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1 Infineon Slide 1 U.S. IR Roadshow May 18-20, 2004 Joachim W. Binder Director, IR & Financial Communications Infineon Technologies AG Achim Schneider Senior Director, IR & Financial Communications Infineon Technologies North America Corp.

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 Group Business Update & Financials MP Memory Products SMS Secure Mobile Solutions COM Wireline Communications AI Automotive & Industrial Electronics Slide 3 Outlook

4 Agenda Group Business Update & Financials MP Memory Products SMS Secure Mobile Solutions COM Wireline Communications AI Automotive & Industrial Electronics Slide 4 Group Summary and Outlook

5 Accelerated Market Growth in CY 2004 Forecasts [USD bn] 77 IC Insights +27.1% - 5.7% Dataquest +20.1% +17.7% SIA +19.4% + 5.8% WSTS +19.4% +12.6% In-Stat +25.9% +13.5% % 31% 42% -9% 4% -8% 19% 37% -32% 1% 18% Slide Source: WSTS

6 IFX: Fastest Growing Top 10 Semiconductor Company CY 2003 vs. CY 2002 Infineon +32.3% TI +20.2% Toshiba +17.9% Intel +14.1% STM +13.9% Samsung +10.6% NEC +8.7% Philips +3.5% Motorola -3.7% -10% 0% 10% 20% 30% 40% Overall 2003 Market Growth 18.3% Source: WSTS Slide 6 Renesas n.a. Source: isuppli, March 2004, based on USD

7 Fiscal Q2 Financial Highlights! Increased revenues, greater productivity, and cost reductions leading to positive fiscal Q2 results! Record sales in Automotive & Industrial! Significant improvement of EBIT margin in Secure Mobile Solutions! Increased revenues in Access segment within Wireline! Significant bit shipment growth more than offset price decline in memory market! Continued solid gross cash position of EUR 2.9 billion! Positive free cash flow of EUR 53 million Slide 7

8 Recent Operational Highlights Memory Products! Decision to ramp-up 300mm fab in Richmond, Virginia! First functional memory chips based on 90nm technology Wireline Communications! Agreement to sell Fiber Optics business to Calif.-based Finisar! Optical Networking activities re-focused, many design wins at new customers Secure Mobile Solutions! First multimedia phone platform introduced Automotive & Industrial Electronics Slide 8! Continued strong design win momentum

9 Profitable Growth [EUR mn] Q1 FY 04 Q2 FY 04 Change 1H FY 03 1H FY 04 Change Net sales Growth (%) 1,623 1, % 2,925 3, % Gross margin 32% 33% 21% 33% R&D in % of sales % % % % +61 SG&A in % of sales % % % % +14 EBIT in % of sales 70 4% 71 4% +1 (250) (9%) 141 4% +391 Slide 9

10 Operating and Free Cash Flow Significantly Improved 3 months ended Mar 31, 2003 [EUR mn] Mar 31, 2003 Dec 31, 2003 Mar 31, 2004 Operating cash flow Capex (230) (216) (253) Other investments 39 (167) (157) Free cash flow (1) (90) (63) 53 Slide 10 (1) Excluding purchase/sale of marketable securities

11 Solid Financial Position Gross cash Financial debt [as of March 31, 2004 in EUR mn] 2,867 2,456 Slide Convertible note due in February 2007 Convertible note due in June 2010 Bank loan due in September 2005 Other long-term debt Short-term debt

12 Agenda Group Business Update & Financials MP Memory Products SMS Secure Mobile Solutions COM Wireline Communications AI Automotive & Industrial Electronics Slide 12 Outlook

13 Memory Products Significant EBIT Improvement Year-over-Year Revenue share Q2 FY04 Revenues and EBIT Margin [EUR mn] % 6% -22% 1% 18% 9% 2% Q1 FY03 Q2 Q3 Q4 Q1 FY04 Q2 Slide 13! Revenues improved by 3% q-o-q, mainly driven by a 22% increase in bit shipments, which more than compensated for a DRAM ASP decline from USD 5.00 to USD 4.50! EBIT decline was mainly due to the lower DRAM ASP

14 Market Development and Current Market Drivers Supply! Estimated 40% bit growth in 2004! Low capex in 2001 to 2003! Delayed introduction of 300mm fabs by competition! Stronger shift of capacity towards logic and flash products! Industry delay for 110nm node! Slower shift to DDR2 products Demand! Estimated 50% bit growth in 2004! Drivers: Corporate replacement, infrastructure, mobile applications! Expected 11% PC unit growth in 2004! Conversion towards Dual Channel technology! Slower MB-per system growth due to availability: Estimated 20-25% Slide 14

15 Ramp-up 300mm Fab in Richmond: Key Facts! Approximately USD 1 billion invest for initial phase: Approx. USD 750 million in FY 2005 Approx. USD 250 million in FY 2006 Approx. USD 40 million of performance grants offered by the state of Virginia! Equipment move-in starting in early CY 2005! 25,000 wafer starts per month (WSPM) to be reached after completion of investment program by mid of CY 2006! Subject to market conditions, a further capacity increase to 50,000 WSPM is possible Slide 15! Decision to build out Richmond does not have an impact on existing manufacturing relationships with foundry partners SMIC and Winbond; Inotera ramp proceeding according to plan

16 Ramp-up 300mm Fab in Richmond: Strategic Rationale! Offsetting reduced internal bit growth from rapid conversion of DRAM to other products! Richmond preferred site due to: Fastest ramp-up as building shell is already in place Reduced incremental invest Synergies with existing 200mm module Smallest USD exchange rate risk Availability of skilled workforce and Strong local government support Slide 16! Expansion will significantly increase productivity of IFX s Richmond site: At 25,000 WSPM in 300mm, site capacity in 8 equivalents would be more than doubled while headcount increases by approximately 45% to 2,550 from 1,750 Full expansion would require increase in staff by approximately 71% to 3,000 from 1750, and more than triple wafer starts in 8 equivalents

17 The Richmond Site Synergies Through Infrastructure Sharing CUB 2 300mm FAB Gas Pad PATM IWT CUB 1 200mm FAB Admin Complex Slide 17 FAB: Wafer Manufacturing PATM: Probe, Assembly, Test, Modules CUB: Central Utility Building IWT: Industrial Waste Treatment

18 Infineon Top 3 DRAM Player in 2003 based on Trench technology Samsung 2. Micron 4. Hynix 5. Nanya 6. Elpida 7. MVI 8. Powerchip 9. Winbond 4.6% 5.5% 4.3% 4.0% 4.2% 2.0% 2.7% 1.8% 1.9% 3.1% 19.1% 18.1% 16.3% 12.7% 14.7% 12.7% Top 10 in 2002: Top 10 in 2003: 28.6% 32.2% % market share, of which 25.2% is Trench-based 97.1% market share, of which 27.4% is Trench-based Slide 18 Source: isuppli, February 2004

19 Agenda Group Business Update & Financials MP Memory Products SMS Secure Mobile Solutions COM Wireline Communications AI Automotive & Industrial Electronics Slide 19 Outlook

20 Secure Mobile Solutions Steady EBIT Margin Improvement Revenue share Q2 FY04 Revenues and EBIT Margin [EUR mn] % -5% 1% 3% 6% -7% -7% Q1 FY03 Q2 Q3 Q4 Q1 FY04 Q2 Slide 20! Revenues almost flat q-o-q as strong sales in the security business offset a lower-than-expected seasonal decline in revenues from mobile solution products! Significant EBIT margin increase based on productivity measures and a better product mix in the security business

21 A New Streamlined, Market-oriented Organization Mobile Solutions Wireless Infrastructure Security Discrete Semiconductors! Mobile platforms! Baseband! RF transceiver! Software solutions! Bluetooth! Local area wireless! Power amplifier! Radio frequency! Baseband! Chip card ICs SIM cards Banking Pay-TV Contactless ID cards! RFID tags! TPM security! Transistors & diodes! BAW filters! Tuners Slide 21

22 After the Market Downturn in 2001, Infineon Increased Market Share 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 22 RF BB 21% 5% 10% 20% 7% 7% 11% 11% Source: Infineon, April 2004 RF BB 34% 8% 16% 31% 11% 11% 17% 17% * GSM / GPRS / EDGE

23 Undisputed Leader in Fast-growing Chip Card 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 23 Source: Gartner 2003, revenues FY03 FY08e Source: Infineon, Nov. 2003

24 Significant Cost Reductions Expected in Chip Card ICs MicroSlim technology 130nm shrink! Volume roll-out of MicroSlim technology (66PE family) in mid Move from 2 transistors to 1 transistor per 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 32-bit controller with flash memory dramatically improves flexibility and manufacturing time for customer - 32-bit architecture enables applications with higher memoryand security-requirements - Low power consumption (1.8 V) and increased performance (66 MHz) Slide 24

25 Agenda Group Business Update & Financials MP Memory Products SMS Secure Mobile Solutions COM Wireline Communications AI Automotive & Industrial Electronics Slide 25 Outlook

26 Wireline Communications Strategic Measures Initiated to Achieve Profitability Revenue share Q2 FY04 Revenues and EBIT Margin [EUR mn] % -40% -35% -83% -7% -14% -17% Q1 FY03 Q2 Q3 Q4 Q1 FY04 Q2 Slide 26! Revenues increased 2% q-o-q, mainly due to higher revenues from the Access business! EBIT margin decline was mainly driven by lower gross margins due to the ramp-up of the ADSL product line, continued price pressure and a lower revenue contribution from higher-margin businesses

27 Wireline Communications F2Q Highlights Access! Acquisition of Taiwan-based ADMtek closed on April 30, 2004! Continued to gain design wins for ADSL2+ solution at the major DSLAM manufacturers, particularly in China! First design win for Analog Telefon Adapter with our Vinetic, Voice over IP (VoIP) processor, and network processor from ADMtek! Received Supplier Excellence Award from Telspec Optical Networking! Optical Networking activities re-focused, many design wins achieved for our new Ethernet-over-Sonet product family! Selected by ZTE as a strategic partner to deliver Resilent Packet Ring (RPR) solutions Fiber Optics Slide 27! Legal carve-out completed according to schedule as of April 1, 2004! Definitive agreement on sale to Finisar signed on April 29, 2004

28 Acquisition of ADMtek Targeting End-to-End Solutions for Broadband Access! Services supported: - Triple play incl. fast Internet, video and voice services - VoIP (Voice over Internet Protocol) - Advanced security features - Wireless LAN DSL-CPE-Market (CPE = Customer Premises Equipment) 444 CAGR 21% 956 CPE [USD mn] DSLAM DSL-CO-Market (CO = Central Office) 382 CAGR 10% 566 Slide e 2007e 2003e 2007e Source: Infineon, Oct. 03

29 Sale of Fiber Optics Business Driving Market Consolidation with Finisar Slide 29! Strategic Rationale: Creates largest pure-play optical components company with broad portfolio Expands addressable market and geographic presence for both! Structure and Consideration: 135 mn shares of FNSR common stock ($ 263 mn / mn as of 4/28/04) 38% of pro-forma ownership for Infineon; will be consolidated at equity Cash- and debt-free transaction! Timing: Closing estimated in CQ3 / Effective date: month-end prior closing Finisar shareholder and applicable regulatory approval required Finisar s President J. Rawls and Chairman F. Levinson have agreed to vote their shares in favor of the deal; representing 15% of basic shares outstanding! Governance and Management: IFX key objective will be to maximize value of FNSR stake received T. Seifert, CEO Wireline Comms, will have 1 out of 6 Board seats at FNSR

30 Agenda Group Business Update & Financials MP Memory Products SMS Secure Mobile Solutions COM Wireline Communications AI Automotive & Industrial Electronics Slide 30 Outlook

31 Automotive & Industrial Electronics Margins Stabilizing at High Levels Revenue share Q2 FY04 Revenues and EBIT Margin [EUR mn] % 13% 14% 14% 12% 14% 14% Q1 FY03 Q2 Q3 Q4 Q1 FY04 Q2! Revenues increased 6% q-o-q driven by improved unit volume, despite ongoing pricing pressure! Stable EBIT margin Slide 31

32 Automotive & Industrial Electronics FQ2 Highlights! Increase in worldwide bookings, especially in Power Management & Supply business! Major design wins in body application at a premium automotive supplier, as well as in safety and vehicle dynamics at volume suppliers! Launch of a TriCore-based microcontroller, the first 32-bit derivative capable of running Linux and other OS designed for industrial and communication applications! Received Preferred Supplier Award from Asustek Slide 32

33 Agenda Group Business Update & Financials MP Memory Products SMS Secure Mobile Solutions COM Wireline Communications AI Automotive & Industrial Electronics Slide 33 Outlook

34 Outlook for Fiscal Year 2004 Slide 34! Expectations for continued stable growth in revenues and overall profitability! Improved demand/supply ratio for Memory Products anticipated, with a positive effect on the development of average selling prices in the second half of our fiscal year! Continued solid growth expected for Secure Mobile Solutions, driven mainly by its mobile solutions segment; wireless infrastructure is expected to recover; also growing demand for security controllers over the next months! Overall modest growth in revenues over the two remaining quarters for Wireline Communications, driven mainly by access business, but potentially reduced due to slower development of other segments! Growing confidence for automotive electronics due to introduction of new car models; positive development for Power Management & Supply expected

35 To create Semiconductor Solutions, enabling the Technology Lifestyle of the Individual in the 21st Century. Slide 35