Financial and Technology Glossary

FINANCIAL GLOSSARY

ADS • American Depositary Shares – ADS are U.S.-traded stock certificates for non-U.S. stocks. These certificates simplify access to U.S. capital markets for non-U.S.-based companies, and in turn provide U.S. investors with investment opportunities in non-U.S.-based companies. Infineon´s ADS are listed on the over-the-counter market OTCQX International Premier at a 1:1 ratio.

CARVE-OUT • Legal separation of business operations (e.g. business units).

CASH FLOW • The cash-effective balance arising from inflows and outflows of funds over the fiscal year. The cash flow statement is part of the consolidated financial statements and shows how the company generated cash during the period and where it spent cash, in terms of operating activities (cash the company made by purchasing / selling goods and services), investing activities (cash the company spent for investment, or cash it raised from divestitures), and financing activities (cash the company raised by selling stocks, bonds and loans or spent for the redemption of stocks or bonds).

DAX • Deutscher Aktienindex – The German Blue Chip Index tracking the 30 major German companies traded on the Frankfurt Stock Exchange, in terms of order volume or market capitalization.

DEFERRED TAXES • Since tax laws often differ from the recognition and measurement requirements of financial accounting standards, differences can arise between (a) the amount of taxable income and pre-tax financial income for a year and (b) the tax bases of assets or liabilities and their reported amounts in financial statements. A deferred tax liability and corresponding expense results from income that has already been earned for accounting purposes but not for tax purposes. Conversely, a deferred tax asset and corresponding benefit results from amounts deductible in future years for tax purposes but that have already been recognized for accounting purposes.

DEFINED BENEFIT OBLIGATION (DBO) • A measure of a pension plans’ liability at the calculation date assuming that the plan is ongoing and will not terminate in the foreseeable future.

DERIVATIVE • A financial instrument that derives its value from the price or expected price of an underlying asset (e.g. a security, currency or bond).

EPS • Earnings (loss) Per Share – basic earnings (loss) per share (“EPS ”) is calculated by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the reporting period (financial quarter or year). Diluted EPS is calculated by dividing net income by the sum of the weighted average number of ordinary shares outstanding plus all additional ordinary shares that would have been outstanding if potentially dilutive securities or ordinary share equivalents had been issued.

EQUITY METHOD • Valuation method for interests in associated companies in which the investor has the ability to exercise significant influence over the investee’s operating and financial policies.

FREE CASH FLOW • Inflow and outflow of cash from operating and investing activities excluding purchases or sales of available-for-sale financial assets.

GOODWILL • An intangible asset of the company that results from a business acquisition, representing the excess of the acquired entity’s purchase price (cost) over the fair value of the net assets acquired and liabilities assumed. Under U.S. GAAP, goodwill is not reduced through regularly scheduled amortization, but rather written down to its fair value if impaired. An impairment assessment is done at least once a year.

GROSS CASH POSITION • Total of cash and cash equivalents and available-for-sale financial assets.

GROSS PROFIT OR MARGIN • Revenues less cost of goods sold.

IFRS • International Financial Reporting Standards; Infineon prepares its consolidated financial statements according to IFRS, as adopted by the European Union.

JOINT VENTURE • A form of business partnership between companies engaging in a commercial enterprise.

MINORITY INTEREST • Proportional share in net income not ascribed to the consolidated group but to outside shareholders that hold a minority share in the equity of the company’s subsidiaries

NET CASH POSITION • Gross cash position less long-term and short-term debt.

REGISTERED SHARES • Shares registered in the name of a certain person. This person’s details and number of shares are registered in the company’s share ledger in accordance with securities regulations. Only individuals registered in the company’s share ledger are considered shareholders of the company and are, for example, able to exercise their rights at the annual general meeting of shareholders.

SEC • Securities and Exchange Commission. The primary federal agency in the U.S. responsible for regulating the financial reporting practices of most publicly owned corporations in connection with the buying and selling of stocks and bonds.

SEGMENT RESULT • We define Segment Result as operating income (loss) excluding asset impairments, net, restructuring charges and other related closure costs, net,share-based compensation expense, acquisition-related amortization and gains (losses), gains (losses) on sales of assets, businesses, or interests in subsidiaries, and other income (expense), including litigation settlement costs. This is the measure that Infineon uses to evaluate the operating performance of its segments.

SEGMENT RESULT MARGIN • An indicator of operating performance, calculated as the percentage of Segment Result in relation to revenues.

TECDAX • A German stock index tracking the 30 major German technology companies traded on the Frankfurt Stock Exchange, in terms of order volume or market capitalization.

U.S. GAAP • Accounting principles generally accepted in the United States of America.

WORKING CAPITAL • Working capital consists of current assets less cash and cash equivalents, available-for-sale financial assets and assets held for disposal less short-term liabilities excluding short-term debt and current maturities of long-term debt and liabilities associated with assets classified as held for disposal.

TECHNOLOGY GLOSSARY

2G • Second generation, i.e. digital mobile telephony. Subsequent to the first generation (analog), 2G digital signals offer good overall sound quality and numerous data services. Second generation mobile communications standard in Europe: GSM.

2.5G • Currently most commonly used mobile communications infrastructure. 2.5-generation mobile communications standard in Europe: GPRS.

3G • Third generation of mobile communications. Provides broadband transmission of voice and data with considerably higher capacity compared to second generation. Third generation mobile communications standard in Europe: UMTS.

300-MILLIMETER TECHNOLOGY • Comprehensive term for the manufacture and processing of wafers with a diameter of 300 millimeters. At Infineon, the term is used as a synonym for the manufacture of memory chips on a 300-millimeter wafer.

65-NANOMETER TECHNOLOGY • Production technology that enables structures measuring 65 nanometers in width to be represented on the chip. The smaller the structures, e.g. conductors and pitches, the smaller the chip and the cheaper its production. The previous technology permitted features of 90 nanometers and the next generation has attained features of 45 nanometers.

ABS • The anti-lock braking system is an electronic vehicle safety feature that prevents the wheels from locking during heavy braking.

ADSL2, ADSL2+ • ADSL 2 and ADSL 2+ are further developments of the ADSL (Asymmetric Digital Subscriber Line) standard, which above all improve the data rates and range of ADSL connections. The increased range allows network providers to offer ADSL to a higher number of potential customers, while the increased data rates allow for new services like high-definition television (HD TV) over the Internet. ADSL 2+ increases the maximum data rate to 25 megabits per second downstream compared to the 16 megabits per second with ADSL 2. These data rates easily allow the transmission of multiple TV or single HD TV channels.

ASIC • Application-Specific Integrated Circuit. Logic IC specially constructed for a specific application and customer; implemented on an integrated circuit.

ASSP • Application-Specific Standard Product. Standard product designed for a specific use that can be used by many customers; implemented on an integrated circuit.

BACK-END MANUFACTURING • The part of the semiconductor manufacturing process that happens after the wafer has left the cleanroom (front-end manufacturing). This includes testing the chips at wafer level, repairing the chips if necessary, dicing the wafers and packaging the individual chips. There is a growing trend among semiconductor manufacturers to outsource the assembly, and sometimes even the testing, to independent assembly companies. Much of the assembly capacity is based in the Pacific Rim countries.

BASEBAND IC • A baseband IC processes the digital signals received and those to be sent. This complex component usually contains a digital signal processor, microcontroller, memory and analog circuits. Essentially, it is the core of a wireless communications system.

BIT • Information unit; can take one of two values“true” / “false” or “0” / “1”.

BLUETOOTH • Technology for wireless voice and data transmission over short distances.

BYTE • Unit of information in data processing components. One byte is equivalent to 8 bits.

CAT-iq • Cordless Advanced Technology – internet and quality. A standard for cordless telephones. CAT-iq enables conventional telephone applications to be combined with broadband Internet.

CHIP CARD • Plastic card with built-in memory chip or microprocessor, which can be combined with a Personal Identification Number (PIN).

CMOS • Complementary Metal Oxide Substrate. Standard semiconductor manufacturing technology used to produce microchips with low power usage and a high level of integration.

CONVERTER • Control unit that can convert AC voltages of various rates and frequencies. This is achieved by means of power electronics. Converters are used in wind turbines, for example, in order to feed fluctuating wind energy into the power network with a voltage of constant frequency. In electric drive technology, for example in engine controllers and trains, a converter is used to generate an output voltage of variable, load-dependent frequency from a mains supply of constant frequency.

CooLMOS • High-voltage power transistor for voltages from 300 to 1,200 V.

CPE • Customer Premises Equipment are user end devices in a computer network, telephone network or in telephone systems. Such end devices are normally the property of the end consumer or customer and are connected to a telephone or data network (Internet or LAN). Telephones, fax machines and modems are the most frequently found CPE devices. In the context of DSL , the term “CPE ” designates DSL modems.

DECT • Digital Enhanced Cordless Telecommunications. Uniform European standard for digital wireless communications systems.

DigRF-v3.09 STANDARD • A standardized interface between the baseband processor and the radio-frequency transceiver. The user data and control information are transferred purely digitally and no longer using analog technology. The current standard is version 3.09.

DSL • Digital Subscriber Line. A broadband digital connection over telephone networks.

EDGE • Enhanced Data Rates for GSM Evolution. Describes a technology for an increased data rate in GSM mobile communications networks which, to date, is only very rarely applied. Like GPRS, EDGE is a further evolutionary development of the GSM technology, and can be introduced in mobile communications networks with moderate effort.

ESP • Electronic Stability Program. A vehicular technology system that uses sensors and computers to brake individual wheels in order to prevent skidding.

FAB • See back-end (manufacturing) or front-end (manufacturing)

FRONT-END MANUFACTURING • Front-end process is the designation for all process steps that the entire wafer must complete. These are lithography, diffusion, ion implantation and application of circuitry levels. Some stations must be completed a number of times. At the end of the front-end process, the wafer may have been through as many as 500 individual process steps.

GIGA • 2 ³⁰, in information technology, e.g. Gigabit (Gbit), Gigabyte (GByte).

GPRS • General Packet Radio Service. New generation of mobile communications (2.5 group) for higher data transmission rates (up to 115 kilobits per second) in GSM networks.

GPS • Global Positioning System. Satellite-based location identification and positioning system based on the transittime differences of received signals.

GSM • Global System for Mobile Communications. Currently the most widely used digital mobile communications standard in the world (see 2G, 2.5G and GPRS).

HDTV • High Definition Television is a generic term for a number of television standards characterized by an increased vertical, horizontal and / or temporal resolution compared to conventional television. This is accompanied by the transition from the 4:3 to the 16:9 aspect ratio.

HERTZ • Hertz (Hz) is the unit for frequency, and is named after the German physicist Heinrich Rudolf Hertz (1857-1894). The Hertz determines the number of oscillations per second, or more generally speaking, the number of repetitive processes per second. Frequently used units are kilohertz (one thousand oscillations per second), megahertz (one million oscillations per second) and gigahertz (one billion oscillations per second).

HOME GATEWAY • This allows high-speed data transmissions from and to private homes. It can be considered as the next evolutionary step following the set-top box (decoder).

HSPDA, HSUPA, HSPA, HSPA+ • High-Speed Downlink Packet Access, High Speed Uplink Packet Access. A third-generation (UMTS) mobile phone communications protocol. HSDP A allows for the rapid transmission of data from the base station to the mobile phone unit at up to 7.2 megabits per second. This makes it possible for large amounts of data such as films, pictures, Internet pages, and e-mail to be downloaded to a mobile phone at high speeds. HSPD A is not only used in mobile phones, laptop users also work via data cards with the fast mobile data link. Like HSDPA, HSUPA is a third generation mobile telephony transmission process. HSUPA enables a fast data connection from the mobile phone to the base station with a current rate of up to 5.8 megabits per second. HSPA is the collective term for HSDP A and HSUPA. HSPA+ is the next generation and permits data transmission of 28 to 84 megabits per second from the base station to the mobile phone.

HYBRID CAR • A hybrid car is usually understood to be a motor vehicle that is driven by at least one electric motor, as well as a combustion engine. The hybrid drive is used in standard car construction to enhance efficiency, reduce consumption of fossil fuels or increase performance at lower engine speeds. In full hybrid cars the vehicle can be driven solely by the electric motor. In mild hybrid cars, the electric motor is simply used to support the combustion engine, for example when accelerating.

IAD •  Integrated Access Device. Customer premise equipments for the next generation network (NGN) that combine telephone, internet, and television signals, provided to customers through their telephone jacks. Users can connect their computers, telephones, and television decoders to IADs.

IC • Integrated Circuit. Electronic component parts composed of semiconductor materials such as silicon; numerous components, including transistors, resistors, capacitors and diodes can be integrated into ICs and interconnected.

IGBT MODULE • Insulated Gate Bipolar Transistor Module. IGBTs are semiconductor components used increasingly in power electronics due to their robustness, high blocking voltage, and their ability to be triggered with negligible power. Modules are formed using several IGBTs in parallel within a single casing. These modules are used to drive electric motors both in automotive and industrial applications. Motor speed and torque can be regulated along a gradual scale. Trains such as Germany’s ICE and France’s TGV use IGBT modules for an efficient and rapid electrical drive control.

IHM • IGBT High-Power Module. Semiconductor power module featuring multiple internal IGBTs (see IGBT module) that is designed for switching loads in the megawatt range (see power semiconductor).

INVERTER • An inverter is an electrical device that converts DC voltage into AC voltage or direct current into alternating current.

IPTV • Internet Protocol Television. Describes the digital transmission of TV programs and movies over a digital data network, and uses the Internet Protocol (IP) on which the Internet is based. The transmission of digital video signals demands a high data rate (about six to eight megabits per second for HD TV). Therefore, IPTV was not possible before the wide spread of broadband Internet connections to customers (e.g. ADSL 2, cable modem or VDSL) and introduction of new compression methods.

ISDN • Integrated Services Digital Network. Type of on-line connection, integrating telecommunications services such as telephone, fax or data transmissions into one single network.

KILO • 2 ¹⁰, in information technology, e.g. Kilobit (Kbit), Kilobyte (Kbyte).

LTE •  Long-Term Evolution. LTE is regarded as currently the most promising alternative to succeed the UM TS standard. First lab tests promise a data transfer rate of 100 megabits per second. This is intended to enable mobile telecommunications providers to offer interactive services, including high-speed data transfer and television (IPTV), as well as voice.

MEGA • 2 ²⁰, in information technology, e.g. Megabit (Mbit), Megabyte (Mbyte).

MICROCONTROLLER • A microprocessor integrated into a single IC combined with memory and interfaces, which functions as an embedded system. Logic circuits of the highest complexity can be designed in a microcontroller and controlled by software.

MICRON (MICROMETER) • Metric linear measure, corresponding to the millionth part of a meter (10 ^–6). -Symbol: μm. As an example, the diameter of a single -human hair is 0.1 millimeters, or 100 μm.

MOBILE PHONE PLATFORM • This platform is a working mobile phone, to which the customer only needs to add peripheral items such as the casing, keyboard, battery, and display. Customers can therefore design, produce and distribute a mobile phone without the need for great technical expertise.

NANOMETER • Metric unit of length. Corresponds to the billionth part of a meter (10 ^–9); the symbol is nm. The diameter of deoxyribonucleic acid (DN A) is roughly 2 nanometers. Fabrication features in the semiconductor industry are now measured in nanometers. See 65-nanometer technology.

POWER SEMICONDUCTOR • Over the last 30 years power semiconductors have mostly replaced electromechanical solutions in the areas of drive technology as well as power management and supply, due to their ability to form high energy flows almost at will. The advantage of these components is their ability to switch extremely rapidly (typically within a fraction of a second) between the “open” and the “closed” state. With the fast sequences of on / off pulses, almost any form of energy flow can be created, e.g. a sinus wave.

POWER TRANSISTOR • Power transistor is a term used in electronics to refer to a transistor for switching or controlling large voltages, currents and outputs. There is no standard method of differentiating between transistors for signal processing and power transistors. Power transistors are mainly produced in packages that enable installation on heat sinks, as it is otherwise impossible to handle the dissipation loss of several kilowatts that occurs with some types and applications. See power semiconductor.

RADIO-FREQUENCY (RF) TRANSCEIVER • The term “transceiver”, created from the words “transmitter” and “receiver”, is used to describe a combination of transmitter and receiver in a single component that is used in wireline and wireless communications. Radio-frequency transceivers are used in wireless communications, for example in mobile phones and cordless telephones.

SCHOTTKY DIODE • A special diode that has a metal-semiconductor junction rather than a semiconductor-semiconductor junction. The most frequently used semiconductor material up to 250 Volts is silicon. Silicon carbide (SIC) is used for voltages in excess of 300 Volts. SiC Schottky diodes offer a number of advantages over conventional diodes in power electronics. When used together with IGBT transistors, it is possible to dramatically reduce switching losses in the diode itself, as well as in the transistor. The name derives from German physicist Walter Schottky (1886-1976). (See silicon carbide)

SEMICONDUCTOR • Crystalline material; its electrical conductivity can be changed as desired by the application of doping materials (most often boron or phosphorus). Semiconductors include silicon or germanium. The term is also applied to ICs made of these materials.

SHDSL • Single-Pair High-speed Digital Subscriber Line. A symmetrical DSL transmission technology used in digital wide area networks and supporting data transfer rates of up to 4 megabits per second.

SILICON • A chemical element with semiconducting characteristics. Silicon is the most important raw material in the semiconductor industry.

SILICON CARBIDE • Compound semiconductor made from silicon (chemical symbol Si) and carbon (chemical symbol C). The abbreviation is SiC. Because of its special material properties (e.g. good thermal conductivity), SiC is used for Schottky diodes, as well as elsewhere. (See Schottky diode)

SINGLE-CHIP SOLUTION • This type of chip, used in mobile phones, combines the functions of several other chips. Singlechip solutions combine the three most important mobilephone chips into one: baseband chips, radio-frequency transceiver chips, and power-supply chips. Memory is also included into more recent single-chip generations. Single-chip solutions reduce the number of required components, thereby lowering costs for telephone testing and mounting.

SIM CARDS • Subscriber Identity Module cards. Chip cards that are inserted into mobile phones in order to identify the user within the network. They are used by mobile phone networks to provide connections to their customers.

SMART GRID • The term Smart Grid is understood to mean the upgrading of the existing power supply networks to include communication and measurement functions, so as to make the flow of energy between increasingly decentralized power generation - for example by means of wind farms or block-type thermal power stations – and consumers more efficient.

SMART PHONE • A smart phone combines the performance of a PD A with a mobile phone. Depending on the manufacturer, the device will be more PDA or more mobile phone. This means that smart phones can log on to a mobile phone network or, as small computers, also run applications like a PDA.

STREET CABINET • A distribution rack at the curb from which the last mile is deployed to the end user’s home. The street cabinet is also connected to the central office via copper or fiber lines.

SWITCHING POWER SUPPLY • A switching power supply is an electronic module that transforms an AC voltage into a DC voltage. Switching power supplies are more efficient than mains transformers and can be more compact and lighter than conventional power supplies containing a heavy transformer with a ferrous core. Switching power supplies are mainly used in PC s, notebooks and servers. However, they also achieve a very high level of efficiency even at low power, so they are increasingly found in plug-in power supply units, for example as chargers for mobile phones.

TRANSCEIVER • See radio-frequency (RF) transceiver.

TRUSTED COMPUTING • Trusted Computing means that the hardware and software used in PC s, as well as other computercontrolled systems, such as mobile phones, can be controlled. This is achieved by means of an additional chip, the Trusted Platform Module (TPM), which can use cryptography to measure the integrity of the hardware and of the software data structures, while also saving these values in a verifiable way.

ULC • Ultra Low Cost. Mostly used in the context of mobile telephones. The most important element in a ULC telephone is a single-chip solution that integrates the elementary mobile phone components, such as baseband processor, transmission and reception unit, power supply and memory on a single chip. See single-chip solution.

UMTS • Universal Mobile Telecommunications System. Designed to be the future global digital standard for –mobile communications. UMTS enables data transmission of up to two megabits per second.

VDSL2 • Very High Data Rate Digital Subscriber Line. VDSL , like ADSL , is a digital transmission technology for the connection of customers using copper wires. It offers significantly higher data rates of up to 52 megabits per second. This decreases the maximum range of the bridgeable copper wire to a maximum of 1.5 kilometers. The use of VDSL is therefore restricted to hybrid networks as an extension to an already existing fiber-optics-connection. The successor VDSL 2 will offer bandwidths of up to 100 megabits per second. The targeted range for this speed is about 200 meters.

VOICE-OVER-IP (VoIP) • IP telephony is the ability to telephone via a computer network using the Internet Protocol. IP telephony used to conduct conversations over the Internet is referred to as Internet telephony. The essential difference to conventional telephony is that voice data is not transmitted via a switched connection through a telephone network, but split up into IP packages which travel through the network to their destination along an unspecified route. IP telephony can share the infrastructure, i.e. the network, with other communications services.

WAFER • Thin slice of semiconductor material (mostly silicon, but germanium or gallium arsenide also common) from which the actual chip is produced. Typical diameters for wafers currently are 200 millimeters and 300 millimeters.

WCDMA • Wideband CDM A. A data transmission process used in UM TS networks.

WLAN • Wireless Local Area Network. A local computer network which connects computers with each other or the Internet via a radio connection.

XDSL • xDigital Subscriber Line. Generic term for various technical concepts for broadband digital data transmission via existing twisted copper wires. Depending on the configuration, the “x” stands for Asymmetric (A), High bit-rate (H), Single line (S), Symmetric high bit-rate (SH) or Very high bit-rate (V).