Infineon reports results for the second quarter of 2008 fiscal year

Neubiberg, Germany – April 23, 2008 – Infineon Technologies AG (FSE/NYSE:IFX) today reported results for the second quarter of the 2008 fiscal year, ended March 31, 2008.

As of March 31, 2008, the financial reports of Infineon will focus on the ongoing operations of the company while at the same time setting the foundation for the comparability of its performance going forward. The assets and liabilities of Qimonda have been reclassified as held for sale in the condensed consolidated balance sheets, and the individual line items in the condensed consolidated statements of operations reflect the results of Infineon’s segments other than Qimonda. The results of operations of Qimonda are reported in one line item titled “Income (loss) from discontinued operations”. In addition, earnings per share as well as the statements of cash flows differentiate between “continuing” and “discontinued” operations. Following this reclassification, the investment in Qimonda has been reduced to its current fair value less costs to sale, resulting in a write-down of Euro 1.004 billion, which was recorded in “Income (loss) from discontinued operations” in the second quarter of the current fiscal year.

Infineon’s revenues in the second quarter of the 2008 fiscal year were Euro 1.049 billion, down four percent sequentially and up seven percent year-over-year. The sequential decline reflects primarily negative revenue seasonality in the Communication Solutions segment. Excluding effects from currency fluctuations, primarily between the U.S. dollar and the Euro, and acquisitions and divestitures, revenues declined two percent sequentially and rose ten percent year-over-year.

Infineon EBIT was Euro 36 million in the second quarter, down from Euro 65 million in the prior quarter. Infineon EBIT in the second quarter included net charges of Euro 8 million, mainly in connection with restructuring, and Euro 5 million for the amortization of acquisition-related intangible assets related mainly to the business acquired from LSI. Infineon EBIT in the first quarter included a net gain of Euro 11 million, and Euro 9 million of such amortization expenses. For additional detail on net gains and charges included in the Infineon EBIT, please see the table on page 9 of this release. Net income from continuing operations for the second quarter was Euro 19 million, translating into basic and diluted earnings per share of Euro 0.03. For the first quarter, net income from continuing operations was Euro 45 million, basic and diluted earnings per share were Euro 0.06.

The net loss from discontinued operations was Euro 1.390 billion for the second quarter. This loss included Infineon’s share in Qimonda’s net loss of Euro 482 million, as well as a charge of Euro 1.004 billion from the write-down of the carrying value of Infineon’s interest in Qimonda to its estimated fair value. Basic and diluted loss per share from discontinued operations was Euro 1.85.

For the second quarter, Infineon reported group net loss of Euro 1.371 billion, and basic and diluted loss per share of Euro 1.82.

Infineon’s outlook for third quarter of 2008 fiscal year

Although Infineon has hedged a significant portion of the cash flow impact of the weakening exchange rate of the U.S. dollar against the Euro for the 2008 fiscal year, the exchange rate development is still negatively impacting the top-line. For the third quarter of the 2008 fiscal year, Infineon expects revenues to be flat to down slightly compared to the second quarter. The company anticipates Infineon EBIT, excluding net gains or charges, to decline from the prior quarter’s level, but to remain positive, with low single-digit Infineon EBIT margin. In the third quarter, Infineon expects to record a gain of approximately Euro 40 million from the sale of the company’s hard disk drive (HDD) business to LSI.

Infineon’s outlook for 2008 fiscal year

For the full year, Infineon maintains its previously announced outlook for its continuing operations. In the Automotive, Industrial & Multimarket segment, revenues and EBIT excluding net gains or charges are both expected to decline slightly from 2007 fiscal year levels. In the Communication Solutions segment, revenues are anticipated to increase 25 to 30 percent, with low to mid single-digit negative EBIT margin excluding net gains or charges.

Infineon currently expects revenues to increase by a high single-digit percentage year-on-year. Infineon EBIT in the 2008 fiscal year, excluding net gains or charges, is anticipated to be positive with low to mid single-digit Infineon EBIT margin.

“In the second quarter, we took a big step forward in our preparation for the ultimate disposal and resulting deconsolidation of our investment in Qimonda resulting in the re-classification as assets held for sale. In our ongoing operations, we made solid year-over-year progress both in terms of revenue and Infineon EBIT. That progress was achieved despite a materially adverse development in the U.S. dollar-Euro exchange rate”, said Dr. Wolfgang Ziebart, President and CEO of Infineon Technologies AG. “Last quarter’s severe fall of the U.S. dollar against the Euro from about 1.45 to the current level of about 1.60, should it be sustained throughout the entire 2009 fiscal year, would negatively impact Infineon EBIT for next year by about Euro 120 million, based on our current revenue projections. Reaching ten percent Infineon EBIT margin under such circumstances would not be possible. Against this background, we have strongly accelerated all margin improvement measures that we are implementing across the company. We therefore see the potential, despite the significant currency hit, to maintain EBIT margins in the Automotive, Industrial & Multimarket segment at a high level and to achieve positive EBIT in our Communication Solutions segment next year, excluding net gains or charges.”

Additional details concerning the outlook can be found in the segments’ sections below.

Segments’ second quarter performance and outlook

Automotive, Industrial & Multimarket (AIM)

In the second quarter of the 2008 fiscal year, the Automotive, Industrial & Multimarket segment reported revenues of Euro 741 million, broadly unchanged compared to the prior quarter, due to the usual seasonal pattern, and unchanged year-over-year.

Excluding the effects of currency fluctuations, primarily between the U.S. dollar and the Euro, and acquisitions and divestitures, segment revenues increased nine percent year-over-year and grew one percent sequentially. Segment EBIT was Euro 69 million compared to Euro 93 million in the first quarter. Net gains or charges included in the segment EBIT for the second quarter were negligible. Included in the first quarter segment EBIT was a gain of Euro 28 million from the sale of part of the company’s interest in its high-power bipolar business.

Revenues and EBIT in the automotive business increased compared to the prior quarter, despite ongoing weakness in demand from U.S. car manufacturers. In the industrial & multimarket business, revenues and EBIT decreased, as expected, due to the usual seasonal pattern in the consumer, computing and telecom markets. Demand for high-power products remained strong. The results of the security & ASICs business remained broadly unchanged compared to the first quarter, mainly due to continued strong demand in the chip card and security business.

Automotive, Industrial & Multimarket’s outlook for third quarter of 2008 fiscal year

In the third quarter of the 2008 fiscal year, Infineon expects revenues of its Automotive, Industrial & Multimarket segment to decline by a low single-digit percentage compared to the second quarter. The expected decline can be attributed predominantly to the ongoing weakening of the U.S. dollar against the Euro and the expected deconsolidation of the company’s’ HDD business. Segment EBIT margin is expected to be in the range of 8.5 to 9.5 percent, excluding net gains or charges. In addition, Infineon expects to record a gain of approximately Euro 40 million from the sale of the HDD business to LSI.

Revenues in the segment’s automotive business are expected to remain broadly unchanged compared to the second quarter. Sales in the industrial & multimarket business are anticipated to be about flat. Results in the security & ASICs business are anticipated to decline compared to the prior quarter, largely due to the deconsolidation of the HDD business following its sale to LSI. The transaction is expected to close in the third quarter. In addition, we expect some normalization in demand for chip card ICs.

Communication Solutions (COM)

In the second quarter of the 2008 fiscal year, revenues in the Communication Solutions segment were Euro 302 million, down 15 percent compared to the prior quarter and up 27 percent year-over-year. Excluding the effects of currency fluctuations, primarily between the U.S. dollar and the Euro, and the contributions from the mobile phone business acquired from LSI and the DSL CPE activities acquired from Texas Instruments, segment revenues increased 10 percent year-over-year and decreased 15 percent sequentially. Segment EBIT for the second quarter declined to negative Euro 29 million, compared to negative Euro 11 million in the prior quarter, following the revenue decline. Included in the segment EBIT for the second quarter was amortization of acquired intangible assets of Euro 5 million relating mainly to the mobile phone business acquired from LSI. Included in the segment EBIT for the first quarter was a write-off of Euro 14 million for acquired in-process R&D in connection with the acquisition of the mobile phone business of LSI. Also included in the segment EBIT for the first quarter was amortization of acquired intangible assets of Euro 9 million relating mainly to the mobile phone business acquired from LSI.

In the wireless business, revenues decreased strongly, as expected, driven mainly by typical wireless seasonality and reduced volumes in certain mobile phone projects. As anticipated, revenues in the broadband business stabilized on the low level of the prior quarter.

Communication Solutions’ outlook for third quarter of 2008 fiscal year

In the third quarter of the 2008 fiscal year, revenues in the Communication Solutions segment are expected to increase by a mid to high single-digit percentage compared to the prior quarter. This increase reflects mainly the scheduled production ramp-ups of the company’s new HSDPA and EDGE mobile platform solutions.

The broadband business is anticipated to remain broadly unchanged compared to the second quarter. Segment EBIT is expected to be approximately negative Euro 25 million, excluding net gains or charges.

Qimonda

In preparation for ultimate disposal and resulting deconsolidation of its investment in Qimonda AG, Infineon has reclassified the assets and liabilities of Qimonda as held for sale in its condensed consolidated balance sheets effective March 31, 2008. With this decision, the individual line items in the condensed consolidated statements of operations on page 8 of this release reflect Infineon’s continuing operations without Qimonda. All results relating to Qimonda are reported in the line item “Income (loss) from discontinued operations”.

For the second quarter, the net loss from discontinued operations was Euro 1.390 billion. This loss included Infineon’s share in Qimonda’s net loss of Euro 482 million, as well as charges of Euro 1.004 billion from its write-down of the Infineon’s interest in Qimonda to its estimated fair value, following the reclassification as held for sale. Basic and diluted loss per share from discontinued operations was Euro 1.85 for the second quarter. Infineon’s beneficial ownership interest in Qimonda as of March 31, 2008 was 77.5 percent.

Other Operating Segments / Corporate and Eliminations

Combined, EBIT in Other Operating Segments and Corporate and Eliminations included charges of Euro 8 million in the second quarter, mainly in connection with restructuring. In the first quarter, EBIT in Corporate and Eliminations included charges of Euro 3 million in connection with restructuring.

Other Operating Segments / Corporate and Elimination’s outlook for third quarter of 2008 fiscal year

In the third quarter, Infineon expects revenues in Other Operating Segments to decline compared to the prior quarter as shipments of wafers out of Infineon’s 200-millimeter wafer facility to Qimonda will come to an end during the quarter. EBIT excluding net gains or charges for Other Operating Segments and Corporate and Eliminations combined is anticipated to be approximately negative Euro 20 million.

Major business highlights of Infineon’s segments in the second quarter of the 2008 fiscal year can be found in this document after the financial tables.

All figures are preliminary and unaudited.

Analyst and press telephone conferences

Infineon Technologies AG will conduct a telephone conference (in English only) with analysts and investors on April 23, 2008, at 10:00 a.m. Central European Summer Time (CEST), 4:00 a.m. Eastern Daylight Time (U.S. EDT), to discuss operating performance during the second quarter of the 2008 fiscal year. In addition, the Infineon Management Board will host a telephone conference with the media at 11:30 a.m. (CEST), 5:30 a.m. (U.S. EDT). It can be followed in German and English over the Internet. Both conferences will be available live and for download on the Infineon web site at http://corporate.infineon.com.

IFX financial and trade fair calendar (*preliminary date)

• Jun 2/3, 2008, IFX Day: Annual Analyst and Investor Day
• Jul 25, 2008*, Earnings Release for the Third Quarter of the 2008 Fiscal Year
• Dec 03, 2008*, Earnings Release for the Fourth Quarter and Full 2008 Fiscal Year
• Feb 12, 2009*, Annual General Meeting of Shareholders

New in the IFX pod cast section at www.infineon.com/podcast

• Emergency Call for Cars
• Tuner: Basics

D I S C L A I M E R

This discussion includes forward-looking statements about our future business. These forward-looking statements include statements relating to future developments in the world semiconductor market, including the market for memory products, Infineon’s 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 continuing transitioning of our production processes to smaller structure sizes, 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, and any potential disposal of our interest in Qimonda. 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, the outcome of antitrust investigations and litigation matters, the success of any corporate activities we may undertake with respect to our interest in Qimonda, as well as the other factors mentioned herein and those described in the “Risk Factors” section of the annual report of Infineon on Form 20-F filed with the U.S. Securities and Exchange Commission on December 7, 2007. As a result, our actual results could differ materially from those contained in the forward-looking statements. Infineon does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.

Infineon Technologies AG, Neubiberg, Germany, offers semiconductor and system solutions addressing three central challenges to modern society: energy efficiency, communications, and security. In the 2007 fiscal year (ending September), the company reported sales of Euro 7.7 billion (including Qimonda sales of Euro 3.6 billion) with approximately 43,000 employees worldwide (including approximately 13,500 Qimonda employees). With a global presence, Infineon operates through its subsidiaries in the U.S. from Milpitas, CA, in the Asia-Pacific region from Singapore, and in Japan from Tokyo. Infineon is listed on the Frankfurt Stock Exchange and on the New York Stock Exchange (ticker symbol: IFX). Infineon currently holds a 77.5 percent equity interest in Qimonda AG, a leading supplier of DRAM memory products. Qimonda is separately listed on the New York Stock Exchange under the ticker symbol “QI”.