Infineon Technologies AG — Investor Presentation 2011

Jun 8, 2011

IFX Day 2011 Campeon – 07 June 2011

Peter Bauer Chief Executive Officer

Infineon Today: Transformation Completed

A New Era: Accelerating Growth

Sustainably Higher Margins

Infineon Outlook: Strong and Well-Equipped for the Future

Summary

Infineon after the Crisis: Premium Growth and Record Margins

Leadership Positions in All Target Markets

Infineon Today: Transformation Completed

A New Era: Accelerating Growth

Sustainably Higher Margins

Infineon Outlook: Strong and Well-Equipped for the Future

Summary

ATV, IMM, CCS: Impressive Growth Track Record Over Last Decade

ToMM market growth of 4% from 2000 to 2011 according to iSuppli*. We grew faster than the market.

A decade of market share gains in ATV and IMM.

* Source: iSuppli, March 2011. ToMM = Total Semiconductor Market – MPU – Memory ICs.

07 June 2011

New Era: Multiple Factors Driving Demand for Power Semiconductors

Semi-enabled CO² -Abatement Measures Yield Particularly High Economic Benefits

CO² abatement for semiconductor-enabled abatement measures

Source: McKinsey Report "Pathways to a Low-Carbon Economy", update 2.1, 2010. Measures may not exclusively depend on use of semiconductors.

LDV: Light Duty Vehicles MDV: Medium Duty Vehicles HDV: Heavy Duty Vehicles

CFL: Compact Fluores. Lamp HVAC: Heating, Ventilation, Aircon.

Chinese Middle Class Drives Enormous Growth in Semiconductor Consumption

ICEs Still Bread-and-Butter Business; New Opportunities by HEV/EV Vehicle production Semi content HEV / EV ~5% p.a. 3-4% p.a. > 25% p.a. 8-9% p.a. ATV: ~10% p.a. 2%-pt p.a. Classical car market Electromobility small units but high growth Courtesy: Bosch Courtesy: Tesla TAM: TAM: TAM: TAM:

Sources: CSM, Strategy Analytics (May 2011)

07 June 2011

Power Supplies, VSD are Main Businesses; Renewables and DPM are Growth Drivers

IMM: > 10% p.a.

Sources: EPIA 2011, Gartner 2010, IMS Research 2010, UNIFE 2010, Yole 2010, Infineon 2011.

07 June 2011

Strong Growth in New Businesses Allows Us to Grow Above Market

CCS: ~5-7% p.a.

Sources: IMS Research 2011, Infineon 2011.

07 June 2011

10% Growth or More p.a. Expected for Infineon

Infineon: ≥ 10% p.a.

07 June 2011

Infineon Today: Transformation Completed

A New Era: Accelerating Growth

Sustainably Higher Margins

Infineon Outlook: Strong and Well-Equipped for the Future

Summary

Segment Result Margins Up Significantly Versus Pre-Crisis Level

07 June 2011

4 Reasons for Sustainable Profitability ─ #1: High Barriers to Entry

Long product life cycles

System knowhow and understanding

Strong quality and reliability req's

• For many markets we address, deliveries of semis need to be ensured for very long periods of time:
• For car industry: 7 to 24 years;
• For train industry: about 15 years.
• Both deep and wide know-how and understanding of our customers' applications needed for making best in class solutions:
• e.g. HEV/EV needs both automotive and industrial expertise.
• Products need to reliably perform well in the field over longer periods of time:
• Airbag reliability required as long as the car is in use;
• Wind turbines should function 30 years.

#2: Semiconductors – Core Enablers of Innovation and Higher Functionality

Energy Efficiency Mobility Security

Power supplies

More advanced power semiconductors allow smaller, denser, lighter and more efficient power supplies.

VSD

More precise and efficient RPM-control versus mechanical transmission.

Recuperation

Implemented in trains for years; brought to cars by the advent of HEV/EVs.

Power steering

EPS is replacing hydraulic-mechanical power steering allowing more flexibility in car design and less power consumption.

Identification

Chip-based passports and national ID cards allow much higher level of security compared with paperonly ID cards.

Brand protection Chip-based authentication of accessories, e.g. batteries.

#3: Semis Represent a Negligible Part of the Value of the End Product

Example 1: mid-range car

Example 2: high-speed train

1.7% of product value

#4: Infineon's Core Competencies ─ Power Semiconductors and eControl

Design and manufacturing of Core competence power power semis tightly coupled

Manufacturing

Design

• Thin-wafer technology
• Super-junction MOSFETs
• Silicon-Carbide (SiC)
• IGBT module packaging
• BLADE packages

Core competence eControl

• Automotive real-time 32-bit microcontroller (TriCore™)
• Automotive 32-bit multi-core design (AURIX™)
• Low-power security controller
• Safety Guard

Sustainable Profitability: We Will Keep High Margins

Infineon: ~20% under normal industry conditions ~15% through cycle

Infineon Today: Transformation Completed

A New Era: Accelerating Growth

Sustainably Higher Margins

Infineon Outlook: Strong and Well-Equipped for the Future

Summary

Target Operating Model

	FY 2010	FY 2011e	Longer term
Revenue	EUR 3.295bn	20% growth yoy	 10% growth p.a.
Gross margin	37.5%	Low 40ies %	Low 40ies %
R&D-to-sales	12.1%	~12%	Low-to-mid teens %
SG&A-to-sales	11.7%	~12%	Low-teens %
Total Segment Result margin	14.4%	~20%	~20%

Strong Balance Sheet: Stability and Flexibility

Well-positioned to take advantage of any opportunity

Infineon is well-positioned to take advantage of opportunities:

• equipment or fabs for organic growth;
• well targeted acquisitions.

Sustainably Returning Cash to the Capital Market

H1 FY11: Infineon returned a grand total of EUR 216m in cash

• Dividend of 10 Euro-cents per share paid in Q2 FY11:
• total of EUR 109m.
• Repurchase of 2014 Convertible:
• cash outlays of EUR 107m in H1 FY11 for EUR 36m nominal.

Infineon plans to return up to EUR 500m in cash until March 2013

• Target to pay sustained dividends (FY10: ~EUR 109m).
• Further capital returns of up to EUR 300m through:
• repurchase of 2014 Convertible or
• share buy-back or
• derivative-based share buy-back.

Infineon – Strategic Partner to Bluechip Customers

• Strategic relationships with customers.
• Capacity Insurance Program (CIP) becoming more popular.

* Based on revenue from trailing 12 months (April 2010 to March 2011).

Revenue split by channel*

direct distribution

30%

Staying on the Leading Edge: Pioneering 300mm for Power Discretes

Leading in thin-wafer technology

• Thin-wafer technology important for:
• Power MOSFETs,
• IGBTs.
• Two years ahead of competition in thinwafer technology.

Leading in production costs

• 300mm pilot line installed in Villach, Austria.
• Purchase of 300mm equipment and facility from former Qimonda.
• Volume production in FY13.

Infineon Today: Transformation Completed

A New Era: Accelerating Growth

Sustainably Higher Margins

Infineon Outlook: Strong and Well-Equipped for the Future

Summary

Summary

We have entered into a new era of power semi demand leading to > 10% growth p.a. ahead.

We aim to earn margins of ~20% under normal conditions and ~15% through the cycle.

• We have the balance sheet to seize upon any opportunity.
• Strong capital returns to financial markets.

We continue to extend our technological lead: Mastering 300mm for power semiconductors.

Top-20 Direct Customers Top-10 Distribution Customers

Top-20 direct customers* Top-10 distributors* * In alphabetical order. All numbers refer to April 2010 through March 2011. ABB Autoliv Bosch Continental Delphi Delco Delta Emerson Gemalto Arrow Avnet Beijing Jingchuan Eurotone Macnica Tecstar Rutronik Ryoyo Tomen Toyotsu WPG Holdings Giesecke & Devrient Hella Hyundai Lear Microsoft Oberthur Samsung Semikron Siemens TRW U.S. Government Printing Office Valeo

Revenue split: direct customers vs distribution

Disclaimer

This presentation was prepared as of June 7, 2011 and is current only as of that date.

This presentation includes forward-looking statements and assumptions about the future of Infineon's business and the industry in which we operate. These include statements and assumptions relating to general economic conditions, future developments in the world semiconductor market, our ability to manage our costs and to achieve our growth targets, the resolution of Qimonda's insolvency proceedings and the liabilities we may face as a result of Qimonda's insolvency the benefits of research and development alliances and activities, our planned levels of future investment, the introduction of new technology at our facilities, our continuing ability to offer commercially viable products, and our expected or projected future results.

These forward-looking statements are subject to a number of uncertainties, such as broader economic developments, including the sustainability of recent improvements in the market environment; trends in demand and prices for semiconductors generally and for our products in particular, as well as for the end-products, such as automobiles and consumer electronics, that incorporate our products; the success of our development efforts, both alone and with partners; the success of our efforts to introduce new production processes at our facilities; the actions of competitors; the continued availability of adequate funds; any mergers, acquisitions or dispositions we may undertake; the outcome of antitrust investigations and litigation matters; and the resolution of Qimonda's insolvency proceedings; as well as the other factors mentioned in this presentation and those disclosed at other occasions.

As a result, Infineon's actual results could differ materially from those contained in or suggested by 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 in light of developments which differ from those anticipated.