Infineon Reports Results of Second Quarter and First Half of Financial Year 2005

MUNICH, Germany—(BUSINESS WIRE)—April 26, 2005— Infineon Technologies AG (NYSE: IFX)(FWB: IFX):

-- Second quarter revenues were Euro 1.61 billion, down 12 percent sequentially. Excluding license income of Euro 118 million realized in the first quarter from the settlement with ProMOS, revenues declined 5 percent sequentially, reflecting reduced revenues of the Communication and Memory Products segments.

-- Net loss in the second quarter was Euro 114 million, down from net income of Euro 142 million sequentially; second quarter EBIT decreased to negative Euro 117 million from positive Euro 211 million in the prior quarter. First quarter EBIT included a net aggregate positive impact of Euro 116 million resulting primarily from the license settlement with ProMOS. Second quarter EBIT was negatively impacted by a net aggregate charge of Euro 74 million resulting primarily from the reorganization measures in the Communication segment.

-- Total revenues for the first half of financial year 2005 were Euro 3.42 billion, up 4 percent from Euro 3.29 billion in the same period last year. Net income for the first half of the 2005 financial year amounted to Euro 28 million, compared to Euro 73 million in the prior year. EBIT in the first half of financial year 2005 was Euro 94 million, a decrease from Euro 141 million in the same period last year.
                               3       3     + /- in %    3     +/- in
                              months  months sequential  months    %
                              ended   ended              ended  year-
                             Mar 31, Dec 31,            Mar 31,   on-
             In Euro million   2005    2004               2004   year
---------------------------- ------- ------- ---------- ------- ------
Revenues                      1,606   1,816        -12%  1,671     -4%
---------------------------- ------- ------- ---------- ------- ------
Net (loss) income              (114)    142      - - -      39  - - -
---------------------------- ------- ------- ---------- ------- ------
EBIT                           (117)    211      - - -      71  - - -
---------------------------- ------- ------- ---------- ------- ------
Earnings (loss) per share
 (in Euro)                    (0.15)   0.19      - - -    0.05  - - -
---------------------------- ------- ------- ---------- ------- ------

                    6 months ended  6 months ended    +/- in %
    In Euro million  Mar 31, 2005    Mar 31, 2004   year-on-year
------------------- --------------- --------------- ------------
Revenues                     3,422           3,294           +4%
------------------- --------------- --------------- ------------
Net income                      28              73          -62%
------------------- --------------- --------------- ------------
EBIT                            94             141          -33%
------------------- --------------- --------------- ------------
Earnings (loss) per
 share (in Euro)              0.04            0.10          -60%
------------------- --------------- --------------- ------------


In the second quarter of financial year 2005, Infineon Technologies AG (NYSE: IFX) (FWB: IFX) reported, as expected, a sequential decrease in overall revenues. The decrease, excluding license income of Euro 118 million realized in the first quarter from the settlement with ProMOS, was primarily due to reduced revenues in its Communication and Memory Products segments. In the Communication segment, sales volumes decreased as a result of a seasonal slow- down of the worldwide mobile phone market coupled with a greater than seasonal decline in demand from some customers. In the Memory Products segment, revenues declined primarily due to the non-recurrence during the second quarter of license income of Euro 118 million from the settlement with ProMOS, and the strong decline of memory prices. Revenues in the Automotive, Industrial and Multimarket segment remained flat when compared to the previous quarter, mainly due to higher sales volume in the automotive and industrial market and despite strong pricing pressure in the chip-card business. All of the company's segments were impacted by pricing pressure.

EBIT declined in the company's three primary segments, as was noted in the outlook from the prior quarter. The sequential EBIT decrease was partially driven by lower sales volumes in the Communication segment, and by the strong decline in memory prices. In addition, EBIT was negatively impacted by a net aggregate charge of Euro 74 million resulting primarily from the reorganization measures in the Communication segment. EBIT in the first quarter included a net aggregate positive impact of Euro 116 million resulting primarily from the license settlement with ProMOS, which did not recur in the second quarter.

"Our cautious assessment of market conditions and the outlook for the last quarter unfortunately turned out to be accurate. In this difficult environment, we concentrated our efforts on optimizing our business setup, and have already achieved several milestones," said Dr. Wolfgang Ziebart, CEO and President of Infineon Technologies AG. "Back in the first quarter of this financial year, we took immediate action and implemented the fast and effective Smart Savings program. We then simplified the organization to create leaner structures and faster decision paths to allow us to better serve our customers. As a third step, we are focusing on restructuring non-profitable businesses."

Market Position

In calendar year 2004, Infineon improved its position on the worldwide semiconductor market from rank 7 to rank 4 according to the market research institute iSuppli.

Employee Data

As of March 31, 2005, Infineon had approximately 36,000 employees worldwide, including approximately 7,200 engaged in Research and Development.

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