Infineon Reports Results for Third Quarter of Financial Year 2005

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

-- Revenues of Euro 1.61 billion in the third quarter were stable compared to the second quarter, reflecting increased revenues of the Memory Products segment, offset by reduced revenues in the Communication and the Automotive, Industrial and Multimarket segments.

-- Third quarter EBIT loss included charges of Euro 81 million, primarily in connection with the planned phase-out of production at the company's Munich-Perlach facility and impairment charges in the Communication segment; third quarter EBIT loss increased to Euro 234 million from Euro 117 million in the prior quarter. Second quarter EBIT was negatively impacted by a net aggregate charge of Euro 74 million resulting primarily from reorganization measures in the Communication segment.

-- Net loss in the third quarter was Euro 240 million compared to a net loss of Euro 114 million in the prior quarter.

-- Total revenues for the first nine months of financial year 2005 were Euro 5.03 billion, down 3 percent from Euro 5.20 billion in the same period last year. EBIT loss in the first nine months of financial year 2005 was Euro 140 million, compared with positive Euro 143 million in the same period last year. Net loss for the first nine months amounted to Euro 212 million, compared to net income of Euro 17 million in the same period last year.
                               3       3     + /- in %    3     +/- in
                              months  months sequential  months    %
                              ended   ended              ended  year-
                             Jun 30, Mar 31,            Jun 30,   on-
             In Euro million   2005    2005               2004   year
---------------------------- ------- ------- ---------- ------- ------
Revenues                      1,606   1,606         +0%  1,908    -16%
---------------------------- ------- ------- ---------- ------- ------
EBIT                           (234)   (117)      -100%      2  - - -
---------------------------- ------- ------- ---------- ------- ------
Net loss                       (240)   (114)     - - -     (56) - - -
---------------------------- ------- ------- ---------- ------- ------
Loss per share
(in Euro)                     (0.32)  (0.15)     - - -   (0.08) - - -
---------------------------- ------- ------- ---------- ------- ------


For the third quarter of financial year 2005, Infineon Technologies AG (NYSE: IFX) (FWB: IFX) reported a stable overall development of revenues. Revenues of the Memory Products segment increased in the third quarter, primarily as a result of an approximate 45 percent bit-shipment growth, which more than offset a price-per-bit decline of approximately 30 percent compared to the previous quarter. In the Communication segment, revenues in the wireline business were stable in the third quarter, whereas demand for baseband components continued to decline. In the Automotive, Industrial and Multimarket segment, slight improvements in revenues of the automotive and industrial businesses could not fully offset further deterioration in the security and chip-card business.

As expected, sequential EBIT loss increased significantly. The EBIT loss increase was mainly driven by significantly lower price levels in the Memory Products segment compared to the previous quarter, as well as continuous pricing pressure primarily in the security and chip-card businesses. In addition, EBIT was negatively impacted by charges of Euro 81 million, primarily in connection with the planned phase-out of production at the company's Munich-Perlach facility and impairment charges in the Communication segment. Second quarter EBIT was negatively impacted by a net aggregate charge of Euro 74 million resulting primarily from reorganization measures in the Communication segment.

"We have made good progress in our corporate restructuring. However, in the third quarter we have seen adverse effects on memory products and security and chip-card ICs as well as at some of our baseband customers," said Dr. Wolfgang Ziebart, CEO and President of Infineon Technologies AG. "In spite of this, we expect an improved fourth quarter compared to the third quarter."

Business groups' 2005 third quarter performance and outlook

Infineon began to report its financial position and results of operations in accordance with its new organizational structure during the second quarter of financial year 2005. The former Mobile and Wireline Communication segments were combined into the new Communication segment to align the company's structure with market developments. At the same time, the company's security and chip-card activities and the ASIC & Design Solutions business were integrated into the extended Automotive, Industrial and Multimarket segment. The results of periods prior to the second quarter of financial year 2005 have been reclassified to conform to the new presentation.

Automotive, Industrial and Multimarket
                                3       3     + /- in %    3     +/-
                               months  months sequential  months  in %
                               ended   ended              ended  year-
                              Jun 30, Mar 31,            Jun 30,  on-
              In Euro million   2005    2005               2004   year
----------------------------- ------- ------- ---------- ------- -----
Revenues                         625      634                  -1%        669        -7%
-----------------------------  -------  -------  ----------  -------  -----
EBIT                                                            23            36                -36%          74      -69%
-----------------------------  -------  -------  ----------  -------  -----
 


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