IFX Day 2002: Infineon Unveils Details of its Growth and Production Strategy at London Conference
The semiconductor industry is undergoing radical change. The cycles so typical of the industry, for example, are shorter today than ever before, with sharper upturns and downturns. Traditional value chains are turning into vertical supply chain networks and there is a consolidation process going on within the value chain layers. In this capital-intensive industry, know-how exchange and partnerships are becoming increasingly important as a way of sharing investments and risks. In this environment Infineon is driving forward its Agenda 5-to-1 growth strategy in order to emerge as one of the winners from the current market change.
As part of its strategy, Infineon intends to position itself in the regional markets as one of the leading providers in China, Japan and the USA, and build on the leading position it already holds in Europe and Asia. In China, Infineon has set its sights on being one of the top 4 semiconductor companies and is aiming for a market share of more than ten percent. Infineon plans to establish its Chinese headquarters in Shanghai and expects to employ about 2300 people in China by 2007 focusing on research and development as well as marketing and sales. The companys activities in that country will be focused primarily on the communications and memory products sectors. In the USA, Infineon will continue expanding its service and sales organization and as a priority will intensify its activities with non-memory products, particularly in the automotive electronics and communications sectors. In Japan, the company will focus on key customers and concentrate on serving local growth markets such as broadband access, optical networks, short-range wireless and smartcards.
Infineon aims to be one of the top two in the industry when it comes to financial performance, particularly in relation to profitability. To achieve this goal, the company will further optimize its organization and focus future investments more intensively in order to grow its solution business. Infineon sees most potential in the high-margin solution business and aims to become the number one semiconductor company in this sector. Among other initiatives, the company intends to build up its software expertise and grow its service business. In addition, Infineon plans to pursue its successful cooperation strategy and collaborate in many areas with leading partners, such as Ericsson, Nanya, Nokia, Toshiba and UMC.
Infineon believes that focusing on technology lifestyle solutions will be key to the successful implementation of Agenda 5-to-1. In the past, the development of new products was primarily technology-driven. Technical feasibility was the watchword for developers. The company believes that in the future new technological trends will be determined by peoples individual needs. This will also drive the demand for solutions that make many aspects of everyday life easier and improve the quality of life, e.g. in healthcare, mobile communications and wearable electronics, where chips will be integrated into items of clothing and will control a variety of functions (e.g. MP3 player, protection against brand piracy, distribution logistics in large laundries, access control, location tracking, etc.).
Secure mobile solutions for terminal devices are one example of Infineons existing solution portfolio. These solutions combine subscriber identification with secure data transfer, e.g. for banking applications. Moreover, access is totally independent of location, e.g. from home, on the road or in the office. The solutions are rounded off by suitable storage media, enabling even memory-intensive applications to be used.
In fiscal 2001, Infineon responded quickly to the changed market conditions with its Impact cost-cutting program and realized savings of more than EUR 2.5 billion. To secure the long-term success of Infineon, the company launched its Impact² program, focusing on further optimization of processes, benchmarking and greater flexibility.
The manufacturing strategy is another key element in the implementation of the Agenda 5-to-1 program and forms the basis for the future growth of Infineon. The company will also continue to leverage its own production expertise in the future, for example its technology leadership in 300mm technology. Just one year after the start of volume production of memory chips on 300mm-diameter silicon wafers, Infineon Technologies can now produce memory chips at a lower cost per component on 300mm wafers than on 200mm wafers. Reaching the cost crossover milestone at its Dresden fabrication plant in Germany is further demonstration of Infineons leadership position in the industry.
Foundries will also be used more extensively in the future. At the same time Infineon will form manufacturing alliances with strategic partners. Infineon was quick to engage in cooperation ventures early on and today controls an entire network of partners, with whom the company cooperates on development as well as production. Infineons international cluster of DRAM production sites is an object lesson in this type of cooperation. The cluster includes Infineon production facilities in Dresden and Richmond (Virginia/USA) as well as Winbond (Hsinchu/Taiwan) and the recently announced production joint venture with Nanya. This concept of integrating Infineons memory facilities into a global network ensures uniformly high levels of quality at all sites worldwide and a constant exchange of know-how and experience. Infineon operates a similar integrated system for manufacturing logic chips with its production facilities in Dresden, Regensburg and Villach, the Altis Semiconductors joint venture with IBM in Essonnes (France) and the UMCi joint venture with UMC in Singapore.
Another key factor in production is flexibility. This means not only being able to service the heavy demand in boom periods, but also minimizing the effects of lower demand in times of crisis. For Infineon, flexibility also means being able to move the production of certain products within the manufacturing cluster to another site at short notice whenever there is a need. Equally, certain capacity reserves in the DRAM cluster can also be used for logic products, and vice versa.
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 2002 (ending September), the company achieved sales of EUR 5.21 billion with about 30,400 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.
D I S C L A I M E R
This news release includes forward-looking statements about our future business. These forward-looking statements include statements relating to future developments of the world semiconductor market, especially the market for memory products, Infineons future growth, the benefits of research and development alliances and activities, our planned levels of future investment in the expansion and modernization of our production capacity, the introduction of new technology at our facilities, the transitioning of our production processes to smaller structures, cost savings related to such transitioning and other initiatives, our successful development of technology based on industry standards, our ability to offer commercially viable products based on our technology, our ability to achieve our cost savings and growth targets. These forward-looking statements are subject to a number of uncertainties, including trends in demand and prices for semiconductors generally and for our products in particular, the success of our development efforts, both alone and with our partners, the success of our efforts to introduce new production processes at our facilities and the actions of our competitors, the availability of funds for planned expansion efforts, as well as the other factors mentioned herein. As a result, our actual results could differ materially from those contained in the forward-looking statements.