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Infineon Technologies AG

Investor Presentation • Nov 16, 2007

222_ip_2007-11-16_a77afb29-7e60-45a6-be63-d60de7129cc9.pdf

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Fourth Quarter and Full Year FY 2007

Quarterly Update

Infineon Technologies AG Investor Relations

Disclaimer

This presentation was prepared as of November 14, 2007 and is current only as of that date.

This presentation includes forward-looking statements about the future of Infineon's business and the industry in which it operates. These include statements relating to future developments in the world semiconductor market, including the market for memory products, Infineon's future growth, the benefits of research and development alliances and activities, Infineon's planned levels of future investment in the expansion and modernization of its production capacity, the introduction of new technology at its facilities, the continuing transitioning of its production processes to smaller structure sizes, cost savings related to such transitioning and other initiatives, Infineon's successful development of technology based on industry standards, Infineon's ability to offer commercially viable products based on its technology, Infineon's ability to achieve its cost savings and growth targets, and the impact of the carve-out of Qimonda, the group's memory products business, its initial public offering, and any further sales of Qimonda shares or other corporate financing measures in that regard.

These forward-looking statements are subject to a number of uncertainties, including trends in demand and prices for semiconductors generally and for Infineon's products in particular, the success of Infineon's development efforts, both alone and with partners, the success of Infineon's efforts to introduce new production processes, the actions of competitors, the availability of funds for planned expansion efforts, and the outcome of antitrust investigations and litigation matters, as well as the other factors mentioned in this presentation and those described in the "Risk Factors" section of the annual report of Infineon on Form 20-F filed with the U.S. Securities and Exchange Commission on November 30, 2006 or contained in the company's quarterly reports. As a result, Infineon's actual results could differ materially from those contained in these forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements.

Infineon does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

Fourth Quarter FY 2007 Results Revenues of EUR 1.84bn; EBIT of EUR -241m

Infineon excluding Qimonda First Quarter FY 2008 Outlook

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Developing Infineon

Infineon Development in Two Phases

9

9

9

9

Qimonda Carve-Out (1-May-06) & IPO (9-Aug-06)

Divested or closed unsustainable businesses

Fiber Optics; Optical Networks; Polymer Optical Fiber; SciWorx; Venture Portfolio, Base station Controllers etc.

Turn-Around of sustainable, but unprofitable businesses

Discretes, Chip Card, Access, Wireless

All major businesses with positive or at least break-even EBIT at the end of CY 2007

Phase 2Developing Infineon Further – 5 Levers

Growth: Energy Efficiency, Communications, Security

1

Earnings: break-even EBIT FY 07, ~10% EBIT margin FY 09, well on our way towards that in FY 08

Capital Intensity: from 11%-13% CapEx/Sales today to ~10% in FY 09, even lower possible thereafter

5

Exploiting Strategic Opportunities: Qimonda divestiture, selective acquisitions to strengthen the platform

Growth: Energy Efficiency, Communications, Security

Powerful Demand Drivers

Growing the Business Increasing the Quarterly Run-rate

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Global Energy Trends: Substantial Needs and Highest Level of Awareness

Dwindling resources drive growth in energy savings and renewables.

  • The cost of energy generation and the price of electricity continue to rise.
  • Electricity consumption is growing 2.6% per year
  • Renewables are on the rise in energy generation.
  • Saving energy is increasingly crucial in industrial, commercial and household applications.

Pollution and climate change drive demand for "clean" solutions.

  • Pollution, environmental protection and climate change are global concerns.
  • Reducing the waste of energy helps cut back on energy generation and its harmful emissions. This is quickly becoming a standard requirement for all areas of public and private life (e.g. Kyoto Protocol).

Our Products Help Reduce Losses Along the Entire Energy Distribution Chain

Source: ZVEI

  1. Nov 2007

Mobile Phones and xDSL are Growth Markets

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DSL CPE

Cable CPE

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2006 2007 2008 2009 2010

Voice Terminal Adapters IP Set Top Boxes

Broadband Router

171 182

Broadband CO

Source: ABI Research, Q2 2007; Infonetics, Q2 2007

baseband

RF CMOS transceiver

management

Protocol stack

Application software

Power

Bluetooth

Infineon Serves the Top-5 Mobile Phone OEMs

Next Generation Network Drives Growth in DSL CO and CPE

Chip Card ICs: Spreading Out to New Segments

Leadership in Markets Served

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2 Texas Instruments 17.3%

4 Conexant 10.3%

Source: Gartner 2007: (w/o cable, analog modem)

14.1%

3 Broadcom

#2 Infineon 12.4%

3 Freescale 10.9%

4 STMicroelectronics 8.6%

Source: Gartner July 2007

Earnings: towards ~10% EBIT Margin

We Target ~10% EBIT Margin in FY 2009

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Infineon defines EBIT as Earnings (loss) Before Interest and Taxes.

  • *) FY2006: Includes net charges of € 199 million relating primarily to various impairments and restructuring measures as well as expenses incurred in connection with the insolvency of BenQ Mobile Germany and the IPO of Qimonda.
  • **) FY2007: Includes net charges of € 128 million relating primarily to various impairments and restructuring measures as well as expenses incurred in connection with the secondary offering of Qimonda shares.

Detailed Outlook for AIM and COM

  • FY 2007: 6% growth driven mainly by power business with contributions also from auto and security; improved EBIT margin vs. FY 2006
  • FY 2008: Expect sales and EBIT excl. oneoffs to be down slightly y-o-y due to adverse currency impact, deconsolidation of business etc.
  • FY 2009: Growth in sales and EBIT
  • FY 2007: Turnover declined y-o-y, but solid design-win momentum; acquired mobile phone activities from LSI and xDSL CPE activities from TI; EBIT recovery ongoing
  • FY 2008: Wireless to post break-even EBIT before charges in FQ1. Full year: expect strong sales growth and slightly positive EBIT before charges despite currency headwind and low to mid-double digit EUR million amortization of intangibles
  • FY 2009: Continued growth in sales and EBIT

Detailed Outlook for OOS and C&E

Other Operating Segments

  • FY 2007: Share of loading of ALTIS fab 100% since 1-Jan-07; agreement with Qimonda over Dresden 8" fab extended to 30-Sep-2009; sales declined; EBIT around break-even
  • Beyond FY 2007: Sales to decline gradually as Qimonda-revenues move lower; EBIT around break-even
  • FY 2009: 30-Sep end of Qimonda agreement over Dresden 8" fab
  • FY 2007: Sales are negative as intra-group wafer deliveries to Qimonda are being eliminated; amount driven by sales to Qimonda in OOS. EBIT before charges EUR -28m. Ongoing expenses in C&E: e.g. stock options, elimination of intra-group profits on wafers sold to Qimonda.
  • Beyond FY 2007: Expect to contain EBIT loss before charges at ~ EUR 40-60m pa.
  • FY 2009: 30-Sep end of Qimonda agreement over Dresden 200mm fab

Capital Intensity: Going Down

Lowering CapEx/Sales ratio to 10%-11%

Capital Structure: Prudent and Efficient

Gross Cash, Gross Debt and Net Debt

Exploiting Strategic Opportunities

Lowering our Stake in Qimonda; Exploiting Strategic Opportunities

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Financial Calendar

  • Feb 07, 2008* Earnings Release Q1 FY 08

Feb 12, 2008 Mobile World Congress, Barcelona

Feb 14, 2008* Annual General Meeting

Apr 23, 2008* Earnings Release Q2 FY 08

Jun 2/3, 2008 IFX Day: Annual Analyst and Investor Day in Munich

Jul 25, 2008* Earnings Release Q3 FY 08

Dec 03, 2008* Earnings Release Q4 and FY 2008

Infineon is now a Major Platform Supplier to Samsung

Complete Mobile Phone Platform Solutions for Major Growth Markets

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