Infineon reports results for the first quarter of 2008 fiscal year

Neubiberg, Germany – February 7, 2008 – Infineon Technologies AG (FSE/NYSE:IFX) today reported results for the first quarter of the 2008 fiscal year ended December 31, 2007.

Results for Infineon excluding Qimonda for first quarter of 2008 fiscal year

Revenues for Infineon excluding Qimonda in the first quarter of the 2008 fiscal year were Euro 1.09 billion, down three percent sequentially and up 14 percent year-over-year. The sequential decline reflects higher revenues in the Communication Solutions segment and lower revenues in the Automotive, Industrial & Multimarket segment. Excluding effects from currency fluctuations, primarily between the U.S. dollar and the Euro, and acquisitions and divestitures, revenues for Infineon excluding Qimonda declined three percent sequentially and rose 15 percent year-over-year.

EBIT for Infineon excluding Qimonda was Euro 65 million in the first quarter, up from negative Euro 25 million in the prior quarter. EBIT in the first quarter included a net gain of Euro 11 million, reflecting a gain of Euro 28 million from the sale of part of the company’s interest in its high-power bipolar business, which was partly offset by charges of Euro 17 million, reflecting a write-off of acquired in-process research & development (R&D) of Euro 14 million relating to the mobile phone business acquired from LSI and restructuring expenses of Euro 3 million. Fourth quarter EBIT included net charges of Euro 94 million, mainly relating to the sale of Qimonda shares. For additional detail on net gains and charges included in the EBIT of Infineon excluding Qimonda, please see the table on page 10 of this release. Also included in EBIT for the first quarter of the 2008 fiscal year were Euro 9 million for the amortization of acquisition-related intangible assets related mainly to the business acquired from LSI.

Results for the Infineon group for first quarter of 2008 fiscal year

In the first quarter, Infineon reported group revenues of Euro 1.60 billion, net loss of Euro 396 million, EBIT of negative Euro 368 million, and basic and diluted loss per share of Euro 0.53.

Outlook for Infineon excluding Qimonda for second quarter of 2008 fiscal year

For the second quarter of the 2008 fiscal year, Infineon expects revenues for its segments excluding Qimonda to decrease by a mid single-digit percentage compared to the first quarter. The company anticipates EBIT for its segments excluding Qimonda and before net gains or charges to decline from the prior quarter’s level, but to remain positive with low single-digit EBIT margin. In the second quarter, Infineon expects net gains or charges to be insignificant.

Outlook for Infineon excluding Qimonda for 2008 fiscal year

For the full year, Infineon maintains its outlook for the Automotive, Industrial and Multimarket segment: revenues and EBIT excluding net gains or charges are both expected to decline slightly from 2007 fiscal year levels. From the third quarter of the 2008 fiscal year onwards, Infineon expects revenues in the Communication Solutions segment to return to sequential growth. Despite the outlook for the current quarter, Infineon expects the full year to yield revenue growth for the Communication Solutions segment of 25 to 30 percent, with low to mid single-digit negative EBIT margin before net gains or charges. For its segments excluding Qimonda, Infineon currently expects revenues to increase by a high single-digit percentage year-on-year. EBIT for its segments excluding Qimonda and before net gains or charges in the 2008 fiscal year is anticipated to be positive with low to mid single-digit EBIT margin.

“In line with our turnaround plan, results for Infineon excluding Qimonda showed solid year-over-year improvements in the first quarter of the 2008 fiscal year, and in particular, both the wireless business and the total Communication Solutions segment reached the goals we set for them”, said Dr. Wolfgang Ziebart, President and CEO of Infineon Technologies AG. “For the 2008 fiscal year, we expect reasonably steady performance from our Automotive, Industrial and Multimarket segment and significant improvements for the Communication Solutions segment year-over-year. We continue to target 10 percent EBIT margin for the 2009 fiscal year, although uncertain prospects for the global economy, the adverse currency development, and the revised outlook are headwinds that make reaching this goal more challenging.”

Additional details concerning the outlook can be found in the segments’ sections below.

Segments’ first quarter performance and outlook

Automotive, Industrial & Multimarket (AIM)

In the first quarter of the 2008 fiscal year, the Automotive, Industrial & Multimarket segment reported revenues of Euro 743 million, representing a nine percent decrease compared to the prior quarter and five percent growth year-over-year. The sequential revenue decline was mostly due to the deconsolidation of the high-power bipolar business and the effects of the currency fluctuations, primarily between the U.S. dollar and the Euro. Excluding these effects, segment revenues decreased four percent sequentially and grew 13 percent year-over-year. Segment EBIT was Euro 93 million compared to Euro 102 million in the prior quarter. Included in the first quarter segment EBIT was a gain of Euro 28 million from the sale of part of the company’s interest in its high-power bipolar business. Segment EBIT for the fourth quarter did not include any net gains or charges.

Revenues and EBIT in the automotive business decreased compared to the previous quarter due to seasonality, the currency impact, weak demand from U.S. car manufacturers, and annual price reductions for major customers. In the industrial & multimarket business, revenues and EBIT decreased due to seasonal weakness in the consumer, computing and telecom markets, the currency impact, and the deconsolidation of the high-power bipolar business. Demand for high-power products remained strong. The results of the security & ASICs business were better than expected, mainly due to continued high demand in the chip card and security business.

Automotive, Industrial & Multimarket’s outlook for second quarter of 2008 fiscal year

In the second quarter of the 2008 fiscal year, Infineon expects revenues of its Automotive, Industrial & Multimarket segment to be approximately flat compared to the prior quarter, in line with the usual seasonal pattern. Segment EBIT margin is expected to be in the range of eight to nine percent.

Revenues in the segment’s automotive business are expected to increase compared to the first quarter despite ongoing weakness in demand from U.S. car manufacturers and annual price reductions for major customers. Revenues in the industrial & multimarket business are anticipated to decline due to the usual seasonal pattern in the consumer, computing and telecom markets. Results in the security & ASICs business are anticipated to remain broadly unchanged compared to the prior quarter due to strong demand for chip cards.

Automotive, Industrial & Multimarket’s outlook for 2008 fiscal year

The forecast for the Automotive, Industrial & Multimarket segment for the 2008 fiscal year remains unchanged. Infineon still expects segment revenues to be down slightly compared to the 2007 fiscal year. Excluding net gains or charges, segment EBIT is anticipated to decrease slightly year-on-year.

Communication Solutions (COM)

In the first quarter of the 2008 fiscal year, revenues in the Communication Solutions segment were Euro 356 million, up 12 percent compared to the prior quarter and up 51 percent year-over-year. Excluding the effects of the currency fluctuations, primarily between the U.S. dollar and the Euro, and the contribution from the mobile phone business acquired from LSI and the DSL CPE activities acquired from Texas Instruments, segment revenues increased 31 percent year-over-year and one percent sequentially. Segment EBIT for the first quarter improved to negative Euro 11 million, compared to negative Euro 14 million in the prior quarter. Included in the segment EBIT for the first quarter was a write-off of Euro 14 million of acquired in-process R&D in connection with the acquisition of the mobile phone business of LSI. The segment reached its earnings goals, as anticipated. Also included in the segment EBIT for the first quarter was the amortization of acquired intangible assets of Euro 9 million relating mainly to the mobile phone business acquired from LSI. Segment EBIT for the fourth quarter did not include any net gains or charges.

In the wireless business, revenues increased significantly, as expected, driven mainly by the consolidation of the mobile phone business acquired from LSI and a continued increase in mobile phone platform shipments. The wireless business reached its earnings goals, as anticipated, when excluding the write-off of acquired in-process R&D of Euro 14 million. Excluding the DSL CPE activities acquired from TI, revenues in the broadband business decreased compared to the prior quarter due to continued weak demand, particularly in the infrastructure business.

Communication Solutions’ outlook for second quarter of 2008 fiscal year

Revenues in the Communication Solutions segment are expected to decline by a mid-teens percentage in the second quarter of the 2008 fiscal year compared to the prior quarter. This is expected to be driven mainly by typical wireless seasonality, but also by lower than expected volumes in certain mobile phone platform projects. The broadband business is anticipated to stabilize on the low level of the prior quarter. Segment EBIT is anticipated to follow the revenue decrease and to come in at approximately negative Euro 30 million before net gains or charges.

Communication Solutions’ outlook for 2008 fiscal year

Revenues in the Communication Solutions segment are expected to return to growth beginning with the third quarter of the 2008 fiscal year. For the full year, Infineon now expects year-on-year revenue growth of 25 to 30 percent in the segment. Segment EBIT is anticipated to be negative and result in a low to mid single-digit negative EBIT margin before net gains or charges, including amortization of acquisition-related intangible assets of around Euro 25 million.

Qimonda

In the first quarter of the 2008 fiscal year, Qimonda reported revenues of Euro 513 million, down 28 percent quarter-over-quarter and down 56 percent year-over-year. First quarter EBIT was negative Euro 433 million compared to EBIT of negative Euro 216 million in the previous quarter. Minority interests, calculated from Qimonda’s first quarter net loss, were Euro 128 million. Qimonda recorded charges of Euro 29 million in connection with its agreement with Infineon for the production of wafers at the Infineon Technologies Dresden GmbH & Co. OHG production facility and its cancellation thereof during the quarter ended December 31, 2007, which were eliminated on consolidation. Infineon’s beneficial ownership interest in Qimonda as of December 31, 2007 was 77.5 percent.

Qimonda’s outlook for the second quarter of 2008 fiscal year

In the second quarter of the 2008 fiscal year, Qimonda expects its bit production to be up by a mid single-digit percentage compared to the first quarter. Additionally, Qimonda has begun to reassess its capacity corridors with foundry partners in light of the relatively low DRAM market price environment.

Qimonda’s outlook for 2008 fiscal year

Qimonda is currently targeting an increase in its bit production for the 2008 fiscal year of 30 to 40 percent, compared with its prior estimate of about 50 percent, taking into account an accelerated reduction of 200 millimeter capacities, partly offset by productivity improvements through conversion to 80 nanometer and 75 nanometer technologies. Qimonda continues to expect bit demand for DRAM to be driven by continued solid growth in graphics, consumer and communication applications and the move to higher density modules in the PC market. The share of bit-shipments for use in non-PC applications is anticipated to be greater than 50 percent for the full fiscal year. Qimonda has reduced its target for capital expenditures for the 2008 fiscal year to a range of Euro 400 to 500 million. As part of the saving measures, the construction of a new 300 millimeter fab in Singapore has been put on hold pending improved market conditions.

Qimonda has reduced its targets for R&D and Selling, General & Administrative (SG&A) expenses for the 2008 fiscal year. It currently expects R&D expenses in the range of Euro 430 to 460 million and SG&A expenses in the range of Euro 200 to 220 million.

Other Operating Segments / Corporate and Eliminations

EBIT in Corporate and Eliminations included charges of Euro 3 million in the first quarter, mainly in connection with restructuring. EBIT in Corporate and Eliminations in the fourth quarter of the 2007 fiscal year included charges of Euro 93 million, mainly relating to the sale of Qimonda shares.

Other Operating Segments / Corporate and Eliminations’ outlook for second quarter of 2008 fiscal year

In the second quarter, Infineon expects revenues and EBIT before net gains or charges in Other Operating Segments and Corporate and Eliminations to remain broadly unchanged compared to the prior quarter. Infineon expects net gains or charges to be insignificant.

Major business highlights of Infineon’s segments in the first quarter of the 2008 fiscal year can be found in this document after the financial tables.

All figures are preliminary and unaudited.

Analyst and press telephone conferences

Infineon Technologies AG will conduct a telephone conference (in English only) with analysts and investors on February 7, 2008, at 10:00 a.m. Central European Time (CET), 4:00 a.m. Eastern Standard Time (U.S. EST), to discuss operating performance during the first quarter of the 2008 fiscal year. In addition, the Infineon Management Board will host a telephone conference with the media at 11:30 a.m. (CET), 5:30 a.m. (U.S. EST). It can be followed in German and English over the Internet. Both conferences will be available live and for download on the Infineon web site at www.infineon.com.

IFX financial and trade fair calendar (*preliminary date)

• Feb 12, 2008; Analyst Presentation at the Mobile World Congress in Barcelona
• Feb 14, 2008; Annual General Meeting of Shareholders
• Apr 23, 2008*; Earnings Release for the Second Quarter of the 2008 Fiscal Year
• Jun 2/3, 2008*; IFX Day: Annual Analyst and Investor Day
• Jul 25, 2008*; Earnings Release for the Third Quarter of the 2008 Fiscal Year
• Dec 03, 2008*; Earnings Release for the Fourth Quarter and Full 2008 Fiscal Year

New in the IFX pod cast section at www.infineon.com/podcast

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About Qimonda

Qimonda AG is a leading supplier of DRAM memory products. Following its carve out from Infineon Technologies AG on May 1, 2006, Qimonda went public on the New York Stock Exchange on August 9, 2006. The company generated net sales of Euro 3.6 billion in its 2007 fiscal year with approximately 13,500 employees worldwide. Qimonda has access to five 300 millimeter manufacturing sites on three continents and operates six major R&D facilities, including its lead R&D center in Dresden, Germany. The company is a leading supplier of DRAM products to PC and server manufacturers and is increasingly using its power saving trench technology for graphics, mobile and consumer applications. Further information is available at www.qimonda.com.

Infineon’s group results include the consolidated results of Qimonda. Qimonda provides outlook on its business separately.

DISCLAIMER

This discussion includes forward-looking statements about our future business. These forward-looking statements include statements relating to future developments in the world semiconductor market, including the market for memory products, Infineon’s future growth, the benefits of research and development alliances and activities, our planned levels of future investment in the expansion and modernization of our production capacity, the introduction of new technology at our facilities, the continuing transitioning of our production processes to smaller structure sizes, cost savings related to such transitioning and other initiatives, our successful development of technology based on industry standards, our ability to offer commercially viable products based on our technology, our ability to achieve our cost savings and growth targets, and the continued development of the business of Qimonda as a stand-alone entity and any future corporate financing measures Infineon or Qimonda may undertake. These forward-looking statements are subject to a number of uncertainties, including trends in demand and prices for semiconductors generally and for our products in particular, the success of our development efforts, both alone and with our partners, the success of our efforts to introduce new production processes at our facilities and the actions of our competitors, the availability of funds for planned expansion efforts, the outcome of antitrust investigations and litigation matters, as well as the other factors mentioned herein and those described in the “Risk Factors” section of the annual report of Infineon on Form 20-F filed with the U.S. Securities and Exchange Commission on December 7, 2007. As a result, our actual results could differ materially from those contained in the forward-looking statements. Infineon does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.

Infineon Technologies AG, Neubiberg, Germany, offers semiconductor and system solutions addressing three central challenges to modern society: energy efficiency, communications, and security. In the 2007 fiscal year (ending September), the company reported sales of Euro 7.7 billion (including Qimonda sales of Euro 3.6 billion) with approximately 43,000 employees worldwide (including approximately 13,500 Qimonda employees). With a global presence, Infineon operates through its subsidiaries in the U.S. from Milpitas, CA, in the Asia-Pacific region from Singapore, and in Japan from Tokyo. Infineon is listed on the Frankfurt Stock Exchange and on the New York Stock Exchange (ticker symbol: IFX).