Investment in Asian growth markets to exploit full potential
The performance of the regional organizations and production sites is one of Infineon's most important strengths. Company decisions in this area take into account the prospective sales volume, innovation potential and cost advantages of the respective regions. Infineon is a global corporation supported by the flexibility of its local sites; responsibility for many tasks and areas of competence is allocated to the individual regions. The local proximity enables the company to recognize changes in and around our markets and react to them immediately - a great advantage in the fast-paced semiconductor sector.
One of our main objectives is to increase Infineon's international presence. We will continue to expand our activities in focus markets such as North America, China and Japan in order to achieve above-average improvements in profit and revenues.
Europe: strong position maintained
Despite Europe's continuing economic stagnation compared to Asia and North America, the continent remains an important market for semiconductor products. Infineon is well represented in Europe, especially in Germany, and over the past financial year we have again been able to capitalize on our broad European presence to reinforce our market position. Infineon's revenues increased by 11 percent to 2.9 billion euros, and we thus attained a market share of more than ten percent in the first half of the 2004 calendar year, securely establishing Infineon as the number two company on the European semiconductor market.
We have expanded our back-end facility in Porto, Portugal with a second module. Our decision in favor of this site reflects, among other aspects, the outstanding quality and efficiency of the existing production facility. Our Dresden site will also play an increasingly important role for the company in the future. Infineon's dedication to this site has proved worthwhile; Dresden is now home to an internationally acclaimed competence center for semiconductor technology. Drawing from the excellent research environment, Infineon is expanding its development center in Dresden, too.
... see Innovation
North America: realizing sales potential
North America has one of the world's strongest consumer markets and is home to important IT, automotive and telecommunications companies. It is a key market for all semiconductor manufacturers, but Infineon has yet to make full use of this potential. The company is therefore planning to expand its presence, especially since it is here that many of our global customers decide whether to use Infineon technology in their products - decisions that clearly have a strong impact on our international sales development.
We have set ambitious goals for ourselves. For one, we will strive to significantly develop our position in the automotive and industrial electronics sectors over the next threeyears. We will also expand our current 200-millimeter module in Richmond, Virginia by adding a 300-millimeter production line. This will enhance our presence in one of the largest and most promising markets for memory chips and help us to respond to our customers' needs more quickly and flexibly in the future.
... see Production
In the past financial year, Infineon's revenues in North America increased strongly to more than 1.5 billion euros, mainly because of memory component sales. We now have a market share of about five percent and ranked third among semiconductor companies on the American market during the first half of the 2004 calendar year.
Asia: Infineon capitalizes on local advantages
Infineon increased its revenues in Asia in the past financial year by 24 percent up to approximately 2.3 billion euros and is now the sixth largest semiconductor manufacturer with a market share of more than three percent in the first half of the 2004 calendar year. The region is playing an increasingly important role for Infineon for several reasons. Firstly, Asia's economic growth is well above global average, making Asia an attractive market for Infineon. Secondly, Asia, still the top market in terms of innovation, is setting global trends with its new products and functionalities. Furthermore, the level of education and training in Asia is generally comparable to the best in the world. And finally, wage and production costs in Asia are often significantly below European and North American standards.
We are now seeking to tap into the potential of the growing Chinese market. Long-term partnerships with a number of universities, such as the Tongji University in Shanghai, should improve our understanding of the market's requirements even further and help us to take part in China's extraordinary innovative potential. We opened a development center in Xi'an in January 2004, seizing the opportunity offered by the city that combines outstanding universities with cost advantages and a tremendous capacity for innovation.
... see Innovation
We are also expanding our global competence center for software development in Bangalore, India, where there are approximately 400 developers currently working at the site.
Japan has now recovered from its long economic crisis. This positive trend partly reflects drastic economic and political restructuring measures. The continued relaxation of restrictive economic structures in Japan is leading to lucrative sales opportunities for foreign suppliers. We plan to make use of this trend by, among other things, adapting Infineon's product range to Japanese requirements and expanding our distribution network there. Long-term commitment to the Japanese market and a focus on product quality are factors central to success in the region and thus main pillars of our strategy. We are also purposefully moving ahead with innovation partnerships with our customers, which both strengthen our position on the Japanese market in the long term and enable each party to benefit from the new opportunities. Our goal is to significantly increase our market share in Japan - and with an increase in revenues of 42 percent up to 364 million euros in the past financial year, we are well on our way.
We will continue to direct our future activities towards maintaining a global network of flexible and local companies. By carefully observing the dynamics of each region and reacting immediately to changes, our objective is to avoid risks and capitalize on new opportunities in the individual locations as soon as they arise.
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