Infineon Technologies AG — Investor Presentation 2016

Sep 21, 2016

Baader Investment Conference Munich, 21 September 2016

Holger Schmidt Manager Investor Relations

Table of Contents

Infineon at a glance

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Technology leadership and system understanding fosters growth and profitability

1, system and technology leader system leader in automotive Leader in security solutions Competitive advantages Revenue Growth: ~8% Segment Result Margin: ~15% Investment-to-Sales: ~13% (Capex*: ~11%; capital. R&D*: ~2%) Average-cycle financial targets * Infineon reports under IRFS broadest technology portfolio;#1 in SiGe; become #1 in base stations by 2020 Auto Power RF Security

Infineon's Revenue Development (excl. IRF) Outperformed Total Semi Market

Revenue Infineon* [lhs]

• * Based on Infineon's portfolio (excl. Other Operating Segments and Corporate & Eliminations) per end of 2015 fiscal year.
• ** Based on market development assumptions FY99's revenue figures for some smaller product categories have been derived from the FY00's revenue figures.
• *** Scale indexed to the Infineon FY99 revenue.

Source: Infineon; WSTS (World Semiconductor Trade Statistics), November 2015

Our promise to investors: Continued value creation through growth (I)

Earnings-per-share growth

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Our promise to investors: Continued value creation through growth (II)

Total cash return to shareholders

• › Policy of sustainable dividend payout.
• › Increase of dividend from €0.18 to €0.20.
• › Payout of €225m on 19 Feb 2016.

Infineon increased relative market share in power and outperformed chip card market

Source: Strategy Analytics, April 2016

Source: IHS Markit, July 2016 Source: IHS Markit, July 2016

* including SHHIC (in 2015, SHHIC was acquired by CEC Huada.)

Tight customer relationships are based on system know-how and app understanding

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Table of Contents

Key facts of the deal

› Transaction perimeter:

´s SiC wafer substrate business (excluding LED)

• › Revenues of US\$173m in LTM* ending 27 March 2016
• › Purchase price: US\$ 850m
• › Transaction type: cash and debt free
• › Financing: US\$ 720m bank loans

US\$ 130m cash-on-hand

› Expected closing date: ~ end of calendar year 2016

* LTM = last twelve months

Deal rationale at a glance

GM 55%* CAGR 20%

• › Become #1 in RF power amplifier market by ~2020 with most complete technology portfolio by capitalizing on technology disruption in cellular infrastructure
• › #1 in silicon carbide for power, strengthen automotive and industrial and accelerate market introduction with cutting-edge products as cost-performance leader and create thereby a higher addressable market for Infineon
• › Deal is margin and adjusted EPS accretive from day 1 with expected 55% incremental gross margin* and 20% incremental revenue growth of the acquired businesses
• › For detailed information on the deal rational please refer to the web call and the corresponding investor presentation at http://www.infineon.com/poweringthefuture

* According to US GAAP, excluding effects from purchase price accounting

Table of Contents

Infineon benefits from industrial, auto and security, the by far fastest growing segments

CAGR 2015 – 2020 by Semiconductor Industry Segment

Source: IHS Markit, Worldwide Semiconductor Shipment Forecast, June 2016

* In calendar year 2015

** source: ABI Research, "Secure Smart Card & Embedded Security IC Technologies", January 2016; microcontroller ICs

Infineon is system leader in automotive; making cars clean, safe and smart

2 with market share gains in power and sensors:

• › #1 in power semiconductors*
• › #2 in sensors*
• › #3 in microcontrollers* (#1 in powertrain**)

Most balanced portfolio with sensors, microcontrollers and power for system approach

Leader in electric drivetrain and CO² reduction - making cars clean

Leader in ADAS - making autonomous driving safe and reliable

Leading product portfolio of sensors and security ICs for individual convenience and connectivity - making cars smart

Focus on sustainable high-bill-of-material areas: powertrain, safety/ADAS/autonomous cars, body

* Source: Strategy Analytics, April 2016 ** own estimate.

Infineon is ideally positioned to benefit from megatrends and to gain further market share in Automotive

for more information see presentation at: www.infineon.com/autoslides

Infineon is system leader with most balanced portfolio in the market

Source: Strategy Analytics, "Automotive Semiconductor Vendor Market Shares", April 2016

Four megatrends are shaping the automotive market, significantly increasing the semi content per vehicle

ADAS/Autonomous driving

• › From ADAS to semi-automated and finally autonomous driving
• › Every world region is striving for "0-accident"

xEV/eMobility

› Mandated CO² reductions make electrification of powertrain inevitable

› Advanced connectivity is driven by making the car part of the Internet

• › Increased connectivity and software content increase risk exposure to hackers
• › Internal/external connectivity must be secured › The car will be fully connected (V2I, V2V, in-vehicle)
• Connectivity Advanced security

ADAS system chipset coverage by Infineon

Infineon market leader in radar; 20m sensor chips sold; ~50% CAGR16-21 based on design wins*

• * Refers to 77 GHz radar sensor chip market

ADAS semi growth driven by radar and camera sensor modules

xEV growth driven by power semis

*Source: IHS Markit, "Alternative Propulsion Forecast", January 2016, expected number of vehicles

Infineon is well positioned globally to benefit disproportionally from xEV boom

Infineon is ideally positioned to benefit most from megatrends ADAS, xEV, and security

ADAS, CO² reduction and adoption of premium features drive Infineon growth

~8% p.a. through-cycle growth

Infineon is #1 and technology leader in power semiconductors

1 in the market*

Broadest product and technology portfolio

Addressing broadest range of applications

300 mm thin-wafer manufacturing for power semiconductors

System leader with digitalization of the control loop and functional integration

Leader in next-generation power semiconductor materials GaN and SiC

Infineon is ideally positioned to gain further market share and earn superior margins in power semiconductors

* Source: IHS Markit, "Power Semiconductor Discretes & Modules Report", July 2016

As system leader in power, Infineon has broadest application and technology reach

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Infineon further strengthened its market positions

• * The market for IGBT components (\$3,944m) includes discrete IGBTs (\$853m), Standard IGBT modules (\$1,692m), CIB/PIM (\$299m), and IPMs (\$1,101m).
• ** relative market share
• Source: IHS Markit, "Power Semiconductor Discretes & Modules Report", July 2016

Infineon continuously improved relative market share in power

Relative market share* of 3 in the total power semiconductor market

* The relative market share is defined as the proportion of the market share held by the market leader (in all years presented for Infineon) compared to the market share of the second largest competitor in the relevant year.

Source: IHS Markit, several reports from 2004 through 2016

Strong #1 position in power allows driving of key areas of differentiation and innovation

Unique 300 mm thin wafer power semiconductor manufacturing

Compound semiconductors GaN and SiC

Digitalization of the power control loop

Functional integration of IGBT modules

Efficiency and digitalization are main market drivers for power applications

DPM = Digital Power Management

MHA = Major Home Appliances

VSD = Variable Speed Drive

Sensors drive multimarket segment in PMM: 60 GHz radar transceiver for gesture sensing

* See YouTube:https://www.youtube.com/watch?v=8LO59eN9om4

Infineon REAL3™ image sensor is first to meet Google Tango specification

Lenovo PHAB2 Pro first smartphone based on Google Tango

• › depth perception of the surrounding in real-time
• › motion tracking which responds to physical movements
• › area learning capability which enables the device to recall the data recorded from previously visited locations

REAL3™ will drive multiple new applications

• › automotive: driver monitoring
• › consumer: indoor navigation, education
• › gaming: Pokémon Go is a remarkable AR technology demonstrator; leading game developers will incorporate AR technology in new games
• › AR seems to have scored over VR by ease of accessibility: AR games can be used on mobile phones, whereas VR needs rather expensive headsets and tremendous computing power

Infineon is the leader in security solutions for the connected world

2 in microcontroller-based smart card ICs*

1 in embedded digital security**

Complete portfolio of hardware, software, services and turn-key solutions

Leading in growth segments payment, government ID, connected car security, IoT, and Information and Communications Technology security

Infineon is ideally positioned to benefit from the growth trends in the security controller market

* Source: IHS Markit, July 2016

** Source: IHS Markit, December 2015

CCS is enabling security for the connected world

Source: IHS Markit, Dec 2015, July 2016; * based on units; USD-ranking not provided

Recent design-wins underline Infineon's #1 position* in embedded digital security

Recent design-wins for OPTIGA™ family products

• › Servers and gateways
• › Notebooks, e.g. Lenovo ThinkPad
• › Industry PCs
• › Tablets, e.g. Microsoft Surface Pro 4
• › Smart home hub, e.g. Google OnHub

Courtesy: Lenovo

Courtesy: Google

* Infineon is market leader in embedded secure microcontrollers with 31% market share (ranking based on units). Source: IHS Markit, "Embedded Digital Security Report", January 2016

Infineon's long-term growth is based on sustainable growth drivers

~8% p.a. through-cycle growth

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Strong growth in ATV due to ADAS and electro-mobility

* The business with XMC industrial microcontrollers developed by ATV and CCS was transferred to PMM and IPC with effect from 1 October 2015. The previous year's figures have been adjusted accordingly.

Guidance for Q4 FY16 and total FY16

	Outlook Q4 FY16* (compared to Q3 FY16)	Outlook FY16 (compared to FY15)
Revenue	Increase of 3% +/- 2%-points	Based on the outlook for Q4 FY16, revenue growth and Segment Result Margin
Segment Result Margin	At the mid-point of the revenue guidance: 17%	for FY16 are expected to finish within the range forecast in the preceding quarters**.
Investments in FY16		About €850m
D&A in FY16		€850m*** About

* Based on an assumed average exchange rate of \$1.10 for €1.00.

** On 02 February 2016 based on an exchange rate of \$1.10 for €1.00: "Revenue to increase by 13% +/- 2%-points; SR margin to come in at 16% at the mid-point of the revenue guidance". On 03 May 2016 based on an exchange rate of \$1.15 for €1.00: "Revenue to increase by 12% +/- 2%-points; SR margin to come in between 15% and 16% at the mid-point of the revenue guidance".

*** Including D&A on tangible and intangible assets from purchase price allocation of International Rectifier.

Solid Investment Grade rating assigned by S&P in connection with revised capital structure targets

Revised capital structure targets announced by Infineon in February 2016:
a.) Gross Cash	b.) Gross Debt
› "€1bn plus 10% to 20% of revenue"	› "less than 2.0x EBITDA"
	Infineon's revised capital structure targets are reflected in the Corporate Credit Rating of BBB (outlook: "stable") assigned by S&P in February 2016.

› Rating not changed after announcement of planned Wolfspeed acquisition

Infineon has a well balanced maturity profile

Note: Other debt with maturities between 2017 and 2023 totaling €149m.

SG&A still includes noticeable acquisitionrelated costs that are incrementaly declining

• * Target range for SG&A: "Low teens percentage of sales".
• ** Target range for R&D: "Low to mid teens percentage of sales".

Improved working capital due to increased payables

* For definition please see page 48.

Investments on target of ~13% of sales; D&A stable at ~13% of sales

^* For definition please see page 48.

Net cash increased due to €277m Free Cash Flow

› Free Cash Flow from continuing operations was €277m, significantly up from €45m in Q2. This is basically a timing effect in terms of certain trade payables

RoCE expected to increase in FY16 vs FY15

* For definition please see page 48.

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('Trade payables' / ['Cost of goods sold' + 'Purchase of property, plant and equipment']) * 90

Investments =

Notes

'Purchase of property, plant and equipment'

• 'Purchase of intangible assets and other assets' incl. capitalization of R&D expenses

Capital Employed =

'Total assets'

• 'Cash and cash equivalents'
• 'Financial investments'
• 'Assets classified as held for sale'
• ('Total Current liabilities'
• 'Short-term debt and current maturities of long-term debt'
• 'Liabilities classified as held for sale')

RoCE =

NOPAT / Capital Employed =

('Income from continuing operations'

• 'financial income'
• 'financial expense')

/ Capital Employed

DOI (days of inventory; quarter-to-date) =

('Net Inventories' / 'Cost of goods sold') * 90

DPO (days payables outstanding; quarter-to-date) =

Working Capital =

• ('Total current assets'
• 'Cash and cash equivalents'
• 'Financial investment'
• 'Assets classified as held for sale')
• ('Total current liabilities'
• 'Short term debt and current maturities of long-term debt'
• 'Liabilities classified as held for sale')

DSO (days sales outstanding; quarter-to-date) = ('Trade receivables' / 'revenue') * 90

Please note:

All positions in ' ' refer to the respective accounting position and therefore should be applied with the positive or negative sign used in the relevant accounting table.

Infineon is a long-standing member of Europe's leading sustainability indices

Infineon's most recent achievements

• › Jan 2016: Infineon is listed in the Sustainability Yearbook for the sixth consecutive year and, according to RobecoSAM, among the top 15% most sustainable companies worldwide.
• › Sep 2016: Infineon is listed in the Dow Jones Sustainability Europe Index for the 7th consecutive year and in the World Index for the 2nd time – both achievements this year as the only European semiconductor company.

› Sep 2015: Infineon is listed in the STOXX® Global ESG Leaders Indices, which serves as an indicator of the quality

of Infineon's performance in the governance, social and environmental areas (ESG).

• › Infineon was added to the FTSE4Good Index Series in 2001 and has been confirmed as a member since then.
• › Jul 2016: Most recent review.

› Dec 2015: In the Carbon Disclosure Project (CDP)

climate change report, Infineon achieved a placing among the best companies in the Information Technology sector.

Financial calendar

Date	Location	Event
11 Oct 2016		ATV Conference Call by Peter Schiefer, Division President
16 – 17 Nov 2016	Barcelona	Morgan Stanley TMT Conference
23 Nov 2016*		Q4 FY16 and FY 2016 Results
29 – 30 Nov 2016	Scottsdale, AZ	Credit Suisse TMT Conference
02 Feb 2017*		Q1 FY17 Results
16 Feb 2017	Munich	Annual General Meeting
04 May 2017*		Q2 FY17 Results
01 Aug 2017*		Q3 FY17 Results
14 Nov 2017*		Q4 FY17 and FY 2017 Results

* preliminary

Institutional Investor Relations contacts

Dr. Jürgen Rebel

Corporate Vice President +49 89 234-21626

Investor Relations juergen.rebel@infineon.com

Joachim Binder

Senior Director +49 89 234-25649 Investor Relations joachim.binder@infineon.com

Holger Schmidt

Manager +49 89 234-22332 Investor Relations holger.schmidt@infineon.com

Tillmann Geneuss

Manager +49 89 234-83346 Investor Relations tillmann.geneuss@infineon.com