Infineon Technologies AG

Investor Presentation • May 7, 2019

Second Quarter FY 2019 Quarterly Update

Infineon Technologies AG Investor Relations

Agenda

1	Infineon at a glance
2	Quarterly highlights
3	Automotive
4	Industrial Power Control
5	Power Management & Multimarket
6	Digital Security Solutions
7	Selected financial figures

Infineon at a glance: strong financials, leading market positions

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

Our strategy is targeted at value creation through sustainable organic growth

Focus		Technology leadership			System understanding
› Focus on fastest growing segments of semi market › Tackle global megatrends		› Leverage core competencies in different end markets to maximize ROI		› Create value for customers through system under standing
Auto		Power	RF & Sensors		Security
System leader in automotive	#1; system and technology leader		Broad RF and sensor technology portfolio		#1 in Security Solutions

	Target operating model: average-cycle targets
Revenue growth	Segment Result margin	Investment-to-sales
9%	17%+	15%
	Continued value creation for shareholders
›	›	›
Organic RoCE ≙	Paying out at least a constant dividend	continuous EPS
~2x WACC	even in periods of slower growth	increase

FY18 revenue of €7,599m by target application

Tight customer relationships, based on system knowhow and application understanding

Infineon holds a leading position in its target markets

Automotive semiconductors

total market in 2018: \$37.7bn

Source: Strategy Analytics, "2018 Automotive Semiconductor Vendor Share", April 2019

Power discretes and modules

total market in 2017: \$18.5bn

Source: Based on or includes content supplied by IHS Markit, Technology Group, "Power Semiconductor Market Share Database 2017", September 2018

Security ICs

total market in 2017: \$3.3bn

Source: ABI Research, "Smart card & secure ICs", October 2018

	Outlook Q3 FY19* (compared to Q2 FY19)	Outlook FY19* (compared to FY18)
Revenue	Increase of 1% +/- 2%-points	€8.0bn +/- 2% (prev.: Increase of ~9%, +/- 2%-pts)
Segment Result Margin	At the mid-point of the revenue guidance: 15%	at the mid-point of the guidance: ~16% (prev.: ~17.5%)
	Investments in FY19	~€1.5bn
	D&A in FY19	~€1.0bn**

• * 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 about €90m

Agenda

1	Infineon at a glance
2	Quarterly highlights
3	Automotive
4	Industrial Power Control
5	Power Management & Multimarket
6	Digital Security Solutions
7	Selected financial figures

Groundbreaking chip embedding technology boosts system performance of 48 V mild hybrid systems

Technological advantages of chip embedding

• › Performance improvement of 48 V systems; up to 60% compared to a traditionally designed system
• › Reduction of system complexity and system cost
• › Increase of power density, energy efficiency and reliability

Chip embedding technology:

Project Features

• › Power MOSFETs no longer soldered on the PCB but integrated within
• › Low-voltage power MOSFET OptiMOS™5 provided by Infineon
• › Embedded power PCB technology called Smart p² Pack® provided by Schweizer Electronic
• › Continental Powertrain first player to adopt the technology
• › Used for 48 V starter generator
• › Start of production: 2021

Design-win with optimized IGBT solution for fastgrowing Chinese induction heating market

• › Chinese home appliance manufacturers see high field failure rates in induction heating applications mainly caused by unstable grid which can damage the IGBT
• › fast-growing market of induction heating systems requires ever-higher performance and higher reliability to protect brand reputation against any failure
• › system-in-package solution integrates logic functionality, driver IC, and reverseconducting IGBT
• › logic functionality includes diagnostic features and programmable protection functions against over-voltage, over-current, and overtemperature

Being at the heart of wind turbines – PrimePACK™ with IGBT5 and .XT technology

• › high reliability and robustness, esp. for off-shore wind turbines
• › long lifetime
• › power cycling capabilities increased by factor of 10
• › high power density: using IGBT5 and .XT power modules, with the same number of cabinets about 30% more electrical power increase feasible
• › excellent system efficiency

Automotive

Infineon's position in the automotive semiconductor universe

Source: Strategy Analytics, "Automotive Semiconductor Vendor Market Shares", April 2019

Electro-mobility

xEV growth driven by emission regulation; EU about to force CO² reduction to -37.5% by 2030 vs 2021

* Japan has already met its 2020 statutory target as of 2013 Source: ICCT (www.theicct.org), April 2018

The incremental demand of power semi-conductors is a significant opportunity

2018 average xEV semiconductor content by degree of electrification

* "power" includes linear and ASIC; "others" include opto, small signal discrete, memory

Automated Driving

For Automated Driving more compute power but also a higher security and safety is needed

Increased sensor requirements drive the content in the next 5 years and beyond

		More sensors required for any next level of automation
	NCAP 5 Star, AD L2	AD L3	AD L4/L5
	Automatic emergency brake/ forward collision warning
Application*	Parking assist		Valet parking
	Lane keep assist	Highway assist	Highway and urban chauffeur
Radar # of modules**	Corner MRR/LRR ≥ 3	MRR/LRR	Imaging ≥ 10 ≥ 6
	New: Corner starting 2020	Corner	Surround
Camera # of modules**	≥ 1		≥ 4 ≥ 8
Lidar # of modules**	0		1 ≥ 1
Others	› Ultrasonic	› Ultrasonic › Interior camera	› Ultrasonic › Interior camera › V2X

* Source: VDA (German Association of the Automotive Industry); Society of Automotive Engineers

** Market assumption

Average semi content per car by level of automation at the given years

Infineon's Power Strategy

2019-05-07 Copyright © Infineon Technologies AG 2019. All rights reserved. 23

Infineon's portfolio covers the entire range of power and frequency

IPC's and PMM's discrete power portfolio* is basically separated by voltage classes

		silicon-based power semiconductors		compound semiconductors
			6,500 V
y r o			4,500 V	SiC MOSFET
rrit e C t	IGBT modules		3,300 V	(CoolSiC™) roadmap
P I			1,700 V
		discrete IGBTs	1,200 V	SiC MOSFET today
			900 V
	high-voltage MOSFETs (CoolMOS™)		600 V	GaN MOSFET today
y r o			400 V	GaN MOSFET
rrit e			150 V	(CoolGaN™)
t M M P		mid-voltage MOSFETs (OptiMOS™)		roadmap
			80 V
	low-voltage MOSFETs (OptiMOS™)		20 V

* excluding drivers and control ICs

Three strategic levers to outgrow the power semi market: "core – adjacent – new"

Broaden scope to new applications

› System understanding and strong R&D force allow us to enter emerging power applications

Four key success factors: Infineon well positioned to defend its leadership in power semis also in SiC

Industrial Power Control

Clear leader in discrete IGBTs and IGBT modules; IPMs improved from #4 to #3

* Including standard (non-integrated) IGBT modules and power integrated modules (PIMs) / converter inverter brake (CIB) modules.

** On 29 May 2018, Microchip closed the acquisition of Microsemi. The 2017 revenue depicted here was contributed entirely by Microsemi.

Source: Based on or includes content supplied by IHS Markit, Technology Group, "Power Semiconductor Market Share Database 2017", September 2018.

Due to the extensive power module portfolio Infineon can address the whole range of drives applications

*Low-power drives include compact drives, standard drives, premium drives and brushed DC drives.

Infineon is a key player in the PV market providing solutions to the leading inverter manufacturers

* Infineon is serving the top-10 but not necessarily as a sole supplier.

1) based on or includes content supplied by IHS Markit, Technology Group, "PV Installations Tracker – Q1 2019"; March 2019; including off-grid 2) by shipped capacity in MW: based on or includes content supplied by IHS Markit, Technology Group, "PV Inverter Market Tracker – Q4 2018"; December 2018

Infineon is the leading power semiconductor supplier for the wind turbine industry

* Infineon is serving the top-10 but not necessarily as a sole supplier.

1) Wood Mackenzie Power & Renewables, "Market Outlook Update", March 2019

2) by shipped capacity in MW: Wood Mackenzie, Power & Renewables, "Historic wind turbine OEM market share", March 2019

What comes next? Mid- to long-term structural growth opportunities

collaborative robots eAviation eDelivery vehicles

fuel cell

eMarine

Power Management & Multimarket

PMM's growth is built on many applications from different sectors in power and non-power

PMM – Power

2019-05-07 Copyright © Infineon Technologies AG 2019. All rights reserved. 36

Infineon is the clear leader in MOSFETs; growth potential in power ICs

Discrete Power MOSFET market

total market in 2017: \$6.65bn

Power IC market

total market in 2017: \$23.6bn

* On 29 May 2018, Microchip closed the acquisition of Microsemi. The 2017 revenue depicted here was contributed entirely by Microsemi. Source: Based on or includes content supplied by IHS Markit, Technology Group, "Power Semiconductor Market Share Database 2017", September 2018. Discrete Power MOSFET market incl. automotive MOSFETs. Power IC market incl. automotive power ICs.

Technology leadership in MOSFETs and digital power: highest efficiency and power density

Power management solutions reduce TCO

More efficient semiconductors

• › lower power consumption
• › lower opex

Higher power-density

• › more compact system designs
• › lower capex

Four interrelated trends drive power semiconductor BoM in battery-powered applications

In total battery-powered applications are a significant growth driver for PMM's power business

Transition from 3G/4G to 5G drives demand in power semis for antennas and power supplies

• › driver #1: massive growth of data and computing power
• › driver #2: higher number of base stations due to denser network
• › driver #3: ~4x higher power semiconductor content per radio board: from ~\$25 for MIMO antenna to ~\$100 for massive MIMO antenna array
• › driver #4: fog computing data center as a completely new market

What comes next? Mid- to long-term structural growth opportunities

on-board charger

wireless charging

collaborative robots

smart speaker

PMM – RF and Sensing

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RF and Sensing devices enable new services and will shape the way we live and work

Various use cases are enabled by a small set of versatile core technologies

Augmented Reality Voice-controlled devices Gesture control

Commercial and consumer multicopters

Industrial robotics

We focus on MEMS sensors and target to become the leader in 3D sensing and radar

Key Use Cases – Examples
Voice authentication	Advanced fitness tracking	Smog alarm	Gesture sensing	3D AR gaming
			Face recognition & biometric identification
Human Machine Interface

Digital Security Solutions

Continuous stream of new topics aging and exiting

Infineon first to offer automotive-qualified TPM for the connected car; Volkswagen among first customers

• › OPTIGA™ TPM 2.0 (Trusted Platform Module) is especially for use in
• › central gateway
• › telematics unit (e.g. secure software updates over-the-air)
• › infotainment system
• › Volkswagen decided to deploy OPTIGA™ TPM 2.0 as security solution for the connected car

• › Several design-ins with a number of car manufacturers already achieved

• › The automotive-qualified OPTIGA™ TPM 2.0 is designed for the long product life cycles of cars as its firmware can be updated remotely with respect to state-ofthe-art security needs

• › OPTIGA™ TPM 2.0 and the AURIX™ family of microcontrollers are part of the Infineon portfolio of application-specific security solutions in automotive

Agenda

1	Infineon at a glance
2	Target operating model (TOM)
3	Quarterly highlights
4	Automotive
5	Industrial Power Control
6	Power Management & Multimarket
7	Digital Security Solutions
8	Selected financial figures

Revenue growth + 8% y-y and an uptick of 1% q-q

Revenue development

[EUR m]

• › Revenue up 1% q-q
• › driven by ATV and DSS
• › broadly flat at IPC
• › weaker demand at PMM
• › Segment Result down 8% q-q
• › change in product mix and underutilization charges burden gross margin and Segment Result
• › cost containment measures like headcount freeze implemented

Q2 FY19 Division Performance

• › Q2 FY19: Revenue growth driven by higher demand for electric drivetrain products and driver assistance systems
• › Q2 FY19: Quarterly revenue decline attributable to lower demand for industrial drives, solar and household appliances
• Segment Result Margin in % › Q2 FY19: Weaker demand across most product areas

Q3 Q4 Q1

FY19

Q2

580

23.6

+9%

^{651 617 591}

27.8 25.1

› Q2 FY19: Quarterly growth due to payment cards and embedded SIMs for vehicles

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

RoCE and adjusted RoCE

Development of earnings-per-share (EPS) from continuing operations [EUR cent]

Total cash return to shareholders

• › Policy of sustainable dividend payout
• › Increase of dividend from €0.25 to €0.27
• › Payment of €305m on 26 Feb 2019

Opex within target range

Selling, General & Administration* Research & Development** [EUR m]

209 210 ^{227 218 212} 11.4% 10.8% 11.1% 11.1% 10.7% Q2 FY18 Q3 Q4 Q1 FY19 Q2 Q2 FY18 Q3 Q4 Q1 FY19 Q2

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

** Target range for R&D: "Low to mid teens percentage of sales". In FY18, reported R&D expenses amounted to €836m, net of €86m of grants received and net of €143m of capitalized development costs.

Inventories main driver for Working Capital increase

[days]

Working capital* Inventories

Trade receivables Trade payables

[EUR m]

* For definition please see page "Notes".

Investments and D&A trending up due to growth

* For definition please see page "Notes".

Healthy gross cash and net cash position

Liquidity development

[EUR m]

• › Operating cash flow from continuing operations was €215m in Q2 FY 2019
• › Free Cash Flow from continuing operations was minus €137m

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

Maturity profile

[EUR m; US\$ m; nominal values]

Note: Additional debt with maturities between 2019 and 2023 totaling €44m of which €18m repayments related to Campeon.

Glossary (1 of 2)

AC	alternating current
AC-DC	alternating current - direct current
AD	automated driving
ADAS	advanced driver assistance system
AEB	automatic emergency braking
AI	artificial intelligence
AR	augmented reality
BEV	battery electric vehicle
BGA	ball grid array
BoM	bill of material
CPU	central processing unit
DC	direct current
DC-DC	direct current - direct current
DPM	digital power management
eCall	emergency call
ECU	electronic control unit

ECU	electronic control unit
EMU	electric multiple unit
EPS	electric power steering
eSIM	embedded subscriber identity module
eSIM	embedded SIM
EV	electric vehicle
FPGA	field programmable gate array
GPU	graphics processing unit
HEV	mild and full hybrid electric vehicle
HMI	human machine interaction
HSM	hardware security module
HST	high-speed train
HW	hardware
ICE	internal combustion engine
INV	in-vehicle networking

Glossary (2 of 2)

IPM	intelligent power module
iPol	image processing line
IRF	International Rectifier
LSEV	low-speed electric vehicle
LSPS	LS Power Semitech Co. Ltd.
µC	microcontroller
MEMS	micro electro-mechanical systems
MHA	major home appliances
MIMO	multiple input, multiple output
micro hybrid	vehicles using start-stop systems and limited recuperation
mild hybrid	vehicles using start-stop systems, recuperation, DC-DC conversion, e-motor
MOSFET	metal-oxide silicon field-effect transistor
OBC	on-board charger
OEM	original equipment manufacturer
PHEV	plug-in hybrid electric vehicle
Pol	point-of-load

PV	photovoltaic
RF	radio frequency
rhs	right-hand scale
Si	silicon
SiC	silicon carbide
SiGe	silicon germanium
SMPS	switch-mode power supply
SOTA	software over-the-air
SW	software
ToF	time-of-flight
TPM	trusted platform module
UPS	uninterruptible power supply
V2X	vehicle-to-everything communication
VR	virtual reality
VSD	variable speed drive
xEV	all degrees of vehicle electrification (EV, HEV, PHEV)

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 trademarks used in the data, if any, are trademarks of IHS Markit. Other trademarks appearing in the IHS Markit Materials are the property of IHS Markit or their respective owners.

Financial calendar

Date	Location	Event
8 May 2019	Nuremberg	PCIM trade show; IPC Business Update by Dr. Peter Wawer, Division President IPC and Dr. Peter Friedrichs, Technology Development Silicon Carbide
22 May 2019	London	JP Morgan European TMT Conference
29 May 2019	New York	UBS Best of Europe One-on-One Conference
3 Jun 2019	Zurich	Berenberg Innovation Conference
4 Jun 2019	Milan	14th Equita European Conference
5 Jun 2019	Berlin	Deutsche Bank German, Swiss & Austrian Conference
11 Jun 2019	Paris	21st Exane European CEO Conference
1 Aug 2019*		Q3 FY19 Results
29 Aug 2019	Frankfurt	Commerzbank Sector Conference
23 Sep 2019	Unterschleißheim (nearby Munich)	Berenberg Goldman Sachs German Corporate Conference
24 Sep 2019	Munich	Baader Investment Conference
7 Oct 2019		ATV Call by Peter Schiefer, Division President ATV
12 Nov 2019*		Q4 FY19 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
• 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')

DOI (days of inventory; quarter-to-date) = ('Net Inventories' / 'Cost of goods sold') * 90

DPO (days payables outstanding; quarter-to-date) = ('Trade payables' / ['Cost of goods sold' + 'Purchase of property, plant and equipment']) * 90

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.

Institutional Investor Relations contacts

Alexander Foltin

Corporate Vice President Finance, Treasury & Investor Relations

+49 89 234-23766 alexander.foltin@infineon.com

Joachim Binder

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

Isabell Diel

Manager Investor Relations

+49 89 234-38297 isabell.diel@infineon.com

Alexander Groschke

Senior Manager Investor Relations

+49 89 234-38348 alexander.groschke@infineon.com

Holger Schmidt

Senior Manager Investor Relations

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