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Infineon Technologies AG

Investor Presentation • Feb 1, 2006

222_ip_2006-02-01_ede40f9e-4144-4836-b652-440d3db7141f.pdf

Investor Presentation

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Q1 FY06 Presentation

Presentation for Q1 FY06 Quarter2006n I f n i e o n

March

Slide 1 ### March Quarter 2006

Peter J. Fischl Executive Vice President and CFO

Kin Wah Loh Executive Vice President, Board Member Memory Products

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.

Contents

Financials and Outlook Financials and Outlook

AIM Review AIM Review

COM Review COM Review

MP Review MP Review

Results Overview

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Slide 6

Logic Business Profitable in Q1 FY 2006

(1) Prior to inclusion of results of other operating segments and corporate & reconciliation

Maintaining a Net Cash Position

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Presentation for Q1 FY06 March Quarter 2006 Slide 7

(1) Excluding purchase / sale of marketable securities, increase mainly due to full consolidation of Altis.

Infineon Business Group Q2 FY06 Outlook as of Jan 24th

  • AIMAIM! Estimating AIM revenues to increase slightly. EBIT margin to contract largely due to annual price reduction in auto, growing R&D.
    • !Awaiting slight sales growth in auto, seasonal decline in industrial ICs. Chipcard ICs returning to some revenue growth with time frame for turnaround plan confirmed.
    • ! FY 06 EBIT margin flat to up vs FY 05 despite expenses for Perlach fab closure and Kulim fab ramp
  • COM COM
  • ! Expecting COM revenues to decline due to seasonality.
  • ! Expecting deterioration in EBIT given revenue decline and already lean cost base.
  • ! Wireline business continues to operate profitably with strong broadband momentum.
    • !Turnaround in wireless platforms expected in 4 to 6 quarters.

MPMP - ! Expect bit production to increase by more than 20% q-o-q given additional shipments from Richmond 300 ramp and foundry partners.
- ! Bit shipments to follow suit. Weeks of inventory likely to decline q-o-q. FLC to benefit accordingly.
- ! On track with 90nm ramp-up (revenue cross over achieved December 2005) as well as with 70nm development.

Business Group Automotive, Industrial & Multimarket Q1 FY06 Update

! Revenue growth due to seasonality in industrial business (power supplies and motherboards) and strength in automotive sales across the board, in particular tire pressure monitoring systems.

! Strongly improved EBIT despite Kulim / Perlach costs due to higher sales, improved profitability, in particular in automotive.

Slide 11

AIM Fields of Activities Revenue in Q1 FY 2006: EUR 652 million

(1) CCC = Communications, Consumer, Computing

The Automotive Business Segmentation

efficiency

efficiency

(e.g. Euro-Norm)

(e.g. Euro-Norm)

towards

towards

components

(e.g. TPMS, ABS,

(e.g. TPMS, ABS,

departure

departure

components

32-bit

32-bit

power; trend

and convenience

Cruise Control, etc.)

Cruise Control, etc.)

features

features

and convenience

of electro-mechanical

of electro-mechanical

technologies

of safety

of safety

technologies

Market Driver

Market Driver

power; trend

Slide 13

Safety Is The Key Innovative Application Segment, Powertrain Is Influenced By Increasing Emission/Fuel Consumption Requirements

Automotive SC Demand by Application Automotive SC Demand by Application

Key Trends Key Trends

  • !WW silicon content per vehicle to grow from \$200 (ë02) to \$300 (ë09)
  • ! Increasing sensor content is key to intelligent vehicles - US TPMS ruling proceeds as published
  • ! Airbag, ABS, ESP will achieve broad penetration rates, first driver assistance applications visible
  • ! LED and relais replacement are key design topics in body segment
  • ! Integration of consumer application into the vehicle pushes standardized interfaces (Bluetooth, USB, Telematics)

Semiconductors are key enabling technology for increased automotive performance Semiconductors are key enabling technology for increased automotive performance

The Industry Business Segmentation

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Presentation for Q1 FY06 March Quarter 2006 Slide16

2003 Rank

1

2

4

3

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7

9

8

2004 Rank

1

2

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4

5

6

7

8

=8 Infineon

IR

Fairchild

STM

Toshiba

Vishay

Renesas

Mitsubishi

Fuji Electric

Company Name

Infineon Strengthened No. 1 Position in Power Semis; Improved to No. 4 in Industrial Applications

Change

0,3%

-0,2%

0,1%

0,5%

-0,7%

0,1%

0,3%

0,2%

0,0%

2004

8,4%

7,8%

7,7%

7,2%

6,7%

5,9%

5,4%

4,7%

4,7%

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Power Semiconductor Market

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IFX Industrial Products IFX Industrial Products

  • ! Power semiconductors
    • ï AC/DC, DC/DC
    • ï High power semiconductors
    • ï IGBT
    • ï power modules
    • ï thyristors
    • ï diodes

! Microcontrollers

  • ï 8-bit controller
  • ï 16-bit controller
  • ï 32-bit controller (TriCore)

Presentation for Q1 FY06March Quarter 2006 Slide 17

10 10 ON 3,9% 4,1% 0,2%

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

Chip Card: Measures Taken so Far

In short In short

confirming breakeven in December quarter 2006 turnaround expected in March quarter 2006 confirming breakeven in December quarter 2006 turnaround expected in March quarter 2006 ""

Business Group Communication Solutions Q1 FY06 Update

  • ! COM revenue increased slightly given seasonally strong RF shipments and broadband access demand.
  • !Significant improvement of EBIT as a result of higher revenues, a favourable product mix and further optimization of R&D expenses.

Presentation for Q1 FY06 March Quarter 2006 Slide 20

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

Growth Driver: xDSL

DSL market development DSL market development

Triple play services and network replacement drive DSL demand

For example:

  • !Deutsche Telekom intends to provide Germany's 50 largest cities with up to 50Mbit/s broadband lines by 2007
  • !By mid-2006, already 2.9 million households can use the new technology
  • Worldwide IP DSLAM port shipments [mn]50

Infineon's position Infineon's position

VDSL2 leadership

  • ! We offer the first fully standard compliant VDSL2 chip solution
  • ! Several major OEM's decided to start VDSL2 designs based on our chipset
  • ! First VDSL2 revenues already achieved in Q4 CY05

Expanding ADSL2/2+ customer base

! Design-wins at several new major OEMís during CY05

Presentation for Q1 FY06 March Quarter 2006 Slide 21

Source: Infonetics, Q2 2005

Growth Driver: 3G and EDGE CMOS RF Transceiver

Infineon Infineoníís position in 3G and EDGE RF transceivers s position in 3G and EDGE RF transceivers

No. 1 RF transceiver supplier* and leader in RF CMOS:

  • !1st to introduce RF CMOS EDGE single-chip transceiver
  • !1st to introduce RF CMOS 3G single-chip transceiver
  • ! 1st to introduce RF CMOS WEDGE transceiver

Translating RF CMOS leadership into design-wins:

!Several WEDGE and EDGE mobile phone platforms ramping up in 2H CY06 will be based on IFX CMOS transceivers

* Source: Gartner, July 2005

Growth Driver: Connectivity for Mobile Phones

Growth driver Growth driver

Increasing demand for connectivity in mobile phones:

Infineon's position Infineon's position

Bluetooth

  • !Customers: BenQ, Panasonic
  • ! Bluetooth 2.0 + EDR solution sampling since early 2005
  • ! Design win at new OEM

A-GPS

  • ! World's first RF/BB single-chip solution sampling since early 2005
  • ! Design-wins at 2 mobile phone platforms

WLAN

  • !802.11 a/g single-chip for mobile phones available in 2006
  • ! VoIP functionality integrated
  • ! UMA support

UWB

!Single-chip for mobile phones in development

Presentation for Q1 FY06 March Quarter 2006 Slide 23

Source: Strategy Analytics, March 2005

Competitive Mobile Phone Platform Offering Leads to Several Design-wins

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Presentation for Q1 FY06 March Quarter 2006 Slide 24

Source: Mobile phone sales: Gartner, September 2005. Baseband sales: Infineon July 2005

Text in bold and italic: Added during Q4 CY05

Business Group Memory Products Q1 FY06 Update

  • ! Conservative approach to shipments in light of strong price decline; built 1.0 to 1.5 weeks of inventory.
  • ! ASP down especially on weak DDR2 pricing. FLC up q-o-q on Richmond ramp, inventory valuation, OpEx, delays in specialties.
  • ! 90nm ramp on schedule with revenue crossover Dec. 2005. Richmond 300mm well under way.

IFX MP, the Leading Trench Innovator: Number 4 in Sales, Number 2 in Bit Shipments

Presentation for Q1 FY06 March Quarter 2006 Slide 27

Source: iSuppli, November 2005 * prelim. Market share Q3 2005

DRAM Trench Technology Roadmap IFX MP and Nanya Jointly Develop 70nm and 60nm

Bit Growth Driven by Emerging Applications

Expected CAGR 2004 ñ 2009 of Bit-Demand: 50% on average* Expected CAGR 2004 ñ 2009 of Bit-Demand: 50% on average*

* Source: iSuppli, Q3 2005

! Strongest Bit-growth in mobile communication and consumer applications

Low-power is important factor in addressing new markets

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Trends and Developments in the MP Business Group

Presentation for Q1 FY06

March Quarter 2006

Slide 32

Never stop thinking.

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