintaining A Solid Financial Cash Position

San Francisco August 11, 2005 Slide -6-

Moors & Cabot

(1) Excluding purchase/sale of marketable securities

!

Recent Business Highlights ñ AIM and COM

Automotive, Industrial & Multimarket

  • !Increased market share in car electronics from 8.7% in CY03 to 9.1% in CY04 (Source: Strategy Analytics, June 2005)
  • !IFX to supply secure chips, package & more for German e-Passport
  • !Agreement with a leading HDD manufacturer to develop a product for fast-growing mobile applications market

Communication

  • !MP-E GPRS/EDGE " one of smallest multimedia phone platform incl. all HW/SW components required for high-performance and advanced multimedia functionality; true 3-chip solution consists of multimedia baseband, power management unit and CMOS RF chip
  • !Panasonic/PMC " uses MP1-G multimedia platform now for GSM/GPRS phones; 3-band functionality and camera support, polyphonic-ring tones, color displays and Java capability
  • !SMARTi 3G " worldís first CMOS RF transceiver chip for UMTS applications; single-chip for 6-band solution makes UMTS phones usable worldwide; various design wins already

Moors & Cabot San Francisco August 11, 2005 Slide -7VINAX " industry's first fully standard-compliant VDSL2 end-toend solution; established leading position wrt to Triple Play services

Recent Business Highlights ñ MP and Corporate

Memory Products

!

  • !Start of commercial production based on 90nm DRAM trench technology; products available: 512M DDR and 512M DDR2
  • !Increased share of specialty DRAMs (Graphic and Mobile RAM)
  • !Sampling started of customized 8GB (Gigabyte) DDR2-400 Tall registered DIMMs based on dual-die technology
  • !First to provide DDR3 devices with full interface functionality to major PC enabler
  • !Only company to offer complete in-house solution for next generation server modules (FB-DIMMs), including DRAM module, AMB-Chip and heat spreader

Continuing IFXís commitment to restructuring

  • !Corporate Research functions to be integrated in Business Groups
  • !eupec GmbH to be integrated into IFX AG but maintaining brand
  • !Wearable electronics activities spun off by MBO
    • RFID software solution activities spun off by MBO

Moors & Cabot San Francisco August 11, 2005 Slide -8-

Recent Management Changes

Mr. Kin Wah Loh ñ Now Head of Memory Products Mr. Kin Wah Loh ñ Now Head of Memory Products

  • ! Member of Management Board of IFX AG since 2004
  • ! President of Infineon Technologies Asia Pacific 1999-2004
  • ! General Manager of various production sites of Siemens Semi
  • ! 25 years of experience in semiconductor and manufacturing
  • !Engineering and Business degrees

Mr. Hermann Eul ñ Now Head of Communication Mr. Hermann Eul ñ Now Head of Communication

  • ! New Deputy Member of Management Board (July 28th, 2005)
  • ! Group VP and GM of Communication Business Group since 2004
  • ! Professor for RF-Technology and Radio-Systems at University of Hanover/Germany
  • ! GM of various Business Units at IFX AG and Siemens AG
  • ! 18 years of experience in R&D and management functions in communications and RF technologies
  • ! PhD in Electrical Engineering

Moors & Cabot San Francisco August 11, 2005 Slide -9-

Infineonís Business Groups

Automotive, Industrial & Multimarket

COM COM

Communication

MPMP

Memory Products

Moors & Cabot San Francisco August 11, 2005 Slide -10-

Automotive, Industrial & Multimarkets: #2 in Car Electronics, #1 in Power ICs, #1 in Card ICs

Microcontroller Automotive Power Sense & Control Chip Card & Security ICs Power Management & Drives Discrete Semiconductors ASIC & Design Solutions

Communication

MPMP

Memory Products

Moors & Cabot San Francisco August 11, 2005 Slide -11-

AIM: Revenue And EBIT Development

Automotive, Industrial and Multimarket BGës outlook for Q4 FY05:

  • !Estimating revenues and EBIT to remain stable sequentially
  • ! Awaiting benefits from seasonal strength in Auto and Industrial businesses
  • !Continued price pressure at security & chip card ICs
  • !Continued focus on productivity improvements
  • ! Planned phase-out of production in Munich and start-up costs for new site in Malaysia to negatively impact EBIT through end of CY 2006

Moors & Cabot San Francisco August 11, 2005 Slide -12

Maintaining Profitability in Automotive & Power Business With Complete Coverage of Customers' Needs

Defining automotive intelligence

Applications:

!Powertrain

  • !Safety management
  • ! Body & convenience
  • ! Infotainment

Products:

!Sensors

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

Converting and controlling power Converting and controlling power

Key trends for power management

  • ! DC/DC
      • Cost /footprint per ampere
      • Solution business in PC motherboard and notebook

  • !AC/DC

    • Miniaturization of power supply
    • Higher switching frequencies

Sources: iSuppli, WSTS, InStat, Infineon

Moors & Cabot San Francisco August 11, 2005 Slide -13-

Keeping Leadership in Security and Chip Card ICs Despite Difficult Market Environment

Addressing broad application base with approx. 40% market share Addressing broad application base with approx. 40% market share

Ongoing productivity measures Ongoing productivity measures

  • Volume roll-out of 130nm process # Volume roll-out of 130nm process

  • Focus on new 32bit emerging applications #Focus on new 32bit emerging applications

  • Accelerated shift to MicroSlim technology #Accelerated shift to MicroSlim technology

  • Shift to Flip-Chip-on-Substrate (FCOS) packing #Shift to Flip-Chip-on-Substrate (FCOS) packing

Moors & Cabot San Francisco August 11, 2005 Slide -14

Communication:

Driving Convergence of Technologies and Applications

Automotive, Industrial & Multimarket

Broadband Access ñ Access and CPE RF Connectivity ñ RF Engine, RF Power, Tuner System, RF Custom, SR Wireless Mobile Phones ñ Entry Phone, Feature Phone, CP Siemens, Software

MPMP

Memory Products

COM: Revenue And EBIT Development

Communication BG's outlook for Q4 FY05:

  • ! Expecting revenues to remain stable or increase slightly sequentially
  • ! Anticipating EBIT to remain stable or improve slightly compared to 3rd quarter EBIT (excl. impairment charges)
  • ! Awaiting wireline business to be profitable by end of CY 2005

Moors & Cabot San Francisco August 11, 2005 Slide -16-

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

Emerging Markets Remain Unit-growth Drivers; Shift Towards Feature-driven Replacement Sales

Moors & Cabot San Francisco August 11, 2005 Slide -17-

Sources: Infineon (2005), Gartner (Jan 2005), Strategy Analytics (Dec 2004)

Wireless RF ñ Market Leader With >25% Market Share in Transceivers And 3rd Generation Now in CMOS

Moors & Cabot San Francisco August 11, 2005 Slide -18-

t

IFX Introduced Worldwide First Single-chip RF/baseband to Target Low Cost Markets

Long-term experience Long-term experience

RF CMOS transceiver RF CMOS transceiver

  • ! In volume production !In volume production
  • !130nm CMOS !130nm CMOS
  • ! Single-chip digital RF solution !Single-chip digital RF solution

Baseband Baseband

  • ! In volume production ! In volume production
  • ! 130nm CMOS ! 130nm CMOS

  • ! Integrates: !Integrates:

    • Digital baseband - Digital baseband
    • Mixed signal - Mixed signal
    • SRAM - SRAM

Monolithic integration

!30% lower BOM !30% smaller footprint

! Less complexity

Single-chip CMOS RF and baseband

Supports: Supports:

  • ! Up to GPRS Cl. 12 ! Up to GPRS Cl. 12
  • ! 1.3 MPix camera !1.3 MPix camera
  • ! Dual color display ! Dual color display
  • ! MP3 playback ! MP3 playback

Moors & Cabot San Francisco August 11, 2005 Slide -19-

Infineonís ULC Solution Reduces BOM Significantly

Moors & Cabot San Francisco August 11, 2005 Slide -20-

Infineon Features Advanced Platform Applications

Applications Applications

Multimedia phone MP-E/EU Camera

Feature phone (Low-end) MP1-G Apoxi Feature phone (Low-end) MP1-G Apoxi

! ! ! ! !

!

Product features Product features

  • !Video conferencing and video streaming Video conferencing and video streaming
  • ! Video recording with preview ! Video recording with preview
  • ! High-speed browsing ! High-speed browsing
  • ! 3D sound and 3D gaming !3D sound and 3D gaming
  • ! Advanced J2ME features ! Advanced J2ME features
  • ! UMTS reception diversity ! UMTS reception diversity

  • ! 2 MPix still picture camera ! 2 MPix still picture camera
  • !Video playback and recording !Video playback and recording
  • !Video streaming w/o companion !Video streaming w/o companion
  • ! MPEG4, H.263, MP3, AAC++ ! MPEG4, H.263, MP3, AAC++
  • !Voice recording and recognition !Voice recording and recognition
  • !VGA camera module VGA camera module
  • !Polyphone ringer: up to 40 voices Polyphone ringer: up to 40 voices
  • !Video: MPEG-4/H.263 play/record Video: MPEG-4/H.263 play/record
  • !Codecs: FR / HR / EFR / NB-AMR Codecs: FR / HR / EFR / NB-AMR
  • ! Connectivity: IrDA, USB 2.0, Bluetooth Connectivity: IrDA, USB 2.0, Bluetooth

Moors & Cabot San Francisco August 11, 2005 Slide -21-

Wireline ñ Strong Positioning in Access Growth Markets

Moors & Cabot San Francisco August 11, 2005 Slide -22-

Sources: Dell'Oro 2005 (ADSL), IFX 2005; Gartner 07/2005 (T/E);

VDSL2 Success Factors ñ Infineon Has it All

Early availability \$

  • !VINAX: 1st fully standard compliant VDSL2 chip solution
  • !IFX: Sole company meeting all regional requirements

\$Experience

  • ! More than 4 million VDSL1 lines powered by Infineon chip solutions
  • !Fully ADSL backwards compatible

\$Meeting all regional requirements

!Extensive line-card and CPE solutions portfolio including: DSL, Communications Processors, VoIP, WLAN, switch/PHYsÖ

Moors & Cabot San Francisco August 11, 2005 Slide -23-

Memory Products: Leader in 300mm DRAM Manufacturing

Automotive, Industrial & Multimarket

Communication

MPMP

Moors & Cabot San Francisco August 11, 2005 Slide -24-

Computing ñ DT, NB, WS, Server & more Graphics ñ For graphics and games Consumer & Mobile ñ Low power for lifestyle Aeneon ñ For emerging white box markets Flash ñ NAND-compatible NVM

MP: Revenue And EBIT Development

Memory Product BGës outlook for Q4 FY05:

  • ! Expecting bit-production to increase by ~15% based on additional shipments from Inotera, foundry partners and ramp of Richmond 300
  • ! Bit-shipments are estimated to increase above market average
  • ! Continue focusing on expansion of portfolio with higher margin products and increasing share of products with 512M density & DDR2 interfaces

(1) Excluding antitrust-related charges.

Moors & Cabot San Francisco August 11, 2005 Slide -25-

300mm Fabs Up And Running ñ Now Converting to 90nm

Moors & Cabot San Francisco August 11, 2005 Slide -26-

Shifting Memory Portfolio To Higher Margin Products

Moors & Cabot San Francisco August 11, 2005 Slide -27-

Agenda

Quarterly Update & Financials Quarterly Update & Financials

Automotive, Industrial & Multimarket Automotive, Industrial & Multimarket

Communication Communication

Memory Products Memory Products

Outlook Outlook

Moors & Cabot San Francisco August 11, 2005 Slide -28-

!

Infineon Groupës F4Q Outlook As Of July 26th

  • !Revenues and EBIT: expect firm improvement sequentially
  • !R&D and SG&A: should remain roughly at a similar level
  • !One-off charges: substantially lower, range of EUR20-40mn
  • !Pay back of EUR450mn credit facility from available funds
    • Tax expense rate: around 30%
  • !Capex: expected range for FY05 is EUR 1.3-1.4 bn
  • !Depreciation: expected FY05 range approx. EUR 1.3-1.4 bn
  • !FY06: Capex & Depreciation ranges not expected to increase
  • !AIM: estimated stable revenues and EBIT
  • !COM: expected revenues to remain flat or slightly increase; EBIT with slight improvement at best (ex impairment charges)

Moors & Cabot San Francisco August 11, 2005 Slide -29-

!

Memory Market And MP Outlook For F4Q As Of July 26th

  • !Demand estimated to pick up based on further increase in memory content per system and current overall low price level for DRAMs
  • !Only moderate growth of supply expected due to shift of capacities from DRAM to Flash by some competitors
    • Infineon anticipates a rather balanced demand and supply environment in the market, facilitating price stability during the quarter

!MP: Infineon is confident that both a further market growth and a stable price environment, combined with further operational improvements, will help to reduce substantially our losses in the current quarter

Moors & Cabot San Francisco August 11, 2005 Slide -30-

Moors & Cabot

San Francisco

August 11, 2005

Slide -31-

Consumer And Communication Devices Drive Growth in 2005, Consumer And Auto Safety Spplications in 2006

Electronic equipment revenues Electronic equipment revenues market forecast by segment market forecast by segment

Moors & Cabot San Francisco August 11, 2005 Slide -32-

Source: Gartner Dataquest, May 2005

DRAM Bit Market Development And Forecasts

Moors & Cabot San Francisco August 11, 2005 Slide -33Source: WSTS for historical data, Forecast: Gartner, iSuppli, DeDios Q2 2005

* iSuppli: demand 42% , supply 53%

!

!

Slide -34-

Market Trends ñ Revenue Forecast Worldwide

Total VDSL and VDSL2 IC shipments and revenue forecast

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