European Technology Conference 2004 hosted by Cheuvreux

Transcription

1 Conference 2004 hosted by Cheuvreux Paris March 4th, 2004 Secure Mobile Solutions - Poised for Profitable Growth Dr. Erk Thorsten Heyen CEO Secure Mobile Solutions Business Group Slide - 1 -

2 Disclaimer Please note that while you are reviewing this information, this presentation was created as of the date listed, and reflected management views as of that date. This presentation contains certain forward-looking statements that are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to the Risk Factors noted in the Company's Earnings Releases and the Company's filings with the Securities and Exchange Commission. Slide - 2 -

3 Agenda Introduction Mobile Solutions Wireless Infrastructure Security Discrete Semiconductors Slide Operations and Summary

4 Introduction Mobile Solutions Wireless Infrastructure Security Discrete Semiconductors Slide Operations and Summary

5 Secure Mobile Solutions A New Streamlined, Market Oriented Organization Mobile Solutions Wireless Infrastructure Security Discrete Semiconductors! Mobile platforms! Baseband! RF transceiver! Software solutions! Local area wireless! Power amplifier! Radio frequency! Baseband! Chip card ICs! RFID tags! TPM security! Transistors & diodes! BAW filters! Tuners Slide - 5 -

6 Infineon Grows Stronger Than the Market [USD bn] 30 Semiconductor revenue Chip card market Wireless market IFX SMS revenues (right hand scale) [USD bn] % Y-o-Y growth rates Chip card market Wireless market IFX SMS % 20% 0% -20% Slide IFX market share CY00 CY01 CY02 CY03e 8% 9% 10% 12% % CY00 -> " CY01 "-> CY02 "-> CY01 CY02 CY03e Sources: Market : Gartner. Includes digital cellular/pcs, digital cordless, wireless LAN and pager subscriber devices, and digital cellular/pcs infrastructure equipment Market 2003: Infineon, Feb. 2004

7 Significant Progress Made on the Path to Target Margins 10% 5% 0% -5% -10% -15% -20% -25% Q1 FY02 Q2 Q3 Q4 Q1 FY03 Q2 Q3 Q4 Q1 FY04 Slide EBIT EBIT excluding acquisition related charges

8 Introduction Mobile Solutions Wireless Infrastructure Security Discrete Semiconductors Slide Operations and Summary

9 After the Market Downturn in 2001 Infineon Continuously Increased Market Shares Total handset market GSM* / W-CDMA [units mn] IFX RF IFX BB [units mn] IFX RF IFX BB CY00 CY01 CY02 CY03 0 CY00 CY01 CY02 CY03 Slide RF BB 21% 5% 10% 21% 7% 7% 11% 11% Source: Infineon, Feb RF BB 34% 8% 16% 31% 11% 11% 17% 17% * GSM / GPRS / EDGE

10 Undisputed Market Leadership in RF Transceivers [units mn] RF Baseband Others 79% Others 89% Total market CY03 #1 #3 IFX 21% IFX 11% GSM*/ W-CDMA CY03 #1 Others 69% #2 Others 83% Slide IFX 31% * GSM / GPRS / EDGE Source: Infineon, Feb IFX 17%

11 The Main Business is Generated by Replacement Mobile handsets Handset market segments CY04 [units mn] High end Multimedia 10% 40% CY99 CY00 CY01 CY02 CY03 CY04e CY05e CY06e CY07e CY08e Entry 50% replaced handsets new subscriber handsets Slide ! Market growth rates slow down Source: Infineon, Feb Comments! In regions with high penetration rates replacement biz dominates over new subscriber biz! Market size extension by expansion into further low-income regions, e.g. China, India

12 MP1: World's first UMTS, EDGE and GPRS Mobile Phone Solution Utilizing an ARM9-based Modem Multimedia support! Megapixel camera! Video recording! Video playback! Video streaming! Video conferencing Platform can be configured as! UMTS/EDGE/GPRS! UMTS/GPRS! EDGE/GPRS! GPRS APOXI application framework! Hardware independent! Supports standard applications (WAP, MMS, Java,...) Slide A-GPS (assisted GPS)! Can be configured as optional enhancement! Indoor localization support! Continuous navigation possible

13 Multimedia Platform Roadmap E-GPRS Class 12 MP3-U Open O/S UMTS / HSDPA 3.6Mbps 3D graphics Video Play/Rec CIF 30/15 fps Multimedia platform 3 E-GPRS class 10 MP2-U 2 MPix Camera UMTS Rel. 99 Video Streaming MP2-G MP2-Enhanced GPRS cost ratio E-GPRS class 12, DTM, SAIC > 3 MPix, 3D graphics Multimedia platform 2 MP1-G MP1-U GPRS Class 10 UMTS Single Mode Video Play/Rec QCIF 30/25 fps Voice centric up to 1 MPix Camera Java MIDP 2.0 MP1-UE UMTS/ E-GPRS, Video play/rec., Video conf. Multimedia platform 1 Multimedia platform 1 GPRS class 8 Triple Band APOXI WAP, MMS, Java IrDA P2002+ Slide

14 Infineon's Basic Platform Enables Camera Functionality within the Entry Phone Segment Slide P2002+ is a cost optimized platform solution enabling:! Camera functionality! Polyphonic ring tones! Colour displays! Java capability

15 Entry Segment Platform Roadmap System costs P2002+ GPRS class 8 Triple Band APOXI WAP, MMS, Java IrDA P2002 GSM Dual Band APOXI BP2 GPRS class 10 Dual Band 2 out of 850/900/1800/1900 WAP 2.0 CIF/VGA camera FM radio BP2-c Quadband APOXIlite BP2-m GPRS class 12 modem BP3 Java MIDP2.0 Camera integrated Bluetooth A-GPS Slide

16 Supplying 4 out of 5 Japanese OEMs with 3G RF Transceivers W-CDMA handsets manufactured by Japanese OEMs [units mn] CY03 CY04e CY05e CY06e Slide Source: Infineon, Feb. 2004

17 Benefiting from Strong Customer Relationships! Supplier to the TOP 3 European handset OEMs! Supplier to 4 of 5 Japanese 3G OEMs! TOP 2 selling local mobile phone models in China in CY03 based on Infineon platform solutions*! Gaining market share in the service provider branded phone business Slide *Source: Feb. 2004

18 TOP 2 Selling Local Mobile Phone Models in China in CY03 Based on Infineon Platform Solutions Top 1 Top 1: DBTEL 5688 the best price quality ratio Top 2: Kejian K308 the best polytone ringer Top 2 Top 3: Top 4: Top 5: Top 6: Top 7: Top 8: Top 9: Top10: Panda GM600 best display design Kejian K358 best entertainment functions Amoisonic DA8 best camera functions Eastcom EG730+ best design for female Amoisonic A9, best design for male Legend EG180 best smart phone Daxian C618, best CDMA phone CEC F88, best innovation phone Slide

19 Platform Offering Track Record From Turn Key Design to Volume Production Based on IFX Platform * Slide ! Several phones (DBTEL, Galaxy, Konka, Tresor, etc.) in volume production in CY03! 19% of Infineon's basebands sold through platform business in CY03 * Selection of Models

20 Advanced Applications Lead to a Higher Memory Share Handset semiconductor BOM by functional groups 100% 80% 60% 40% 20% 0% CY01 CY02 CY03 CY04e CY05e CY06e CY07e CY08e Slide Source: Infineon, Dec Discretes Modem + Application Processor Memory Others

21 Well Positioned to Cross-Sell Memory Products into Handsets Target applications! High-end mobile phones! Multimedia mobile phones! PDAs! Digital still camera! MP3-player! Multimedia mobile phones Slide Features! Low power SDRAM! 128Mb, 256Mb and 512Mb in production! Low power! Pin compatible with SRAM! 16Mb and 32Mb sampling

22 Integration Path - Driving Down System Cost by Leveraging IFX Core Competencies % reduction of component count RF front end Front end module RF CMOS RF module Baseband Single chip BB / RF Slide ~140 components

23 Introduction Mobile Solutions Wireless Infrastructure Security Discrete Semiconductors Slide Operations and Summary

24 Wireless Infrastructure New Technology Leads to Growth! Offering the full chain for radio base stations: RF Power RF ASICs Mixed signal Baseband processing! No. 2 in RF power with fast growing market share! Core supplier in RF-ASIC/modules and RF power for the base station market leader! Leading in the release of 3G baseband ASSP: world's first merchant 3G wireless signal processor! Supplier to the TOP 3 wireless infrastructure suppliers Slide

25 Introduction Mobile Solutions Wireless Infrastructure Security Discrete Semiconductors Slide Operations and Summary

26 Undisputed Leader in Growing Chip Card IC Market Total chip card IC market CY02 Chip card IC market development [EUR bn] Infineon 40% STM 15% Others 3% Philips 14% Samsung 4% Hitachi 14% Atmel 10% CAGR 22% Others Pay-TV Identification Finance Transport Mobile Com Telecom Slide Source: Gartner 2003, revenue CY02 0 FY03 FY08e Source: Infineon, Nov. 2003

27 Growth Segment Identification: Design Win Overview National ID: Finland 2000 Estonia 2002 Hong Kong 2002 Italy 2002 Macao 2002 Saudi Arabia 2002 Belgium 2003 Israel 2003 Latvia 2003 The Netherlands (pilot for passport) 2003 Oman 2003 United Arab Emirates 2003 Health care/social security: Poland 2001 Slovania 2002 Spain 2002 Taiwan 2002 Austria 2003 Belgium 2003 Germany (2nd gen. pilot) 2003 Italy/Lombardia 2003 USA 2003 India 2004 Slide Special user groups: Spain (police card) 2001 Germany (card BMI/BSI) 2002 Italy (military card) 2002 USA Department of Defense (common access card) 2001 Israel (gov. employees) 2002 USA New York (police card) 2003

28 Chip Card IC Profitability Strongly Affected through Strong Price Pressure and Weak US Dollar [Indexed] 10% Price development of chip card microcontroller IC's since CY98 0% -10% -20% -30% -40%! Industry wide capacity tightening! Selected products in allocation -50% CY98 CY99 CY00 CY01 CY02 CY03 Slide µc ASP [EUR] µc ASP [USD] Sources: : Gartner, April 1999 April : Infineon, Feb. 2004

29 Significant Manufacturing Cost Reductions in Infineon s Chip Card ICs Expected Microslim technology 130nm shrink! Volume roll-out of microslim technology (66PE family) in mid Move from 2 transistor/bit to 1 transistor/bit - Significant reduction of chip area - High performance and increased memory size! Volume roll-out of first chip card products on 130nm technology in mid First 32bit controller with flash memory dramatically improves flexibility and manufacturing time for customer - 32bit architecture enables applications with higher memoryand security-requirements - Low power consumption (1.8V) and increased performance (66MHz) Slide

30 Introduction Mobile Solutions Wireless Infrastructure Security Discrete Semiconductors Slide Operations and Summary

31 A Leading Player in Discrete Semiconductors! No. 1 in RF discretes*! Improved from rank 7 to 5 in CY02 in small signal diodes and transistors** Hitachi 5% Others 14% Sanyo 5% Philips 6% KEC 7% ON 7% Infineon 7% Rohm 20% Matsushita 8% Toshiba 11% NEC 10%! Volume shipment of more than 10bn pieces in CY03 for small signal discretes! Supplier to all important handset manufacturers, consumer goods customers and automotive customers! Strong key customer relations Distributors 30% Direct customers 70% Slide *Source: Infineon, Feb **Source: Gartner, July 2003

32 Key Growth Drivers for Discrete Semiconductors! Digital terrestrial, satellite and cable tuner ICs for digital TV and set-top-boxes! BAW (Bulk Acoustic Wave) filter technology for GSM/GPRS, 3G and CDMA filter applications! HIPAC (High Integrated Passive and Active Components) - Passive integration amongst top growth areas in mobile phones (circuit protection, filters)! Technology leadership in ultra small leadless packages for all standard components Slide

33 Introduction Mobile Solutions Wireless Infrastructure Security Discrete Semiconductors Slide Operations and Summary

34 Highly Efficient Inhouse Manufacturing to Support Future Growth in Secure Mobile Solutions Power logic cluster Advanced logic cluster Munich Regensburg Villach Dresden Altis JV UMC SiFo Mixed signal X RF X X Slide Advanced logic RF CMOS Embedded flash X X X

35 Optimizing R&D Efficiency Through Partnerships and New R&D Centers in APAC Development alliances! Jointly developed 90nm process technology! This technology is currently being introduced! Joint development of 65nm process technology! Exploring extensions down to 45nm technologies New R&D centers! Opened R&D Centers in: China (Xi'an and Shanghai) India (Bangalore) Slide

36 Summary Secure Mobile Solutions - Poised for Profitable Growth! Aggressively pursued market share gains through the downturn! Successfully penetrated growth segments (3G, platform, 32bit controller, BAW, Digital Tuner, Asian customers)! Still solidifying relationship with traditional OEM customer base! Significantly improved margins and overall profitability -- further improvement expected for the future! Price decline slowing or reversed! Continued growth expected for all business units within SMS! Ability to lever strong in-house manufacturing base! Continued transfer of R&D resources to lower cost locations in Asia Slide ! Unique portfolio of capabilities to address future needs of secure mobile communications

37 To create Semiconductor Solutions, enabling the Technology Lifestyle of the Individual in the 21st Century. Slide