Infineon Technologies AG — Investor Presentation 2017

Nov 14, 2017

Fourth Quarter FY 2017 Quarterly Update Infineon Technologies AG Investor Relations

Table of Contents

Please regard the slides "Disclaimer", "Notes" and "Glossary" at the end of the presentation.

Infineon at a glance

Our strategy is targeted at value creation through sustainable organic growth

Focus		Technology leadership	System understanding
Automotive	Power mgmt	RF and sensors	Security
System leader in automotive	#1; system and technology leader	Broad RF and sensor technology portfolio	#1 in security solutions

Average-cycle financial targets

~8% p.a. revenue growth

~17% Segment Result Margin ~13%

investment-to-sales (thereof capex*: ~11%)

Continued value creation for shareholders

Organic RoCE ~ 2x WACC

• › paying out at least a constant dividend even in periods of slower growth
• › continuous EPS increase

* Infineon reports under IFRS and has therefore to capitalize development assets which represents currently ~2% of sales.

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

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

Infineon's organic revenue development clearly outperformed total semi market

* Based on Infineon's portfolio (excl. Other Operating Segments and Corporate & Eliminations) per end of FY17.

** Source: WSTS (World Semiconductor Trade Statistics) in EUR, October 2017

Organic RoCE as the key value metric typically amounts to ~2x WACC

Our commitment to investors: Continued value creation through growth

Total cash return to shareholders

• › Increase of dividend from €0.22 to €0.25*
• › Payment of €283m*
• * Proposal to the AGM to be held on 22 February 2018

	Outlook Q1 FY18*	Outlook FY18* (compared to FY17)
Revenue	Decrease of 2% +/- 2%-points	Increase of 9% +/- 2%-points
Segment Result Margin	At the mid-point of the revenue guidance: ~15%	At the mid-point of the revenue guidance: ~17%
Investments in FY18		€1.1bn to €1.2bn
D&A in FY18		€880m** About

• * Based on an assumed average exchange rate of \$1.15 for €1.00.
• ** Including D&A on tangible and intangible assets from purchase price allocation of International Rectifier.

Table of Contents

Q4 FY17 Group and Division Performance

Last major step in completing IRF integration: fab in Newport (Wales) sold to Neptune 6 Ltd.

Background: IR Newport Ltd.

• › 01/2015: Acquired as part of International Rectifier
• › 04/2015: Announcement to either close or sell the fab by the end of CY 2017
• › 09/2017: Signing of definitive agreement and handover to new owner

Key facts

• › Fab handed over on 29 September 2017
• › Infineon and Neptune 6 have entered into a 2-years wafer supply agreement

Strategic rationale

• › Economies of scale not competitive within Infineon's manufacturing landscape
• › Supply agreement ensures a mutually smooth transition phase for seller and buyer

Financial impact

• › Short-term: negligible impact; avoidance of negative one-time effects from closure
• › Mid-/long-term: increasingly positive effects from improved cost position

Major design-win achieved for µC AURIX™ 2G of several hundred million Euros over lifetime

AURIX™ 2G key features	Platforms addressed by the design-win
performance: supported by hard › coded algorithms power consumption › › scalability: wide range of eFlash configurations functional safety: ASIL-D compliant › › security features: integrated HSM	powertrain › ICE transmission › xEV motor control › chassis › traditional safety › braking › ABS › airbag high-growth ADAS ›
	› camera › radar sensor fusion ›

Material-specific advantages of gallium nitride (GaN)-based HEMTs vs silicon-based MOSFETs

Infineon launched first GaN-based product: game-changing 600 V CoolGaN™ power switch

600 V CoolGaN™ selected by Eltek for Flatpack2 SHE (super high-efficient) 3 kW AC-DC power conversion module for data center and telecom applications

telecom central office

CoolGaN™ target applications to come

• › consumer: power supply for super-thin flat panel TVs
• › mobile devices: ultra-compact adapters and chargers

Table of Contents

Reference to web presentations

10 Oct 2017: ATV Division Call by Peter Schiefer, Division President Automotive www.infineon.com/atv-call

• 29 Jun 2017: PMM Division Call by Andreas Urschitz Division President Power Management & Multimarket www.infineon.com/pmm-call
• 11 May 2017: Deutsche Bank AutoTech Conference by Dr. Jürgen Rebel, CVP Investor Relations www.infineon.com/db-autotech
• 16 Mar 2017: Bernstein xEV and Energy Storage Conference by Hans Adlkofer, VP Automotive System Group www.infineon.com/bernstein

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

CAGR 2016 – 2021** by Semiconductor Industry Segment

• * Market size in calendar year 2016
• ** Source: Based on or includes content supplied by IHS Markit, Technology Group, "Worldwide Semiconductor Shipment Forecast", September 2017
• *** Source: ABI Research, "Secure Smart Card & Embedded Security IC Technologies", August 2017; 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*
• › #4 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 2017; ** Infineon estimate.

Infineon is ideally positioned to benefit from ADAS/AD, xEV, connected cars and to gain further market share in Automotive

Infineon's position in the automotive semiconductor universe

– 24 / 77 GHz radar – REAL3™ ToF sensor m.s. trend

2017-11-14 Copyright © Infineon Technologies AG 2017. All rights reserved. 21

– ADAS/AD – Powertrain

* Divestiture of NXP's Standard Product business ("Nexperia") closed on 16 Feb 2017; hence included in the 2016 ranking.

m.s. trend

Source: Strategy Analytics, "Automotive Semiconductor Vendor Market Shares", April 2017

– xEV penetration

– EPS

m.s. trend

– Lighting

Megatrends shaping the automotive market; significantly increasing semi content per car

ADAS/AD semi growth driven by radar and camera sensor modules over the next 5 years

L2 vehicles in 2020:~8m L3 vehicles in 2025: ~3m L4/L5 vehicles in 2030: ~4m

Source: Strategy Analytics; Infineon.

Bill of material contains all type of semiconductors (e.g. radar modules include µC).

Infineon's product portfolio fosters revenue growth in ADAS/AD for the next decade

CO² emission targets are the key triggering points for increase in semiconductors

Source: The International Council for Clean Transportation, 2017

(1) Higher efficiency of the 'classic' ICE:

• › EPS (electric power steering)
• › start-stop
• › dual-clutch
• › alternator

(2) Energy efficiency of body applications:

• › power distribution
• › electric motors for pumps and fans

(3) Electrification of the drivetrain:

• › main inverter
• › auxiliary inverter
• › onboard charger
• › battery management

The incremental demand of power semiconductors is a significant opportunity

Source: Strategy Analytics, "Automotive Semiconductor Content", May 2017; Infineon * "power" includes linear and ASIC; "others" include opto, small signal discrete, memory With the transition from ICE to xEV the power semi content in powertrain increases by ~15x

Source: Strategy Analytics, "Automotive Semiconductor Content", May 2017; Infineon

Power semiconductor demand for different levels of electrification

Infineon has all elements and unparalleled package expertise for all xEV applications

ADAS/AD, clean cars, and adoption of premium features drive growth

~8% p.a. through-cycle growth

1 in the market* for MOSFETs, discrete IGBTs, IGBT-based modules and total market

Broad 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 * Source: IHS Markit, Technology Group, "Power Semiconductor Annual Market Share Report", August 2017 Key areas of innovation

Leader in next-generation power semiconductor materials SiC and GaN

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

Efficiency, productivity and legislation are main market drivers for power applications

IPC is perfectly positioned to outperform traditional markets and leverage emerging ones

Traditional markets with <5% p.a.

• › Portfolio for automation application to compensate low demand in drives
• › Strong position in stable wind market
• › Broad traction portfolio enables compensation of low demand in highspeed trains through urban transportation +
• › Weakest level of growth in oil & gas (process automation) passed as capex slowly recovers

Emerging markets with >5% p.a.

• › Comprehensive offering and expertise enable growth in SiC above average
• › Ongoing inverterization of home appliances enables strong growth
• › Optimal position to strongly benefit from high growth rates in PV, transmission & distribution and commercial, construction and agricultural vehicles
• › Emerging applications like energy storage, EV charging and robotics offer additional growth potential

Industrial Power Control to grow ~8% p.a.

PMM's growth is built on many applications from different sectors

Product-to-System approach opens growth opportunities beyond MOSFETs

Essential parts of any electronic system (e.g. in an SMPS); can be realized with separate components or as an integrated power stage as system-on-chip

* Infineon estimates

Strengthening IC business allows for faster growth in power than market average

PMM is a leader in core technologies for ambient sensing, thus driving innovation

• › #2 in the market (31.1%) for silicon microphones
• › World's best signal-tonoise ratio

• › Integration of additional sensing functions

• › 60 GHz radar sensors e.g. for gesture sensing (example: Google Soli)

• › 24 GHz radar sensors e.g. for automotive, robotics and smart home

MEMS Radar Time of Flight

• › REAL3™ image sensor for AR/VR applications in smartphones and automotive driver monitoring
• › High-resolution 3D image sensor available with 19k, 38k and 100k pixels
• › Measuring brightness and distance for every single pixel

Sensor fusion

› Combination of microphone and radar with audio processor from XMOS enables far field voice capture by audio beamforming combined with radar target presence detection.

Growth in RF & Sensing is driven by broader product portfolio and emerging applications

* Infineon estimates

• › SiMic: Integrating additional ambient sensors in upcoming generations (e.g. temperature and pressure)
• › RF discretes: Adding a focus on antenna-centric solutions to existing LNA and switch business

Tailored growth strategies help maintain leadership position in both major segments

› Scale and technology leader in power MOSFETs › Broadest portfolio: 25V – 900V › Addressing all applications › #1 holding ~1/3 of the market Current position

Growth levers

• › Capitalize on scale and technology leadership in discretes
• › Double TAM by pushing into power management ICs

› Core technologies enable broad portfolio of products for even more applications.

Growth of ~8% p.a.

Growth of ~8% p.a.

Infineon is the leader in security solutions for the connected world

1 in microcontroller-based smart card ICs*

1 in embedded digital security**

Complete portfolio of hardware, software, services and turnkey 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, Technology Group, "Smart Card Semiconductors Report", July 2017

** Source: IHS Markit, Technology Group, "Embedded Digital Security Report ", January 2016 (based on units, USD-ranking not provided)

Tailored embedded security µC portfolio for applications in the hyper-connected IoT world

› Infineon AURIX™ microcontroller with HSM for onboard communication › Security microcontrollers (e.g. eSIMs, TPMs) enable various functions like eCall, software over-the-air, vehicle-to-infrastructure, and on-board multimedia

› Security microcontroller for Infineon MIPAQ™ Pro IPM enabling authentication › Security chips are integrated in solutions for Industry 4.0 applications, e.g. robots

› OPTIGA™ TPM and OPTIGA™ Trust for devices like smart home routers and gateways (e.g. Google OnHub), smart meters, smart lighting etc.

Infineon is the leading supplier of eSIM for emergency call (eCall) system for cars

eSIM

• › Emergency call function (eCall) will be mandatory for all new registered cars in the EU as of 31 March 2018
• › Infineon is world's leading supplier of embedded SIMs (eSIMs) used for eCall function
• › In addition to eCall eSIMs enable various functions like
• › software over-the-air (SOTA)
• › vehicle-to-infrastructure
• › on-board multimedia
• › Infineon's related eSIM revenue almost doubled in FY17; for FY18, again strong growth expected

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

~8% p.a. through-cycle growth

Table of Contents

OPEX level right on target

* Target range for SG&A: "Low teens percentage of sales".

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

Increase in trade payables due to high investments

Trade payables DPO*

* For definition please see page "Notes".

Investments between €1.1bn and €1.2bn due to strong underlying growth in demand

* For definition please see page "Notes".

Gross and Net Cash increased due to strong Free Cash Flow

• › Free Cash Flow from continuing operations was €249m.
• › Debt decreased by €25m due to change in FX-rates used for valuing US\$-based debt.

Infineon has a balanced maturity profile and a solid investment grade rating (BBB) from S&P

Note: Additional debt with maturities between 2017 and 2023 totaling €73m of which €38m repayments related to Campeon.

Disclaimer

Disclaimer:

This presentation contains forward-looking statements about the business, financial condition and earnings performance of the Infineon Group.

These statements are based on assumptions and projections resting upon currently available information and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development may therefore differ materially from what has been expected.

Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update forward-looking statements.

Specific disclaimer for IHS Markit reports, data and information referenced in this document:

The IHS Markit reports, data and information referenced herein (the "IHS Markit Materials") are the copyrighted property of IHS Markit Ltd. and its subsidiaries ("IHS Markit") and represent data, research, opinions or viewpoints published by IHS Markit, and are not representations of fact. The IHS Markit Materials speak as of the original publication date thereof and not as of the date of this document. The information and opinions expressed in the IHS Markit Materials are subject to change without notice and neither IHS Markit nor, as a consequence, Infineon have a duty or responsibility to update the IHS Markit Materials or this presentation. Moreover, while the IHS Markit Materials reproduced herein are from sources considered reliable, the accuracy and completeness thereof are not warranted, nor are the opinions and analyses which are based upon it. IHS Markit and the IHS Markit globe design are trademarks of IHS Markit. Other trademarks appearing in the IHS Markit Materials are the property of IHS Markit or their respective owners.

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

Infineon's most recent achievements

• › Jan 2017: Infineon is listed in the Sustainability Yearbook for the 7th consecutive year and, according to RobecoSAM, among the top 15% most sustainable companies worldwide
• › Sep 2017: Infineon is listed in the Dow Jones Sustainability Europe Index (as the only semiconductor company) for the 8th consecutive year and in the World Index for the 3rd time

› Sep 2016: 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 2017: Most recent review

› Dec 2016: In the Carbon Disclosure Project (CDP) climate change report, Infineon achieved a placing among the best companies in the Information Technology sector

› Mar 2017: Infineon has been reconfirmed as a constituent of the Ethibel Sustainability Index (ESI) Excellence Europe

Financial calendar

Date	Location	Event
15 – 16 Nov 2017	Barcelona	Morgan Stanley TMT Conference
28 – 29 Nov 2017	Scottsdale, AZ	Credit Suisse TMT Conference
09 – 10 Jan 2018	New York	Commerzbank German Investment Seminar
31 Jan 2018*		Q1 FY18 Results
22 Feb 2018	Munich	Annual General Meeting
26 – 28 Feb 2018	Barcelona	Mobile World Congress
03 May 2018*		Q2 FY18 Results
12 June 2018	London	Capital Markets Day "IFX Day 2018"
01 Aug 2018*		Q3 FY18 Results
12 Nov 2018*		Q4 FY18 and FY 2018 Results

* preliminary

Notes

Investments =

'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.

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

Glossary

AD	automated driving
ADAS	advanced driver assistance system
AEB	automatic emergency braking
BoM	bill of material
DPM	digital power management
eCall	emergency call
EPS	electric power steering
eSIM	embedded subscriber identity module
EV	electric vehicle
HEV	mild and full hybrid electric vehicle
HSM	hardware security module
ICE	internal combustion engine
IPM	intelligent power module

MHA	major home appliances
micro hybrid	vehicles using start-stop systems and limited recuperation
mild hybrid	vehicles using start-stop systems, recuperation, DC DC conversion, e-motor
OBC	onboard charger
PHEV	plug-in hybrid electric vehicle
SiC	silicon carbide
SiGe	silicon germanium
SOTA	software over-the-air
TPM	trusted platform module
UPS	uninterruptible power supply
V2X	vehicle-to-everything communication
VSD	variable speed drive
xEV	all degrees of vehicle electrification (EV, HEV, PHEV)

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

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

Tillmann Geneuss

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