Infineon Delivers Strategy to Address Increasing Packet Traffic and Extends Product Portfolio for Delivering Efficient Data Services over Existing Networks

Munich, Germany – June 16, 2004 – Infineon Technologies AG (FSE/NYSE: IFX) today introduced its new ’Cost-Efficient Data Transport’ strategy to develop telecommunications equipment that will enhance and upgrade optical infrastructure at the edges of metropolitan and wide-area networks in the most cost efficient manner.

“ Infineon’s new strategy provides solutions for the technical and economic challenges faced by telecom providers,” said Christian Scherp, Vice President of Marketing, Wireline Communications, Infineon Technologies North America. “The global infrastructure now in place was principally designed for transport of voice services. With the increasing demand for packet-based broadband services, data volume over these networks is growing while competitive pressure is driving down the recoverable cost of service delivery.”

The cost-effective data transport strategy and related product initiatives will enable original equipment manufacturers (OEMs) to address service provider and carrier requirements for advanced systems to support the transition from today’s voice-optimized networks to delivery of packet-based broadband services, such as Voice-over-IP (VoIP), internet access, peer-to-peer file sharing, audio/video transport, and business applications such as Virtual Private Networks (VPNs) and storage data transport.

“ Global packet traffic originating from and delivered to consumer and enterprise customers increased by 77 percent in 2003, and this increased volume is driving a reduction in the dollar-per-bit revenues service providers can capture,” said Allan Armstrong, an analyst at the market research firm RHK. ”In fact, inefficient use of the network infrastructure contributes to our forecast that, by through 2008, dollar-per-bit revenue will decrease by a total of 28 percent per year. The market is ready for solutions that can help telecom service providers and carriers leverage existing infrastructures, especially the large build-out of SONET/SDH (Synchronous Optical Network/Synchronous Digital Hierarchy) rings that are optimized for voice traffic but inefficiently carry 'data' traffic today.”

Infineon has identified four segments of the data over SONET/SDH market that it is addressing with new products and technology integration programs. In the first of these segments, Ethernet over SONET framing, the company today announced the introduction of the MetroMapper 2.5G chipset, the second member of a family of networking ICs supporting Ethernet or generic data transport requirements defined by international standards organizations.

“ In line with our commitment to delivering the industry’s most complete portfolio of IC solutions for delivery of broadband services from the core to the door, Infineon’s optical networking business unit will provide its OEM customers with the critical technologies to optimize SONET/SDH networks for value-added data transport services,” said Scherp. “The network infrastructure must be able to transport any type of data traffic in the most cost-efficient way possible packaged as value-added services and automatically provisioned on demand. Providers will want to deliver on-demand applications ranging from VoIP, audio/video broadcast and peer-to-peer file sharing, to virtual private lines and other business applications, without costly truck rolls and error-prone manual configuration. Our Cost-Efficient Data Transport strategy delivers the building blocks to enable these services.”

Infineon’s new ‘Cost-Efficient Data Transport’ strategy

The revised strategy for data over SONET/SDH by Infineon addresses the following areas:

• Ethernet and generic data over SONET Framer Devices:

Ethernet over SONET (EoS) is a general term used to describe the set of standards being defined to enable efficient packet-transfers over SONET/SDH rings. EoS framers handle the mapping of Ethernet or general packet-based data into SONET/SDH utilizing the new Virtual Concatenation (VC), Link Capacity Adjustment Scheme (LCAS ) and Generic Framing Procedure (GFP) standards; therefore, allowing data traffic to coexist with voice on the same network. Infineon’s first device to address this segment, the MetroMapper622, was introduced in 2003.

• Layer 2 / Layer 3 Switching Elements:

Layer2/3 switching elements enable the data services and management capabilities described by the Metro Ethernet Forum (MEF), Internet Engineering Task Force (IETF) and International Telecommunications Union (ITU) standards bodies, which maximize utilization of shared network resources and enable network management systems for on- demand provisioning, enforcement of Service Level Agreements (SLAs), as well as billing on a value-added service basis.

• Resilient Packet Ring Media Access Controllers (RPR MACs):

RPR is an important emerging Layer 2 protocol to further enhance the efficiency of the network, especially for point to multi-point and multi-point to multi-point applications such as audio/video broadcast or regional LAN Virtual Private Networks. RPR MACs can work in concert with (or be integrated with) EoS Framers to allow those implementing the technology to take full advantage of SONET/SDH ring topologies and their proven reliability.

• Storage Transport:

Storage transport is an important emerging application driven by the increasing demand to decentralize data storage centers (Storage Area Networks or SANs) for disaster resiliency and to meet legislative requirements regarding data safety and availability. This requires that datacenters be interconnected and places stringent requirements on the network. Traditionally, large corporations have used private lines offered by service providers through dense wavelength division multiplexing (DWDM) networks. However, private line costs are prohibitive for smaller corporations or smaller remote locations, which means there is now a demand to offer storage transport services over a shared network. Storage transport devices implementing new standards such as Fiber Channel BB2/3 (FCBB2/3) allow equipment, and therefore service providers, to offer Fiber Channel (FC) interfaces that seamlessly and cost efficiently interconnect distributed SAN sites for enterprise customers.

Infineon will demonstrate solutions related to its new strategy at the SUPERCOMM exhibition and conference, June 22 – 24, in booth # 12347.

MetroMapper 2.5G chipset Added to Portfolio

In keeping with its refocused strategy, one of the demonstrations at SUPERCOMM will highlight the newest addition to the Ethernet over SONET framer family, the MetroMapper 2.5G chipset, which allows equipment manufacturers to develop systems that meet the latest Ethernet transport requirements as defined by the MEF, IETF and ITU-T, including seamless interface between private and carrier networks, and any-point-to-any-point connectivity. Like the MetroMapper 622, it offers a hitless LCAS engine proven in a real network environment and extensive zero-packet-loss Layer 2 on-chip functionality. It also supports low-order and high-order virtual concatenation (VCAT) with Link Capacity Adjustment Schemes (LCAS) for up to 128 channels and provides Ethernet Virtual LAN (VLAN) ID processing and enables MPLS label update processing.

The MetroMapper 2.5G chipset is offered in a 1024-contact ball grid array (BGA) package and is available now at a low-volume price of US dollar 350.

Infineon Technologies AG, Munich, Germany, offers semiconductor and system solutions for the automotive and industrial sectors, for applications in the wired communications markets, secure mobile solutions as well as memory products. With a global presence, Infineon operates in the US from San Jose, CA, in the Asia-Pacific region from Singapore and in Japan from Tokyo. In fiscal year 2003 (ending September), the company achieved sales of Euro 6.15 billion with about 32,300 employees worldwide. Infineon is listed on the DAX index of the Frankfurt Stock Exchange and on the New York Stock Exchange (ticker symbol: IFX). Further information is available at www.infineon.com.