Deutsche Bank German Corporate Conference

Transcription

1 Deutsche Bank German Corporate Conference Infineon Page 1 Frankfurt Dominik Asam Senior Vice President Corporate Center IR, M&A, Ventures N e v e r s t o p t h i n k i n g.

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. Page 2

3 Agenda Group Business Update & Financials MP MemoryProducts SMS Secure Mobile Solutions COM Wireline Communications AI Automotive & Industrial Electronics Page 3 Outlook

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

5 Business Highlights! Fastest growing Top 10 semiconductor company *! Significant market share gains! APAC biggest driver of revenue growth! Improved margins and returned to profitability in 2nd half of CY03! Positive EBIT contributions from MP, SMS and AI! Successfully penetrated emerging customers in wireless market! Acquiring CPE player ADMtek, carving-out Fiber Optics (COM) Page 5! Solid cash position of 2.8bn by Dec 31, 2003 * CY03/CY02. Source: isuppli, March 2004

6 Accelerated Growth in 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% Page Source: WSTS

7 IFX: Fastest Growing Top 10 Semiconductor Company CY 2003 vs. CY % 0% 10% 20% 30% 40% Infineon 32.3% TI 20.2% Toshiba 17.9% Intel 14.1% STM 13.9% Overall Market Growth 18.3% Source: WSTS Samsung 10.6% NEC 8.7% Philips 3.5% Page 7 Motorola -3.7% Source: isuppli, March 2004, based on USD

8 Capitalizing on Growth Opportunities in APAC Sales by region F1Q03 F1Q04 Europe (1) % 22% NAFTA 315 Europe (1) % 20% NAFTA 331 Germany % 33% APAC & Others 477 Germany % 37% APAC & Others 602 Total: EUR 1,441m Total: EUR 1,623m Page 8 (1) Excluding Germany [according to US GAAP in EUR m]

9 Higher Margins and Lower Operating Expenses Gross margin R&D SG&A EBIT margin [% of total revenues] 27.9% 31.9% 18.4% 17.0% 11.9% 10.7% 4.3% (2.0%) Page 9 F1Q03 F1Q04

10 All Business Groups Contributed to EBIT Improvement IFX Total [EBIT in EUR m] Memory Products Automotive & Industrial Secure Mobile Solutions Wireline Comms (15) (29) (28) Page 10 F1Q03 F1Q04 (42)

11 Solid Financial Position Gross cash Financial debt [as of December 31, 2003 in EUR m] 2,828 2,473 Page Convertible note due in Feb Convertible note due in June 2010 Bank loan due in Sept Other long-term debt Short-term debt

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

13 Recent Market Development and Current Market Drivers Bit [10^13] WW $ [10^6] ASP Spot Market [$] 8,00 7,00 6,00 5,00 4,00 3,00 2,00 256M SDRAM 128M DDR 128M SDRAM 256M DDR M DDR M DDR400 0 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 * Source: WSTS ,00 0,00 Jan 03 Apr 03 Jul 03 Okt 03 Jan 04 Source: DRAM exchange Page 13 Supply! Est. 45% bit growth 2004*! Reduction of capex in 2001 to 2003 leads to only moderate capacity extensions and delayed introduction of 300mm production by competition! Shift of capacities towards higher margin products, e.g Flash! Shift to higher densities and DDR2 Demand! Est. 50% - 55% bit growth 2004*! Corporate replacement drives PC unit growth to est. 11%! Further conversion towards Dual Channel Chipsets! Above average growth for Infrastructure and Mobile Applications! MB/system growth depending on price development: Copyright Est. 20% Infineon Technologies - 30% All rights reserved. * Source: Infineon, 01/2004

14 DRAM: Focus the Product Portfolio on the Growth Segments Infrastructure and Mobile Applications CAGR of DRAM Bit Demand % Infocom 80% 60% Others " Mobile Phone " Smart Phone " PDA " Web pad Infrastructure " Server " Networking NAS, SAN CAGR total DRAM market % 20% Entertainment " Camcorder " Game Console " Set-Top-Box " DVD-Player Computing " Desktop PC " Notebook PC " Workstation " Graphics Page 14 0% 0% 10% 20% 30% 40% 50% 60% 70% Projected Bit Share of total DRAM Market in 2008

15 Well Positioned to Cross-Sell Memory Products into Mobile Applications Target applications! High-end mobile phones! Multimedia mobile phones! PDAs! Digital still camera! MP3-player! Multimedia mobile phones Page 15 Features! Low power SDRAM! 128Mb, 256Mb and 512Mb in production! Low power! Pin compatible with SRAM! 16Mb and 32Mb sampling

16 Initial Flash Product Portfolio Flash Cards " High volume growth segment " Initial Products: SD-Card and MultiMediaCard Products Application " Mobile Phone " PDA " MP3-Player " DSC Flash Components " NAND-compatible 512Mbit Flash in a TSOP-package Page 16

17 Leading Fully Loaded Cost Position Fully Loaded Cost 8,00 7,00 6,00 5,00 4,00 3,00 FLC in USD FLC in EUR Q4 01/02 Q1 02/03 Q2 02/03 Q3 02/03 Q4 02/03 Q1 03/04 0% FLC Reduction -10% -20% -30% -40% -50% -60% QOQ EUR YOY EUR Page 17! Leading position in 300mm and smallest die sizes translate into strong Fully Loaded Cost Reductions! Outlook for Q4 03/04: At least 30% Euro cost reduction for in-house manufacturing based on 110nm conversion and additional 300mm capacities

18 Top 3 DRAM Player in Optimize Growth through Foundries and Cooperations based on Trench technology 1. Samsung 2. Micron 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 therein 25.2% Trench based 97,1% Market share therein 27.4% Trench based Source: isuppli, February 2004 Page 18 Market Share 28% 24% 20% 16% 12% 8% 4% Foundry 1) Joint Ventures 2) Infineon 0% FY 02/03e FY 03/04e FY 04/05e FY 05/06e FY 06/07e 1) Includes Winbond and SMIC; 2) Includes Inotera! Aiming at 50% of Infineon's capacities to be provided by JV partners and foundries within the next five years! Market IP to support company growth while optimizing investment requirements! Share investments, costs, and risks in cooperations with partners

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

20 Secure Mobile Solutions 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! RFID tags! TPM security! Transistors & diodes! BAW filters! Tuners Page 20

21 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 Page 21 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

22 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 Page 22 *Source: Feb. 2004

23 Platform Offering Track Record From Turn Key Design to Volume Production Based on IFX Platform * Page 23! 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

24 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,...) Page 24 A-GPS (assisted GPS)! Can be configured as optional enhancement! Indoor localization support! Continuous navigation possible

25 Infineon's Basic Platform Enables Camera Functionality within the Entry Phone Segment Page 25 P2002+ is a cost optimized platform solution enabling:! Camera functionality! Polyphonic ring tones! Colour displays! Java capability

26 Undisputed Leader in 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 Page 26 Source: Gartner 2003, revenues FY03 FY08e Source: Infineon, Nov. 2003

27 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 Page 27 µc ASP [EUR] µc ASP [USD] Sources: : Gartner, April 1999 April : Infineon, Feb. 2004

28 Significant Cost Reductions Expected in Chip Card ICs Microslim technology! 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 130nm shrink! 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) Page 28

29 Agenda Group Business Update & Financials MP MemoryProducts SMS Secure Mobile Solutions COM Wireline Communications AI Automotive & Industrial Electronics Page 29 Outlook

30 COM Access has Achieved No. 1 Position through a Broad Product Portfolio and Key Design Wins at Tier-1 Accounts Broadband Access Standard Telecom! Leading market position in traditional telecom infrastructure*: -No. 1 in ISDN -No. 1 in SLICS -No. 2 in Codecs -No. 2 in T/E! Excellent Cost Position Broadband Access! No. 1** in VDSL w/ 70 design wins at major vendors in Asia! No. 2** in SHDSL! Design-wins at nearly all ADSL-CO Tier-1 Accounts in EU /ASIA **In-Stat/ MDR, Sept 2003 Infineon has the Leading Position in the Access Market* Page 30 Others 41.2% Legerity 4.2% 2001 Conexant Others 11.1% Agere 28.4% % BRCM 4.4% ST 5.4% TI 5.6% GSPN 7.7% IFX 9.9% # 3 BRCM 5.4% Legerity 5.7% GSPN 7.0% TI 8.8% IFX # % Conexant 12.4% ST 9.0 % Agere 10.7% *SOURCE: isupply, June-2003, segments combined: Analog modems, xdsl modems, Cable modems, ISDN, SLIC, CODEC, VoIP, T/E

31 ADMtek will Play Key Role as Broadband CPE Expert Solutions from the Core to the Door US Taiwan Munich Berlin Optical Networking Broadband CPE Broadband CPE Carrier Access Fiber Optics Core OC -768/192 x n λ Metro Storage Datacenter FC/EoS Office EoS Office ADM OC FTTx x MSAP/ ONU OADM ADM Metro Transport Office OADM ADM EoS ADM EoS Office Park OXC OTM DCS MSC T1/E1 & OC3 BSC BTS DCS Broadband CPE Class4/5 Switch ATM SW DSLAM Central Office xdsl/ POTs Carrier Access Page 31

32 Complementary Strengths Meeting Market Needs for Broadband CPE Market Technologies Competencies ADSL Technology Access Processor WLAN Voice VDSL/SHDSL Software Know How CPE Reference Design # # # # # # # L e g e n d = # = # Page 32 Complementary competencies and technologies enable us to successfully compete in the broadband CPE market with a complete system solution.

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

34 Enabling System Integration of Automotive Electronics and System on Board Level System on Vehicle Level System on Traffic Management Level Powertrain Safety Management Infotainment AUDO-NG 32-bit microcontroller enable new engine concepts and reduce fuel consumption and emission Today Pressure sensors monitoring tire pressure, initiating alert if pressure is too low, to protect passenger s health Tomorrow TCG Telematics Communication Gateway leveraging automotive and wireless know-how Smart power door module offers up to 9 comfort functions on one chip Page 34 Comfort Management

35 Efficiency Gains with Intelligent Power Management Standby consumption: e.g. 4 nuclear power plants in the U.S. for efficiency losses only DC/DC Conversion, e.g. on PC motherboard: 20% gains AC/DC Conversion in power supply: 30% gains Battery Discharge: 20% gains Battery Standby: 50% gains heat noise Battery Charge: 20% gains 220 V (AC) Page 35 Chris Calwell and Travis Reeder, Ecos Consulting; Carrie Webber, LBNL at Power Supply Workshop PEC hosted by Pacific Gas & Electric (PG&E), the Environmental Protection Agency (EPA), Lawrence Berkeley National Laboratory (LBNL), and the Natural Resources Defense Council (NRDC), San Francisco, CA January 14, 2002.

36 Agenda Group Business Update & Financials MP MemoryProducts SMS Secure Mobile Solutions COM Wireline Communications AI Automotive & Industrial Electronics Page 36 Outlook

37 Outlook Fiscal Year 2004 Page 37! Semiconductor market Positive signs for market recovery; we expect stable growth for all segments in fiscal year Objective is to again outgrow the market and improve profitability relative to industry benchmarks! Wireline Communications Solid growth expected in FY We re preparing strategic options for Fiber Optics by carving out the business into a separate legal entity to optimize the COM performance! Secure Mobile Solutions Slight sequential revenue decrease expected in Q2 due to seasonally-reduced demand after Christmas, and continued phasing out of some cordless business. Stable development of the wireless infrastructure and silicon discretes businesses. Increased demand for security controllers until the end of FY 2004 expected! Automotive & Industrial Despite strong continuing pricing pressure good growth in automotive segment expected, reflecting the introduction of new car models with higher semiconductor content but only limited overall growth in worldwide automotive production! Memory Products Increase in bit shipment expected in second quarter and for 2004 as a result of corporate replacement of older equipment and the ramp-up of DDR2-based desktop PCs and servers

38 To create Semiconductor Solutions, enabling the Technology Lifestyle of the Individual in the 21st Century. Page 38