IFX Day 2003

Munich – September 22, 2003

Industrial and Horse Power

Dr. Reinhard Ploss SVP & GM of Automotive & Industrial Group N e v e r s t o p t h i n k i n g . IFX Day 2003 - Munich Dr. Reinhard Ploss Page 1 Copyright © Infineon Technologies 2003. All rights reserved. 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.

London August 28, 2003

Power Distribution Key Products: Thyristors and diodes IGBT- and bipolar modules Energy Treatment Power Management 8 bit and 16 bit Key Products: (Supplies and Drives) microcontrollers Thyristors and diodes Key Products: ® 32 bit TriCore IGBT- and bipolar Discrete Power microcontrollers (incl. DSP) modules Power Control ICs 8 bit and 16 bit microcontrollers 32 bit TriCore® microcontrollers IFX Day 2003 - Munich Dr. Reinhard Ploss (incl. DSP) Page 4 Copyright © Infineon Technologies 2003. All rights reserved. ConvertingConverting && ControllingControlling PowerPower

DefiningDefining AutomotiveAutomotive IntelligenceIntelligence

AutomotiveAutomotive OutlookOutlook

IFX Day 2003 - Munich Converting & Controlling Power Dr. Reinhard Ploss Page 5 Copyright © Infineon Technologies 2003. All rights reserved. Efficiency Losses without intelligent Power Management Several energy transformations from mains to loads

StandbyStandby consumption:consumption: 44 nuclearnuclear powerpower plantsplants inin thethe USUS forfor efficiencyefficiency Battery Discharge: AC/DCAC/DC Battery Discharge: losseslosses onlyonly 20% losses ConversionConversion 20% losses DC/DCDC/DC Conversion,Conversion, inin powerpower e.g.e.g. onon PCPC motherboard:motherboard: supply:supply: BatteryBattery Standby:Standby: 20%20% losseslosses 30%30% losseslosses 50%50% losseslosses

BatteryBattery Charge:Charge: heat 20%20% losseslosses noise

220 V (AC)

Chris Calwell and Travis Reeder, Ecos Consulting; Carrie Webber, LBNL at Power Supply Workshop PEC hosted by IFX Day 2003 - Munich Pacific Gas & Electric (PG&E), the Environmental Protection Agency (EPA), Lawrence Berkeley National Laboratory Dr. Reinhard Ploss (LBNL), and the Natural Resources Defense Council (NRDC), San Francisco, CA January 14, 2002. Page 6 Copyright © Infineon Technologies 2003. All rights reserved. Energy Savings with intelligent Power Management Example: Personal Computer

Source : www.eren.doe.gov/femp/procurement, July 2000

BasedBased onon thatthat youyou cancan savesave forfor eacheach PCPC annuallyannually 119119 kWhkWh equivalentequivalent $7$7 WithWith 129129 mil.mil. PCsPCs producedproduced worldwideworldwide inin 20012001 (source:(source: Gartner)Gartner) thethe totaltotal savingsaving potentialpotential isis ~~ $900M$900M oror ~~ 1515 GWhGWh or or ~~ 1010 powerpower plants!plants! IFX Day 2003 - Munich Dr. Reinhard Ploss Page 7 Copyright © Infineon Technologies 2003. All rights reserved. Power Distribution and Energy Treatment Eupec's Development Fields of Applications

FutureFuture AutomotiveAutomotive DomesticDomestic AppliancesAppliances DistributedDistributed EnergyEnergy SupplySupply SystemsSystems

ClassicsClassics TractionTraction DrivesDrives IFX Day 2003 - Munich Dr. Reinhard Ploss EnergyEnergy SystemsSystems Page 8 Copyright © Infineon Technologies 2003. All rights reserved. Power Management & Supplies Applications and Target Markets

PC / Server / Telecom Power Supply Lighting Ballasts / ESL Low on-resistance and low switching Driven by performance and size losses are critical to this market considerations & cost

Power supplies for Electric lamp ballasts for PCs consumer and industrial Servers applications Telecom High intensity discharge (HID) Lighting for industrial and automotive applications

Adapters / Chargers Consumer Electronics Reduced system size / weight Driven by system cost, size and weight (power supply) Notebooks Printers Color TVs Games Beamers Handsets Set-top box / DVDs IFX Day 2003 - Munich White goods Dr. Reinhard Ploss Page 9 Copyright © Infineon Technologies 2003. All rights reserved. Key Competence in overall Power Semiconductors Moving up from Position 7/8 to Position 4 in 2001

Rank Supplier 2000 2001 Change Internat. Rectifier Fairchild 1. Toshiba 9.3% 8.6% -0.7% Toshiba 7,6% 6,7% 2. International Rectifier 8.1% 7.6% -0.5% 8,6% Infineon* 3. Fairchild 7.8% 6.7% -1.1% Others 6,6% 4. Infineon * 5.6% 6.6% 1.0% 61,4% 5. Vishay 7.4% 6.2% -1.2% Vishay 6,2% 6. STMicroelectronics 5.6% 6.2% 0.6% STM 7. Hitachi 5.7% 6.1% 0.4% Fuji 6,2% 8. Mitsubishi 4.5% 5.4% 0.9% 4,0% ON Hitac hi 9. ON Semiconductor 6.2% 4.1% -2.1% 4,1% 6,1% Mitsubishi 10. Fuji Semiconductor 4.5% 4.0% -0.5% 5,4%

IFX Day 2003 - Munich *Infineon includes Eupec Dr. Reinhard Ploss Page 10 Source: IMS Research, Nov 2002 Copyright © Infineon Technologies 2003. All rights reserved. Highlights Industrial Power (FY 02/03)

PowerPower ManagementManagement && SupplySupply:: MajorMajor marketmarket shareshare gaingain withwith DC/DCDC/DC convertersconverters inin motherboardmotherboard applicationsapplications CompletedCompleted productproduct offeringoffering forfor CoreCore SupplySupply ChipsetChipset SolutionSolution (PC(PC // laptoplaptop motherboard)motherboard) ExpandedExpanded AC/DCAC/DC portfolioportfolio toto covercover lowerlower powerpower applicationsapplications (e.g.(e.g. DVDDVD playerplayer andand Settop-Boxes)Settop-Boxes) ImprovedImproved competitivecompetitive costcost positionposition andand achievedachieved technologicaltechnological leadershipleadership (Silicon(Silicon Carbid,Carbid, CoolMOSCoolMOSTMTM)) HighHigh PowerPower Conversion:Conversion: No.No. 22 worldwideworldwide inin highhigh powerpower conversionconversion withwith 21.7%21.7% marketmarket share*share* StrengthenStrengthen #1#1 positionposition inin mediummedium // highhigh powerpower drivesdrives SetSet newnew standardsstandards forfor mediummedium powerpower drivesdrives andand StraightStraight onon tracktrack toto solutionsolution businessbusiness withwith newnew IGBTIGBT stackstack assembliesassemblies IFX Day 2003 - Munich Dr. Reinhard Ploss Page 11 *) Source WSTS Copyright © Infineon Technologies 2003. All rights reserved. ConvertingConverting && ControllingControlling PowerPower

DefiningDefining AutomotiveAutomotive IntelligenceIntelligence

AutomotiveAutomotive OutlookOutlook

IFX Day 2003 - Munich Dr. Reinhard Ploss Page 12 Copyright © Infineon Technologies 2003. All rights reserved. Enabling System Integration of Automotive Electronics Innovative Semiconductor Solutions for …

… Powertrain, Safety, Comfort and Infotainment System on System on System on Board Level Vehicle Level Traffic Management Level

Powertrain Safety Managementw Infotainment ay rro od o T om AUDO-NG 32-bit T microcontroller enable new engine concepts and reduce fuel consumption and Pressure sensors TCG Telematics emission monitoring tire pressure, Communication Gateway initiating alert if pressure leveraging automotive and is too low, to protect wireless know-how passenger´s health

Smart power door module offers up to 9 comfort functions on one chip

Comfort Management IFX Day 2003 - Munich Dr. Reinhard Ploss Page 13 Copyright © Infineon Technologies 2003. All rights reserved. Automotive Semiconductor Solutions Strong Portfolio Enhanced Recently by SensoNor Acquisition

Sensing Computing Actuating Powertrain Pressure Sensors 16 bit µC MOSFETs ® IGBTs - Diesel Engine Mgmt. Hall Sensors 32 bit TriCore Regulators - Gasoline Engine Mgmt. (µC + DSP) Transceivers - Transmission Control Smart Power - Starter/Alternator System ICs

Safety Management Pressure Sensors 8 bit µCs MOSFETs - ABS/Traction Control Hall Sensors 16 bit µCs Regulators - Suspension RF ICs 32 bit TriCore® Transceivers - Airbag + Restraint Systems (µC + DSP) Smart Power - Power Steering System ICs - Tire Pressure Monitoring

Comfort Management Hall Sensors 8 bit µCs MOSFETs - Light Control Temp Sensors 16 bit µCs Smart Power - Heating, Ventilation, RF ICs Regulators Air Condition Transceivers - Door & Seat - Smart Battery Terminal

Infotainment Telematics Gateway Controllers, Wide Range - Telematics (GSM/GPRS) and Short Range (Bluetooth, WLAN) - Navigation communication solutions, GPS, High Frequency ICs, - Multimedia CAN/MOST Transceivers, Plastic Optical Fibres - Car Audio Multimedia Cards, Power ICs, Security ICs IFX Day 2003 - Munich - Dashboard Dr. Reinhard Ploss Page 14 Copyright © Infineon Technologies 2003. All rights reserved. Powertrain - Increasing Energy Efficiency Needs Complex Data Processing and Controlling

Most significant potential for fuel efficiency is the efficiency of the engine. This requires high performance control. Increasing number of sensors: – Euro3: in average 15 – Euro4: between 20 and 30 – Cam less engine: average 30 Increasing amount of data to be processed for engine management: – 1996: 16 bit microcontroller to fulfill Euro2 has same power as an Intel 386 processor – 2005: 32 bit microcontroller to fulfill Euro4 has IFX Day 2003 - Munich same power as an Intel Pentium I processor Dr. Reinhard Ploss Page 15 Copyright © Infineon Technologies 2003. All rights reserved. Motor Sports and Business: Learning from each other

Motor Sports Business

Highest priority on Highest priority on performance energy efficiency E.g. shift by wire E.g. energy distribution first in motor sports and management (Fuse and relay replacement) first in street vehicles

Main focus on safety Electronics allow through mechanics additional safety Electronics may support applications, mechanics if allowed mechanically not (e.g. TPMS, ABS) solvable (e.g. airbags, ESP, intelligent light IFX Day 2003 - Munich Dr. Reinhard Ploss management) Page 16 Copyright © Infineon Technologies 2003. All rights reserved. Infineon Automotive Ranks No.2 Worldwide Continuously Outperforming the Market

InfineonInfineon AutomotiveAutomotive 20022002 ContinuousContinuous OutperformanceOutperformance No.No. 22 World,World, No.1No.1 EuropeEurope

Infineon Motorola Automotive Others 13.4% 500% CAGR: 20% sales Infineon 37.8% 400% 8.2% Automotive 300% semiconductor STM CAGR: 9% market 6.6% 200% Mitsu- Total Toshiba bishi 100% semiconductor 6.2% CAGR: 4% market 2.8% 0% NEC Hitachi 6.1% 94 95 96 97 98 99 00 01 02 3.9% Philips Strong European market development TI Bosch 5.9% compared to rest of world 3.9% 5.2% Strengthened regional business in NAFTA/Japan Market: $11,505M US. Improved relationships to major automotive USGrowth 2001/2002: 6% system vendors

IFX Day 2003 - Munich Strong market position in Europe secures technological leadership Dr. Reinhard Ploss Page 17 Source: Strategy Analytics, July 2003 Copyright © Infineon Technologies 2003. All rights reserved. Highlights Automotive Semiconductors (FY 02/03)

ContinuouslyContinuously outperformedoutperformed AutomotiveAutomotive SemiconductorSemiconductor MarketMarket andand securedsecured #2#2 WWWW andand #1#1 EUEU positionposition IncreasedIncreased revenuerevenue inin NANA andand becamebecame No.No. 44 GrewGrew 44 timestimes fasterfaster thanthan marketmarket inin JPJP 20%20% GrowthGrowth inin AutomotiveAutomotive PowerPower BusinessBusiness FirstFirst successsuccess ofof PowerPower ASSPASSP approachapproach FurtherFurther establishmentestablishment ofof nextnext automotiveautomotive 3232 bitbit microcontrollermicrocontroller generationgeneration (Powertrain(Powertrain / / Safety)Safety) StrategicStrategic entryentry intointo growinggrowing "Infotainment""Infotainment" marketmarket RoundedRounded upup automotiveautomotive productproduct portfolioportfolio andand expandedexpanded USUS businessbusiness byby successfulsuccessful SensoNorSensoNor acquisitionacquisition StrategicStrategic partnershipspartnerships withwith leadingleading carcar manufacturersmanufacturers forfor co-co- developmentdevelopment onon futurefuture automotiveautomotive semiconductorsemiconductor technologiestechnologies

DefiningDefining AutomotiveAutomotive IntelligenceIntelligence

AutomotiveAutomotive OutlookOutlook

OverallOverall CAGR:CAGR: 8%8% KeyKey TrendsTrends

in $bn Increasing sensor content is key to intelligent vehicles 25 CAGRCAGR +8%+8% Improved software and IC perfor- 19.770 mance to shorten design cycles of 20 vehicle manufacturers 4.205 +8% 12.546 Reduced weight and power dissipa- 15 21% tion ("silicon instead of heat sink") 4.870 +9% Increasing Infotainment applications, 22% 2.708 25% 10 driving GSM/GPRS/UMTS chipsets, 23% 2.893 6.785 +10% Bluetooth and GPS solutions 34% 5 30% 3.781 In-car networking requires intelligent Bus Systems ("system on 25% 3.164 20% 3.908 +4% vehicle") 2002 2008 Powertrain Safety Body Systems Driver Infotainment SemiconductorsSemiconductors areare keykey enablingenabling technologytechnology for increased automotive performance IFX Day 2003 - Munich for increased automotive performance Dr. Reinhard Ploss Page 20 Source: Strategy Analytics, own estimates Copyright © Infineon Technologies 2003. All rights reserved. New Laws: e.g. Direct Tire Pressure Monitoring One-stop Shopping for Direct TPMS Solutions

Today: No. 1 supplier of pressure based side airbag sensors and Hall based wheel speed sensors (ABS). Key sensor trends: Further integration of functionality and standardized signal transmission concepts. Semiconductor sensors: One of automotive electronics key drivers with CAGR of 20%. TPMS: More and faster innovations TPMS through bundling SensoNor's sensor G-SNS expertise and Infineons RF, ASIC and Transponder competencies. Aim: Double Infineon's market share for automotive semiconductor sensors to 15%. (Magneto, Pressure, Temperature)

Largest market for consumer drives (white goods), strong growing market for consumer & PC Highest growth rates in the automotive market - but on the other side it is very cost sensitive Increasing awareness for environmental care: Higher power efficiency, lower emission, lower fuel consumption Demand for similar safety / comfort standards known from EU/US/JP Local industry slowly also expanding into electronics Infineon's ongoing China activities: – Close contacts with OEMs, Tier 1 suppliers and their local JV companies in China – Technical co-operations with Universities, setting-up Automotive, µC, Power labs – Started local project regarding consumer drives with focus on APAC/China Largest growth for cars – Increase local resources in sales, marketing <100k RMB (~11k €) IFX Day 2003 - Munich and support, but also in R&D Dr. Reinhard Ploss Page 22 Copyright © Infineon Technologies 2003. All rights reserved. Defining Automotive Intelligence Semiconductors are Light Vehicles' Nerves, Brain and Muscles

TodayToday InIn 20102010

Automotive electronics can no longer focus on isolated applications Highly networked applications for sharing sensed data and to influence each other, e.g. ACC controls engine management and braking Need for standardized deterministic control and communication busses to

IFX Day 2003 - Munich guarantee safety and security at any time Dr. Reinhard Ploss Page 23 Copyright © Infineon Technologies 2003. All rights reserved. The Road to 2010 90% of all Automotive Innovations will be driven by Electronics

Production of 73 million light vehicles from 8 OEMs Electronic content: 35% (22% Hardware + 13% Software) Semiconductor content per light vehicle: ~300 Euro 2010

2002

Production of 57 million light vehicles from 20 OEMs Electronic content: 22% (18% Hardware + 4% Software) Semiconductor content per light vehicle: ~200 Euro IFX Day 2003 - Munich Dr. Reinhard Ploss Page 24 Sources: Strategy Analytics, FAZ Copyright © Infineon Technologies 2003. All rights reserved. IFX Day 2003 - Munich Never stop thinking. Dr. Reinhard Ploss Page 25 Copyright © Infineon Technologies 2003. All rights reserved.