diff --git "a/Germany/16.Infineon_$41.66 B_Industrials/2015/results.txt" "b/Germany/16.Infineon_$41.66 B_Industrials/2015/results.txt"
new file mode 100644--- /dev/null
+++ "b/Germany/16.Infineon_$41.66 B_Industrials/2015/results.txt"
@@ -0,0 +1,83167 @@
+> TVS (transient voltage suppressor) diode
+11.5
+(496)
+13.4
+(778)
+Selling, general and administrative expenses
+30
+12.7
+(550)
+12.4
+(717)
+Research and development expenses
+26
+38.1
+1,647
+35.9
+2,080
+Gross profit/Gross margin
+57
+80
+Operating income
+525
+14.4
+620
+15.5
+897
+Segment Result/Segment Result Margin
+19
+535
+634
+(74)
+47
+12
+Gain (loss) from discontinued operations, net of income taxes
+Net income
+27
+488
+622
+Income from continuing operations
+6
+555
+45
+0
+0
+783
+17
+971
+Industrial Power Control
+20
+45
+1,965
+41
+2,351
+Automotive
+34
+4,320
+5,795
+Revenue by Segment
+55
+8
+367
+18
+(5)
+24
+1,794
+(1)
+Corporate and Eliminations
+(36)
+1
+0
+14
+Other Operating Segments
+35
+11
+494
+11
+666
+Chip Card & Security
+69
+25
+1,061
+31
+Power Management & Multimarket
+10
+Property, plant and equipment
+1,700
+64.6%
+53.4%
+Equity ratio
+25
+0.48
+0.60
+Adjusted earnings per share in € - diluted
+11
+0.18
+0.20
+Dividend per share in €5
+17
+0.48
+0.56
+Diluted earnings per share in €
+17
+0.48
+(17)
+0.56
+Return on equity
+13.6%
+753
+4.5%
+38.4%
+17
+11.0%
+12.9%
+Employees Infineon as of September 30
+Return on Capital Employed (ROCE) 11
+Debt-to-total-capital ratio 10
+Debt-to-equity ratio⁹
+Inventory intensity³
+(12)
+8.3%
+7.3%
+Return on assets?
+5
+12.9%
+√6
+2,093
+Basic earnings per share in €
+2,232
+988
+957
+Gross cash position³
+Capital expenditure
+Depreciation and amortization
+Net cash used in financing activities from continuing operations
+Free cash flow²
+Net cash used in investing activities from continuing operations
+Net cash provided by operating activities from continuing operations
+12
+4,158
+4,665
+Total equity
+36
+6,438
+8,741
+Total assets
+23
+(3)
+(90)
+(2,593)
+(853)
+220
+Net cash position 4
+(17)
+2,418
+2,013
+18
+668
+785
+48
+514
+760
+(622)
+317
+(1,654)
+861
+(179)
+1,363
+(272)
+20.5%
+568
+11
+2 In alphabetical order. Infineon's major distributions customers are Arrow, Avnet, Jingchuan, Tomen, Weikeng and WPG Holding (SAC).
+1 All figures for 2014 calendar year. The market share of the five largest competitors is shown in the "Market position" section of the relevant segment. The figures
+provided in those sections with respect to changes in market share relate to the 2013 market share figures as calculated in 2015. Due to changes in the way the
+market is analyzed, these figures may differ from the 2013 market share figures reported in 2014.
+1 with a market share of 19.2% for discrete
+power semiconductors and modules
+Source: IHS Inc., September 2015
+Market position¹
+ABB / Alstom / Bombardier / CSR Times / Danfoss /
+Eaton/Emerson / Fronius / Goldwind / Midea /
+Rockwell / Schneider Electric / Siemens / Toshiba /
+Yaskawa/Vestas
+• Key customers²
+> IGBT module solutions incl. IGBT stacks
+medium-power, low-power)
+> IGBT modules (high-power,
+> Driver ICs
+> Discrete IGBTs
+› Bare die business
+Product range
+> Uninterruptable power supplies
+› Traction
+> Renewable energy generation
+> Industrial vehicles
+☐
+> Industrial drives
+1
+23.9%
+> Low-voltage and high-voltage driver ICs
+> GPS low-noise amplifier
+> Discrete low-voltage and high-voltage power transistors
+> Customized chips (ASICs)
+› Control ICs
+Product range
+> Power management (adapters, chargers, power supplies)
+> Mobile devices
+> LED and conventional lighting systems
+> HiRel (high-reliability components)
+> DC motors
+> Cellular network infrastructure
+Applications
+Page 62
+Power Management & Multimarket
+IIIII
+2
+27.8%
+> MEMS and ASICS for silicon microphones
+> Home appliances
+> Charger station for electric vehicles
+› Comfort electronics
+> CO₂ reduction
+Applications
+Automotive
+Page 54
+010C
+1
+10.5%
+19.2%
+2
+Market position¹ ○ Market share
+Segment
+Infineon Technologies AG is a world leader in semiconductor solutions that make life easier, safer and greener.
+Microelectronics from Infineon is the key to a better future. In the 2015 fiscal year (ending September 30),
+the company reported sales of about €5.8 billion with some 35,400 employees worldwide. Infineon is listed on
+the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the over-the-counter market OTCQX
+International Premier (ticker symbol: IFNNY).
+Infineon at a glance
+Infineon
+Infineon Technologies AG
+Annual Report 2015
+Systematic integration
+> Driver assistance systems
+> Energy transmission and conversion
+> Security
+> 32-bit automotive microcontrollers
+Applications
+Page 58
+Industrial Power Control
+Source: Strategy Analytics, April 2015
+2 with a market share of 10.5%
+Market position¹
+Autoliv / Bosch / BYD / Continental / Delphi / Denso /
+Hella / Hitachi / Hyundai / Keihin / Lear / Mando/
+Mitsubishi / Omron / Tesla / Valeo / ZF Friedrichshafen
+Key customers²
+> Voltage regulators
+> Transceiver (CAN, LIN, Ethernet, FlexRay)
+> Radar
+> Power ICs
+> Magnetic and pressure sensors
+> Industrial microcontrollers
+> IGBT modules
+> Discrete power semiconductors
+for powertrain, safety and driver
+assistance systems
+•Product range
+47
+> RF antenna switches
+Key customers²
+16
+942
+18
+39
+1,707
+35
+2,020
+34
+4,320
+5,795
+Change
+in %
+2015/2014
+in % of
+revenue
+€ in
+millions
+in % of
+revenue
+€ in
+millions
+2014
+859
+2015
+20
+2,666
+484
+12
+710
+40
+7
+284
+7
+399
+54
+20
+868
+23
+1,337
+44
+43
+1,845
+46
+10
+> RF power transistors
+Therein: USA
+Japan
+> Ticketing, access control
+> Secure NFC (Near Field Communication)
+transactions
+> Payment systems incl. mobile payment
+> Mobile communications
+> Internet of Things
+> Healthcare cards
+> Governmental identification documents
+> Automotive
+> Authentication
+Applications
+Page 66
+Chip Card & Security
+Source: IHS Inc., September 2015
+for standard MOSFET power transistors
+1 with a market share of 27.8%
+Market position¹
+AAC / Airbus / Artesyn / Boeing / Cisco / Dell / Delta/
+Ericsson / Hewlett Packard Enterprise / Huawei / Lenovo/
+LG Electronics / Lite-on/ muRata / Nokia / Osram /
+Panasonic / Quanta / Samsung / ZTE
+> Trusted computing
+Americas
+Product range
+› Contactless security controllers
+Therein: China
+Asia-Pacific (w/o Japan)
+Therein: Germany
+Europe, Middle East, Africa
+Revenue by region
+Fiscal year from October 1 to September 30
+As at and for the fiscal years ended September 30 (under IFRS)'
+Infineon key data
+Infineon at a glance
+P An overview of our worldwide locations can be found on pages 124 and 125 in the chapter "Infineon worldwide".
+Source: IHS Inc., July 2015
+for microcontroller-based chip card ICs
+2 with a market share of 23.9%
+Market position¹
+Gemalto / Giesecke & Devrient / Google / HP/Lenovo/
+Microsoft / Oberthur Technologies / Safran Morpho/
+Samsung / US Government Publishing Office /
+Watchdata
+Key customers²
+> Dual-interface security controllers
+(contact-based and contactless)
+› Contact-based security controllers
+2.9%
+22
+12.8%
+As a participant of the UN Global Compact Initiative, Infineon made a voluntary commitment to
+abide by the 10 principles included in it. Principles 1 and 2 deal with the topic of human rights.
+Responsible manufacturing: Respect for human rights is essential for Infineon as a sustainable
+company. Our Business Conduct Guidelines reflect our commitment to respect all valid inter-
+national human rights.
+Effective risk and opportunity management is central to all of our business activities and plays
+an important role in implementing the strategic targets described in the section "Group strategy"
+in the chapter "Finances and strategy" - namely achieving sustainable, profitable growth
+and preserving our financial resources through the efficient employment of capital. Various
+coordinated risk management and control system elements are in place and enable us to
+pursue our stated risk strategy in practice, including "Risk and Opportunity Management", the
+"Internal Control System with respect to Financial Reporting Processes", the underlying
+forecasting, management and internal reporting processes, and the Compliance Management
+System. Further information on this material topic is provided in the chapters "Risk and
+opportunity report" and "Finances and strategy".
+Long-term viability of core business: The global megatrends - energy efficiency, mobility and
+security - continue to offer Infineon enormous growth potential. The competitive race will be
+won by embracing innovation and achieving the right combination of costs and benefits.
+This insight opens up a wealth of opportunities to a global player with our innovative strength
+and technological expertise to exploit its areas of differentiation in the market. Our ability to
+make the most of these opportunities will enable us to achieve both sustainable and profit-
+able long-term growth.
+P see page 27 ff.
+Psee page 149 ff.
+P see page 32 ff.
+Product use
+Infineon internal
+Supply chain
+Labor relations
+Business ethics
+Product sustainable value
+Presence in local markets
+Diversity and equal opportunity
+Responsible manufacturing
+Long-term viability of core business
+Material aspects along the value chain
+The table below shows the areas of the value-added chain where Infineon actually sees
+key fields of activity in accordance with the guidelines on sustainability reporting set out
+in the GRI 4:
+The results of these discussions and consequently the material topics were presented to
+and confirmed by the Management Board. These topics are described in this report.
+In a fourth step, these relevant topics and any potentially related risks or opportunities which
+could impact the long-term performance of the organization were discussed with our in-house
+sustainability experts.
+GRI G4-19, G4-20, G4-21
+P see GRI G4 Content Index,
+page 297 ff.
+GRI G4-25, G4-26, G4-27
+ABOUT THIS REPORT
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+4
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+P see page 92 ff.
+5
+We also demand that our supply chain uphold these principles. For this reason we have
+determined a Group-wide approach to this topic with the aim of guaranteeing the required
+transparency throughout our own supply chain. We expect our suppliers to give a commit-
+ment to uphold the values set out in our Principles of Purchasing.
+607
+Further information on this material topic is provided in the section "The Infineon carbon
+footprint" in the chapter "Sustainability at Infineon" and in the chapter "The segments"
+Our products also provide solutions for societal challenges: All "things" capable of transferring
+data and functioning via the internet are covered by the catchword "Internet of Things”. They
+include machines, robots, vehicles, containers and medical equipment. Not only people but
+also a wide range of devices communicate with one another via the Internet of Things. These
+developments are opening up a whole new world of services that will ultimately change
+people's everyday lives. Secure storage and transfer of data are therefore becoming essential
+for many w of these billions of interconnected "things".
+Power semiconductors are often not only crucial for the essential functioning of our customers'
+products and systems, they also have a key impact on efficiency, size, weight and costs. The
+most important energy-saving factor is the ability to boost energy efficiency and thereby mini-
+mize consumption. The several hundred million industrial motors and billions of household
+appliances in use mean enormous saving potential.
+Semiconductors play a decisive role in reducing energy consumption and have achieved the
+highest energy efficiency rates to date.
+As described in our Infineon IMPRES policy, potential environmental impacts are examined
+at the earliest possible stage and taken into account when developing both products and
+processes. This principle applies to all aspects of what we do, whether procurement, develop-
+ment, manufacturing, or the products' sale. All our activities are based on the compliance
+with applicable legislation and regulations. For more information see "Product sustainable
+value" in the chapter "Sustainability at Infineon".
+Product sustainable value: We help to make life easier, safer and more environment-friendly -
+with technologies that do more, consume less and are available to everyone. Microelectronics
+made by Infineon are the key to attaining better living standards. Our inventiveness and
+commitment enable us to create added value for customers, staff and investors alike. We
+understand how technical systems can be made increasingly efficient through the use of
+semiconductors, with the aim of providing sustainable solutions for today's world and that
+of the future, thereby contributing to the ultimate success of our customers.
+Further information is provided in the chapter "The segments” as well as in the section
+"Group strategy" in the chapter "Finances and strategy" and in the section "Corporate
+Citizenship" in the chapter "Sustainability at Infineon".
+"Local social needs" is one of our four Corporate Citizenship focus areas and relates to the
+voluntary social commitment of our local entities towards the communities in which we
+operate. The focus areas as well as the engagement possibilities are set out in our Corporate
+Citizenship Guidelines.
+P see page 52 ff.
+P see page 103 f.
+G see glossary, page 292
+G see glossary, page 294
+P see page 103 f.
+see pages 52 ff., 32 ff. and 106 f.
+P
+GRI G4-19, G4-20, G4-21
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+ABOUT THIS REPORT
+6
+P see page 97 ff.
+P see page 105 ff.
+GRI G4-19, G4-20, G4-21
+Presence in local markets: Every region is unique. Our global strategy requires the mainte-
+nance of research and development (R&D) locations and manufacturing sites throughout the
+world. Risks could therefore arise from adverse economic and geo-political crises in our
+regional markets, changes in legislation, and policies affecting trade and investment aimed
+at limiting free trade and varying practices of the regulatory, tax, judicial and administrative
+bodies in the jurisdictions where we operate. We are continuously expanding our presence
+in key regions in order to serve our customers better and meet their specific local require-
+ments. Our aim is to obtain an even better understanding of the factors determining customer
+success in each region.
+Diversity and equal opportunity: "Diversity management” provides the framework for a
+corporate culture that values the individuality of each staff member and promotes equal oppor-
+tunities. International customer relationships demand great cultural competence. Qualified
+job applicants expect an open working environment. As an international company, staff diversity
+is particularly important to us. The promotion of women to leadership positions is a key aspect
+of the Infineon's diversity management strategy. A change within the organization supporting the
+successful career development of female managers is a prerequisite for meeting our targets.
+Fostering and achieving an adequate work-life balance is of crucial importance for our employ-
+ees' professional success and part of our human resources work. As emphasized in our Business
+Conduct Guidelines, our employees are paid on the basis of work-related criteria, such as
+job requirements and performance. Men and women are paid equally at Infineon. Further
+information on this material topic is provided in the section "Encouraging diversity" within
+the chapter "Our employees".
+The sections "Our responsibility along the supply chain" and "Sustainable use of resources at
+our manufacturing sites" in the chapter "Sustainability at Infineon" provide additional infor-
+mation on this material topic.
+Efficient resource management is a core component of our integrated management system
+for environmental protection, occupational health and safety, and energy. The growing
+scarcity of natural resources is one of today's greatest global challenges. Among other issues,
+our management system integrates targets and processes designed to ensure environmental
+sustainability.
+A variety of chemicals are required in the manufacturing of semiconductors, several of which
+are classified as hazardous. At Infineon we guarantee that any hazardous materials used are
+handled in a highly responsible way.
+ABOUT THIS REPORT
+@www.infineon.com/csr_reporting
+P see page 110 f.
+P see GRI G4 Content Index,
+page 297 ff.
+These kinds of dual magnetic field sensors are used in power
+steering, for example. They measure the angle of rotation of
+the steering axle and the steering torque, or, in other words,
+what the driver wishes to do. Each of the sensor chips has
+an approximate size of 2 by 3 millimeters.
+The title page shows a magnetic field sensor with two sensor
+chips in a cross section: One chip is above the substrate and
+one chip is located below. The picture on the left shows the
+sensor chips assembled on the leadframe as part of an array
+of hundreds of copies. Of the bottom sensor chip only its
+bounding wires are visible.
+Systematic integration
+We are fully committed to live up to this high aspiration. The
+acquisition of International Rectifier has been an important
+step in the right direction.
+Infineon's microelectronic technologies are the key to a future.
+worth living - with products that help improve the quality of life
+and preserve natural resources.
+These changes represent major challenges to society,
+but also offer exceptional opportunities to promote growth
+and achieve success.
+> Technological changes due to connectivity and digitalization
+> The associated demand for resources and
+> The demographic trend
+Far-reaching global changes lie ahead of us in the coming decades:
+Infineon at a glance
+11 Return on Capital Employed (ROCE): for definition [G] see glossary, page 288.
+10 Debt-to-total-capital ratio = long-term and short-term debt divided by total assets.
+9 Debt-to-equity ratio = long-term and short-term debt divided by total equity.
+8 Inventory intensity = inventories (net) divided by total assets.
+7 Return on assets = net income divided by total assets.
+6 Return on equity = net income divided by total equity.
+4 Net cash position: for definition [G] see glossary, page 288.
+3 Gross cash position: for definition G see glossary, page 288.
+2 Free cash flow: for definition G see glossary, page 287.
+1 Columns may not add due to rounding.
+19
+29,807
+35,424
+(37)
+20.3%
+P see page 94 f.
+Highly available steering systems are a basic requirement
+for partially automated driving, a preliminary stage of
+automated driving. Highly available steering systems have
+to be built with multiple redundancies.
+Read more about this sensor in the chapter "Research and
+Development" (P see page 73).
+5 A dividend per share of €0.20 for the 2015 fiscal year will be proposed to the Annual General Meeting on February 18, 2016.
+2
+GRI GG4-18, G4-23
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Relevant topics were then pre-selected, based on our own corporate strategy and stakeholder
+expectations.
+In a second step, consideration was given to general as well as sector- and company-specific
+sustainability standards appropriate for determining the principal factors relevant for
+assessing Infineon's sustainability performance.
+Firstly, we identified Infineon's most important stakeholders, taking into account the factors
+"Responsibility", “Influence”, “Proximity", "Dependency”, and “Representation" in the
+"Stakeholder Engagement Manual" drawn up by the organization "AccountAbility" (see the
+chapter "Sustainability at Infineon").
+Infineon engages in continuous dialog with its stakeholders. In our materiality analysis, we
+evaluate the expectations and requirements of our internal and external stakeholders with
+regard to sustainability in various topics in accordance with the guidelines on sustainability
+reporting set out in the Global Reporting Initiative GRI 4.
+Determining the content of the report
+In addition to the statutory audit of the Combined Management Report, KPMG AG Wirtschafts-
+prüfungsgesellschaft, Munich, has provided independent assurance ("limited assurance")
+on the sustainability performance information in the chapter "Sustainability at Infineon" in
+accordance with the "International Standard for Assurance Engagements 3000" and the
+"International Standard on Assurance Engagements 3410", which constitute the pertinent
+standards for assuring sustainability information.
+The information contained in the Annual Report 2015 also serves as "Communication on
+Progress" for the United Nations Global Compact Initiative (see the section "Business Ethics"
+in the chapter "Sustainability at Infineon").
+The non-financial performance figures contained in this combined report have been prepared
+on the basis of the G4 Guidelines of the Global Reporting Initiative ("GRI”), having regard to
+the GRI "Core" option, and are contained in the Combined Management Report.
+Sustainability Reporting
+3
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+ABOUT THIS REPORT
+KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, has audited the Consolidated Financial
+Statements prepared in accordance with IFRS and the Combined Management Report for the
+fiscal year ended September 30, 2015 and has issued an unqualified audit opinion thereon.
+The Independent Assurance Report issued by KPMG AG Wirtschaftsprüfungsgesellschaft,
+Munich, as well as the explanatory notes to the key performance figures and other disclosures
+provided in the chapter "Sustainability at Infineon" of the Annual Report 2015 are available
+on the Infineon website.
+Notes to the Consolidated Financial Statements and Combined Management Report
+The Consolidated Financial Statements have been prepared in accordance with International
+Financial Reporting Standards ("IFRS").
+About this report
+GRI G4-18, G4-23
+The Combined Management Report has been prepared in accordance with sections 315 and 315a
+of the German Commercial Code ("HGB") and in accordance with German Accounting Standard
+("DRS") 20. Disclosures with respect to the compensation of members of the Management
+Board are provided in accordance with DRS 17, which sets out the requirements for reporting
+on the remuneration of members of governing bodies and, in addition, based on the model
+tables recommended by the German Corporate Governance Code.
+About this report
+Combined Reporting
+P see page 108 ff.
+GRI G4-18, G4-23
+P see page 92 ff.
+This combined report documents Infineon's economic, ecological and social performance
+during the 2015 fiscal year. In addition to providing a description of financial developments,
+we also wish to demonstrate how sustainability contributes to Infineon's success and how
+our activities in this area create value for all our stakeholders.
+Infineon's acquisition of 100 percent of the shares of (and related voting rights in) International
+Rectifier Corporation ("International Rectifier"), based in El Segundo, California (USA),
+announced on August 20, 2014, was closed on January 13, 2015. This report therefore includes
+the results, assets, liabilities, and cash flows pertaining to International Rectifier with effect
+from the date of acquisition. International Rectifier's various lines of business have been fully
+integrated within Infineon's existing Automotive, Industrial Power Control, and Power Manage-
+ment & Multimarket segments, whereby the largest proportion by far has been allocated to
+the Power Management & Multimarket segment. The figures presented for prior-year periods
+have not been adjusted.
+Whenever data relating to International Rectifier are included in the chapters "Sustainability
+at Infineon" and "Our employees", this fact is pointed out explicitly in the relevant chapters.
+The reporting period covers the 2015 fiscal year from October 1, 2014 to September 30, 2015.
+This report is published annually; the previous report was published in November 2014.
+Unless otherwise stated, the key performance figures and other disclosures contained in this
+report relate to the 2015 fiscal year.
+In order to help readers identify and interpret trends relating to quantitative disclosures,
+the report includes data for at least the 2015 and 2014 fiscal years.
+P see page 139
+Growth and profitability performance indicators
+Other performance indicators
+Apart from profitability, ROCE is also influenced by asset intensity, of both non-current assets
+and net working capital. Asset intensity describes the amount of assets necessary to generate
+a certain level of revenue. For an analysis of the derivation of and change in ROCE in the 2015
+fiscal year, see the chapter "Review of financial condition".
+Revenue growth is compared continuously with the rate of growth of relevant target markets.
+This ties in directly with our strategic target of profiting continuously from the growth of
+our target markets. A further indicator for future revenue growth is the number of design wins,
+whereby we regularly measure actual outcomes against targets.
+This key performance indicator describes how efficiently a company manages its resources.
+ROCE is also analyzed by Infineon at Group level only and not at segment level. A comparison
+of a company's RoCE and its weighted cost of capital provides information on the extent to
+which returns have been generated in excess of shareholders' and debt holders' expectations.
+Thus RoCE serves as a tool for value-based management.
+The principal performance indicators described above are supplemented by others that provide
+information about growth potential, cost efficiency by functional area and liquidity.
+Operating result after tax from continuing operations
+Capital employed
+Effective investment management plays a key role with regard to managing free cash flow.
+Our stated strategy of managing investments systematically and limiting them to 13 percent
+of revenue should be seen in this context. Free cash flow is considered by Infineon only at
+Group level and not at segment level.
+The performance indicator RoCE measures the ability of capital to provide a return and is
+defined as the operating result after tax from continuing operations divided by capital employed.
+Capital employed consists of non-current assets and net working capital. ROCE shows the
+correlation between profitability and the capital resources required to run the business.
+Return on Capital Employed (ROCE)
+Infineon manages net working capital levels by focusing relentlessly on optimizing levels of
+inventories, trade receivables and trade payables.
+The main levers for generating free cash flow are profitability, the ability to manage working
+capital efficiently and the levels of investments.
+An important key performance indicator for Infineon is the free cash flow figure, defined as
+net cash provided by or used in operating activities and net cash provided by or used in invest-
+ing activities, both from continuing operations, after adjusting for cash flows related to the
+purchase and sale of financial investments. Free cash flow measures the ability to generate
+sufficient cash flows to finance day-to-day operations and fund required investments out of
+the ongoing business. It is Infineon's stated target to sustainably generate positive free cash
+flow (see the chapter "Review of financial condition" for an analysis of free cash flow in the
+2015 fiscal year).
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Internal management system
+P see page 142
+Free cash flow
+ROCE =
+91
+The book-to-bill ratio gives a good indication of future trends in demand. If orders received
+are greater than revenue recognized within a given period, it is seen as an indication of future
+revenue growth.
+Liquidity performance indicators
+P see page 131
+Combined Management Report - Our Group
+P see page 139 ff.
+P see page 128 ff.
+The "Outlook" in the chapter "Report on expected developments, together with associated
+material risks and opportunities" contains a table showing the actual values achieved in
+the 2015 fiscal year for the key performance indicators, along with expectations for the 2015
+and 2016 fiscal years.
+Actual and target values for performance indicators
+For an analysis of orders received and the book-to-bill ratio in the previous fiscal year, see the
+chapter "Review of results of operations".
+› Orders received as a percentage of revenue: The ratio of orders received and revenue
+recognized during the same accounting period (book-to-bill ratio).
+As part of the process of analyzing operating profitability in detail, Infineon considers earnings
+and costs above the Segment Result line. This involves a review of gross profit, research and
+development expenses, selling, general administrative expenses and the ratio of these items
+to revenue. These performance indicators are used to manage the business at both Group and
+segment levels. For an analysis of changes in the fiscal year under report, see the chapter
+"Review of results of operations".
+› Orders received: The aggregate of all orders received by the Group from customers during
+the relevant reporting period
+Operational early indicators
+Moreover, in order to avoid costs resulting from overcapacity and/or capacity bottlenecks, the
+key operational figures for capacity utilization and forecast capacity requirements are analyzed.
+The results of this analysis are used in determining investment requirements.
+For an analysis of changes in these key performance indicators during the previous fiscal year,
+see the chapter "Review of liquidity".
+> Investments: The total amount invested in property, plant and equipment and intangible
+assets, including capitalized research and development costs
+> Net working capital: Current assets less cash and cash equivalents, less financial invest-
+ments, less assets classified as held for sale, less current liabilities excluding short-term
+debt and current maturities of long-term debt, excluding liabilities classified as held for sale
+> Net cash position: Gross cash position less short-term and long-term debt
+> Gross cash position: Cash and cash equivalents plus financial investments
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity at its
+disposal and an optimal capital structure. Liquidity is managed at Group level, not at segment
+level, and uses the following key performance indicators:
+The analysis of current and future performance is rounded off by using the following opera-
+tional early indicators:
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Internal
+management system
+90
+> achieving a compound annual revenue growth rate of 8 percent
+The internal management system at Infineon is designed to assist in implementing the Group
+strategy described in "Group strategy" in the chapter "Finances and strategy". Accordingly,
+performance indicators are used which enable profitable growth and efficient employment of
+capital to be measured. Infineon has set itself the targets of:
+Psee page 174 ff.
+Psee page 92 ff. and page 108 ff.
+P see page 32 ff.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+88
+> Discrete semiconductors
+> Chip card modules
+Wuxi
+> IPMS (Intelligent Power
+Modules)
+Cheonan
+Beijing
+semiconductors
+> Discrete power
+Batam
+Psee page 144
+> thereby achieving a 15 percent Segment Result Margin over the economic cycle and
+> limiting investments to 13 percent of revenue over the economic cycle
+Overall, attaining these financial targets yields in a sustainable increase in the value of the
+business, brought about by achieving a premium on the cost of capital in the long term.
+In this context, growth, profitability and investments are all interdependent. Profitability is the
+prerequisite for being able to finance operations internally, which, put another way, means
+opening up potential opportunities for growth. Growth, in turn, requires continual investment
+in research and development as well as in manufacturing capacities. Growing at a commen-
+surate rate allows Infineon to achieve leading market positions and to generate economies of
+scope that contribute to greater profitability. Employing financial resources efficiently is a
+critical factor in achieving these aims.
+P see page 52 ff. and page 28
+P see page 264 ff.
+Segment Result is defined as operating income (loss) excluding the following: the net amount of
+asset impairments and reversals thereof; the impact on earnings of restructuring and closures;
+share-based compensation expense; acquisition-related depreciation/amortization and other
+expenses; gains (losses) on sales of assets, businesses, or interests in subsidiaries as well as
+other income (expense), including litigation costs (see note 32 to the Consolidated Financial
+Statements for a computation of the relevant figures). Court and legal fees arising in conjunction
+with licensing Infineon's patents are included in Segment Result, as is any related income.
+Segment Result is the indicator that Infineon uses to evaluate the operating performance of its
+segments (for an analysis of Group and individual segment performance in the 2015 fiscal year,
+see the chapter "The segments" and the section "Successful 2015 fiscal year" in the chapter
+"Finances and Strategy").
+Segment Result
+The three performance indicators described above are also the cornerstones of the system
+for variable compensation within Infineon. Most variable salary components for employees
+and management are directly linked to these performance indicators. Since revenue growth
+correlates with all three performance indicators and is heavily dependent on external market
+circumstances as well as cyclical developments, it is not used as a key performance indicator
+in its own right.
+Infineon also compares the actual as well as the planned Return on Capital Employed (ROCE)
+against the cost of capital, in order to ensure value creation.
+Free cash flow from continuing operations enables us to measure how well operating profit-
+ability is being converted into cash inflows. This key figure also provides information on the
+efficient use of working capital and property, plant and equipment.
+Segment Result is the key figure for measuring operating performance. Expressed as a percent-
+age of revenue (Segment Result Margin), it measures profitability of revenue and shows how
+well operations are being managed. The activities of Infineon's segments are managed on the
+basis of Segment Result. Responsibility for optimizing Segment Result within the framework
+of Group strategy (as approved by the Management Board) rests with the management teams
+of the relevant segments, acting, however, in coordination with the Management Board.
+90
+> Return on Capital Employed (ROCE) to measure capital efficiency
+> Segment Result to measure the operating profitability of its various businesses and
+of the portfolio as a whole
+In order to measure its success in implementing its strategies, Infineon uses the following
+three overarching performance indicators:
+Principal performance indicators
+Performance indicators
+89
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Internal management system
+As part of the process of managing business performance, management also attaches
+great importance to ensuring that Infineon acts in strict compliance with all relevant legal
+requirements and, of equal importance, that its internal Corporate Governance Standards
+are complied with (see the chapter "Corporate Governance").
+Infineon deploys a comprehensive controlling system to manage its business with respect to
+the strategic targets it has set itself. The system involves the use of financial and operating key
+performance indicators. Information for controlling purposes is derived from annual long-term
+planning, quarterly forecasting, orders received per week and actual monthly financial results.
+This knowledge enables management to base its decisions on sound information with respect
+to the current situation and future expected financial and operational developments. Sustain-
+able business practices and the consideration of forward-thinking qualitative factors are
+important for Infineon's long-term success. As an enterprise very much aware of its responsi-
+bilities towards society, Infineon also takes account of non-financial factors, mainly in the
+fields of sustainability (see the chapter "Sustainability at Infineon") and human resources
+(see the chapter "Our employees"). Although these factors are not used to manage business
+performance, they nevertheless help Infineon achieve its financial targets.
+> Free cash flow from continuing operations to measure the amount of cash generated
+or used excluding financing activities
+92
+Roadshows
+Combined Management Report - Our Group
+24/7
+• Product requirements
+•
+> Wafer thinning
+Corporate
+Citizenship
+CSR
+Supply Chain
+Management
+Infineon
+CSR
+Concept
+Environmental
+Sustainability
+Human
+Resources
+Management,
+Human Rights
+Occupational
+Health
+and Safety
+Employees
+Great Place to
+Work Survey
+Quarterly "All-Hands
+Meetings"
+Daily internal news
+Compliance Hotline
+24/7
+Trainings
+• Infineon Service Center
+by experts
+Services provided
+•
+•
+Annual General Meeting
+Roadshows & conferences
+.
+Quarterly Reports
+•
+Quarterly segments presentation
+• Annual Report
+Committees for CSR
+•
+STAKEHOLDER
+MANAGEMENT
+Business Ethics
+Politics
+⚫ Political dialogs
+Employees involved in
+Industry Associations
+⚫ Workshops
+Customers
+⚫ Audits
+Yearly Financial Statements
+topics e.g. "Corporate
+Citizenship Panel"
+Suppliers
+Suppliers-Assessment
+Since 2014, Infineon has published information on opportunities and risks for the company
+derived from climate change via the Carbon Disclosure Project (CDP). In this year's CDP
+climate change report, Infineon has achieved a placing among the best companies in the
+"Information Technology” sector and the status of sector leader in the so-called DACH region
+(Germany, Austria and Switzerland).
+GRI G4-25, G4-26, G4-27
+Psee page 3 f.
+P see page 4 ff.
+P see page 111 f.
+P see the chapter "Awards"
+on page 122 f.
+MEMBER OF
+20100%
+Furthermore, in the 2015 fiscal year Infineon qualified for inclusion in the Sustainability
+Yearbook for the fifth consecutive time. Moreover, "Oekom Research" has given Infineon
+the "Prime" rating.
+Dow Jones
+Sustainability Indices
+STOXX
+Prime
+Investors
+Infineon CSR Concept
+G36
+In addition to the statutory audit of the Combined Management Report, KPMG AG Wirtschafts-
+prüfungsgesellschaft, Munich, has provided independent assurance ("limited assurance")
+regarding the sustainability performance information provided in this chapter in accordance
+with the International Standard for Assurance Engagements 3000 and the International
+Standard on Assurance Engagements 3410, the pertinent standards for assuring sustainability
+information. Further information, including the independent assurance report issued, can be
+found in the Corporate Social Responsibility section of the Infineon website.
+@www.infineon.com/csr_reporting
+Sustainability
+at Infineon'
+Corporate
+Responsibility
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Infineon is listed in the "Dow Jones Sustainability™ Europe Index" and, for the first time, was
+the only European semiconductor manufacturer to be listed in the Dow Jones Sustainability™
+World Index in 2015. Infineon is also represented in other important indices, such as the
+"STOXX® Global ESG Leaders Indices" or the "FTSE4Good Index".
+The numerous areas and departments of Infineon utilize various channels of communication,
+engaging continually in conferences, forums, associations and surveys with the aim of fostering
+targeted communication with the respective stakeholder groups (see "Cooperation with
+universities" in the chapter "Our employees").
+.
+.
+Principles of Purchasing
+•
+Compliance website
+Awareness-raising campaign
+about water-stressed areas
+GRI G4-24, G4-25, G4-26, G4-27
+In 2015, Infineon again qualified for listings in key sustainability indices, which assess companies
+according to environmental, social and governance criteria.
+Social stakeholders
+surveys and studies
+Social and NGOs
+Citizenship activities
+⚫ Conferences &
+workshops
+We understand Corporate Social Responsibility (CSR) as our voluntary responsibility towards
+both international and local societies. Our commitment is based on compliance with current
+legal requirements, the ten Principles of the UN Global Compact and the principle of sustain-
+ability as the symbiosis of economy, ecology and social engagement. Based on these tenets,
+1 Any data in this chapter relating to International Rectifier are explicitly identified in the various sections.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+93
+we have identified six fields of activity: Business Ethics, Occupational Health and Safety,
+Environmental Sustainability, CSR Supply Chain Management, Corporate Citizenship, as well
+as Human Resources Management and Human Rights.
+As part of the continuous development and enhancement of our CSR concept, in addition to
+the materiality analysis (see the chapter "About this report") we view a sustained dialog with
+stakeholders as key to understanding their expectations. We have identified the most import-
+ant stakeholders for Infineon, taking into account the scope of the "Stakeholder Engagement
+Manual" drawn up by the organization "AccountAbility” (see the chapter "About this report”).
+In our materiality analysis we evaluate the expectations and requirements of our internal
+and external stakeholders in the field of sustainability in various topics in accordance with
+the sustainability reporting guidelines set out by the Global Reporting Initiative GRI 4. The
+results of our continuous dialog with our stakeholders have been integrated into the design
+of the analysis.
+Participation in
+chip test and wafer test
+> IGBT stack assembly
+Singapore
+Measures implemented
+> Our IMPRES (Infineon Integrated Management Program for
+Environment, Energy, Safety and Health) is globally certified in
+accordance with ISO 14001 and OHSAS 18001 standards. IMPRES
+underscores our commitment to the efficient management of
+resources, environmental protection and ecological innovation.
+> Effective energy management is important for increasing
+energy efficiency and reducing greenhouse gas emission levels.
+All of our EU frontend sites as well as Campeon, our corporate
+headquarters, are additionally certified in accordance with the
+ISO 50001 standard.
+> Efficient use of energy, mobility and security in a connected
+world - we address some of the most critical challenges that our
+society faces while taking a conscientious approach to the use
+of natural resources. We make life easier, safer and greener -
+with technology that achieves more, consumes less and is acces-
+sible to everyone. Microelectronics from Infineon is the key to a
+better future.
+P see "Product sustainable value ", page 103 f.
+Anti-corruption
+Principle 10: Action against corruption
+> Completion of a specific web-based training on anti-corruption,
+in which more than 7,000 selected employees worldwide have
+participated. The training is mandatory for selected employees
+and for Management.
+Principle 9: Development and diffusion
+of environmentally friendly
+technologies
+> Initiation of a campaign to raise awareness on the topic of com-
+pliance, including posters displayed at all of our Asian sites.
+> Formalized risk assessment as part of the Compliance Manage-
+ment System and the definition of required measures.
+Human resources management, human rights
+Compliance with internationally proclaimed human rights and labor standards is self-evident.
+The Infineon Business Conduct Guidelines reflect this self-commitment and define our standards
+as well as their implementation in this area for all employees worldwide. Our standards are
+in compliance with the International Bill of Human Rights and the Fundamental Principles of
+the International Labour Organization (ILO).
+Our employees receive regular training on the Business Contact Guidelines. In addition, we
+have implemented external hotlines which our employees, suppliers, customers and business
+partners can contact, even anonymously. All reported cases are investigated by our Compli-
+ance experts (see "Business Ethics" in this chapter).
+Even for its suppliers, Infineon requires compliance with all applicable laws, including those
+pertaining to human rights and fair business practices (see "Our responsibility along the
+supply chain" in this chapter).
+Additional information is included in the chapters "Corporate Governance" and
+"Our Employees”.
+Psee page 93
+> Implementation of an Integrity Pact program with local suppliers
+in China, aimed at preventing corruption. Here we utilized a
+concept previously developed in Malaysia in cooperation with
+the organization "Transparency International".
+P see page 105 f.
+Principle 8: Support initiatives for greater
+awareness of environmental
+responsibility
+Environment
+Thereof confirmed as compliance breach
+(after investigation)
+Thereof confirmed as non-breach
+Labor
+Principle 3: Uphold freedom
+of association
+Principle 4: Elimination of all forms
+of forced labor
+Principle 5: Abolition of child labor
+Principle 6: Elimination of discrimination
+Principle 7: Precautionary approach to
+environmental protection
+> As described in our Business Conduct Guidelines, we do not
+tolerate discrimination and reject every form of forced labor. In
+addition to the usual in-house methods of reporting breaches –
+such as to Management, the Human Resources department or
+Compliance - employees and business partners can also contact
+an anonymous whistleblower hotline or an external ombudsman.
+Access and information are available on the Infineon website.
+During the 2015 fiscal year we recorded an increase in the number
+of incoming reports regarding possible breaches, which can be
+explained by the higher number of employees since completing
+the acquisition of International Rectifier (see chart 37).
+> More than 90 percent of our employees work at production
+sites where committees are in place that also offer employers,
+employees and/or employee representatives the opportunity
+to discuss and receive advice on topics relating to environmental
+protection, occupational safety and health.
+> Persons under 15 years of age are not allowed to work for Infineon.
+Exceptions apply for certain developing countries covered by
+International Labour Organization (ILO) convention 138 (minimum
+age lowered to 14 years), or for job training and vocational training
+programs that are authorized by the governments of the countries
+involved and who demonstrably promote those participating.
+(after investigation)
+Thereof still under investigation
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+95
+UN Global Compact
+> 74.5 percent of our employees (including International Rectifier)
+work at sites that have entered into collective agreements and
+where independent employee representatives are in place.
+incl. Int.
+Rectifier
+P see page 174 ff.
+96
+0.5
+0.4
+0.3
+0.2
+0.1
+0
+||||
+Injury Rate (IR)'
+2011
+2013
+2014
+2015
+› Competence center for
+2015
+Infineon
+incl. Int.
+Rectifier
+1 The Injury Rate is calculated as follows: total number of injuries/total hours worked x 200,000.
+Holidays and public holidays are included in the working hours.
+2012
+P see page 108 ff.
+G38
+The recording and evaluation of work-related accident figures in the course of our data
+collection process is performed in accordance with GRI requirements on the basis of the
+standardized Injury Rate (IR) and the Lost Day Rate (LDR). All work-related accidents that have
+led to more than one lost day have been taken into account. The figures presented in this
+section include data from International Rectifier sites.
+96
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Occupational safety
+Target achievement and summary
+of results in the 2015 fiscal year
+> Our Injury Rate in the 2015 fiscal year
+was 0.46. Almost half of the accidents
+resulted in 5 or less lost days
+Target for the 2016 fiscal year
+There were no fatal work-related accidents at Infineon in the 2015 fiscal year. Our Injury Rate
+of 0.46 in the 2015 fiscal year is presented in graph 38. Almost half of the accidents resulted
+in 5 or less lost days. The Lost Day Rate of 5.65 is illustrated in graph 39 and can be explained
+by few accidents with long absence.
+> Our target for the next fiscal year is to
+achieve an Injury Rate of 0.4 or lower.
+One of our primary objectives is to create a safe working environment. Our approach in the
+fields of occupational safety and health protection is based on the principle of prevention.
+Our occupational safety and health management system has been certified in accordance
+with OHSAS 18001 at all of our main manufacturing sites as well as our corporate headquarters.
+The workplace-related risk assessment is designed to ensure that the required measures are
+taken to minimize any risks at their workplace that could endanger our employees. Work-
+place-related risk assessment is a key preventive instrument in the fields of occupational
+safety and health and is subject to continual improvement.
+Workplace-related risk assessments enable us to define measures that improve the working
+environment at Infineon. The implementation of these measures is supported by experts in
+this field. One example is the measures which have already been implemented at a number of
+Infineon sites to reduce noise levels.
+Programs designed to improve ergonomics have also been implemented, including special
+training for preventing back injuries, the optimization of computer workstations and tips on
+the correct lifting and carrying of loads.
+The measures taken are then monitored for effectiveness to ensure they achieve the
+desired result.
+Our experts in the fields of occupational safety, health and fire prevention invested approxi-
+mately 56,972 hours in further training and educational measures worldwide during the
+2015 fiscal year.
+Apart from a range of accident prevention measures, we carry out fire prevention training and
+evacuation exercises at all of our main production sites as well as the Campeon corporate
+headquarters on an annual basis.
+Responsibility for our employees
+2015
+Infineon
+Infineon
+2014
+> Chip card modules
+Regensburg
+> Power semiconductors
+› Competence center for
+sensors and metallization
+> Analog and mixed-signal
+components
+Regensburg
+> Fully automated manu-
+facturing on 200mm
+and 300mm wafers for
+automotive, industrial and
+security applications
+Dresden
+> Power semiconductors
+> High-power IGBT modules
+> Epitaxy for gallium nitride
+wafers
+> ICS
+> Power semiconductors
+(MOSFETS, IGBTs)
+Newport
+87
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Manufacturing sites
+ated by
+Warstein
+CDP
+> Discrete semiconductors
+› Sensors
+› Competence center for
+package development
+2015
+Infineon
+› Package development
+› Sensors
+› Discrete semiconductors
+> Power semiconductors
+Malacca
+> Power semiconductors
+> Wafer-level packaging
+Kulim
+Cegléd
+gallium nitride technology
+(epitaxy, manufacturing)
+> Silicon carbide and
+> MEMS components
+› Competence center
+for 300mm thin-wafer
+technology
+> Power semiconductors
+Villach
+> Medium- and high-power
+IGBT modules
+ESS LEADERS INDICES
+> ICS
+FTSE4Good cekom research
+P see "Infineon products without DRC-conflict minerals", page 105 f.
+and "Human Resources Management, Human Rights", page 95
+Targets for the 2016 fiscal year
+> Implementation of the revised Business
+Conduct Guidelines worldwide and
+the corresponding training, which
+addresses all Infineon employees.
+> To complete the integration of the
+former International Rectifier sites in
+the existing Compliance Management
+System: Infineon compliance training
+and compliance processes will be
+successively applied to all International
+Rectifier employees. The revised
+Business Conduct Guidelines will also
+apply directly to International Rectifier
+employees upon publishing.
+G37
+Reports of possible compliance
+breaches
+88
+71
+66
+51
+38
+47
+24
+28
+In Collaboration with RobecoSAM
+> Firmly defined rules in our CSR Policy as well as the Principles
+of Purchasing, which require our suppliers and service providers
+to fulfill the obligations described therein. Infineon purchases
+its components and materials from companies that respect
+human rights.
+> Training for all employees on Business Conduct Guidelines,
+which reflect our self-commitment to respect and uphold inter-
+national human rights. The training is supplemented with video
+sequences showing case studies from day-to-day working situa-
+tions that are descriptive and easy to grasp for employees at
+every level. The training is repeated at regular intervals and new
+hires to the company are automatically enrolled for training.
+19
+Principle 1: Support for human rights
+Principle 2: Non-complicity in human
+rights abuses
+DRIVING SUSTAINABLE ECONOMIES
+Measures implemented
+Business ethics
+The Infineon Business Conduct Guidelines are an important yardstick in our daily working
+lives. They are valid for all of our employees worldwide, in all of their dealings, whether among
+one another or with our customers, shareholders, business partners and the general public.
+In the 2015 fiscal year we began revising our Business Conduct Guidelines as our Code of
+Conduct for the entire Group. We intend to update both the content and the layout, with the
+aim of providing greater clarity for all readers. In preparation, we conducted a study on the
+best possible way to draw up a Code of Conduct in cooperation with a university and involving
+1,800 employees worldwide. We plan to publish the new Business Conduct Guidelines
+during the first six months of the 2016 fiscal year (see the chapter "Corporate Governance").
+P see page 174 ff.
+94
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Business Ethics
+13
+Targets achieved:
+Target achievement and summary
+of results in the 2015 fiscal year
+UN Global Compact
+As a UN Global Compact participant, Infineon has made a commitment to abide by the stated
+principles and reports below in an exemplary manner in its Communication on Progress on
+the measures implemented:
+Human Rights
+> The number of participants of
+the obligatory compliance training
+remained high at approximately
+16,700. As expected, the figure was
+lower than in the previous reporting
+period, as in the 2015 fiscal year we
+concentrated primarily on rolling out
+the web-based training on corruption
+prevention and antitrust law. The
+focus had previously been on Business
+Conduct Guidelines training. All
+employees were required to take part
+in this training.
+> Apart from beginning to
+update our Business Conduct
+Guidelines, during the fiscal year we
+drew up a new worldwide rule on the
+Handling of Gifts and Invitations,
+and implemented it throughout the
+Company.
+Infineon Technologies AG and selected major subsidiaries commissioned an independent
+audit firm to confirm the appropriateness, implementation and effectiveness of their Compli-
+ance Management System in accordance with the IDW PS 980 standard. This audit (which
+focused on corruption prevention and antitrust law) was completed in the course of the 2014
+fiscal year. Afterwards the standard was transferred to the remaining Group companies during
+the 2015 fiscal year and completed by the end of that same year, with the exception of Interna-
+tional Rectifier companies. Adherence to the Compliance Management System within the
+Group's various subsidiaries will be monitored in regular internal audits.
+> To integrate International Rectifier data
+in the carbon footprint calculation.
+104
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+G 53
+Carbon footprint
+however, is in the field of controls for industrial drives. Here, the estimated average improve-
+ment in efficiency has been adjusted in line with standard market values. The further
+increases in installed capacities for photovoltaics and wind power in 2014 compared with
+2013 and the inclusion of the new "induction cookers” product group were responsible for
+this improvement.
+Therefore, with its products and innovations and coupled with an efficient production,
+Infineon achieved a positive net benefit of approximately 35 million tons of CO2.
+Target for the 2016 fiscal year
+Ratio around 1:23
+CO₂ savings²
+Around 36.5 million tons CO2 equivalents
+Net ecological benefit: CO2 emissions reduction of around 35 million tons
+1 This figure considers manufacturing, transportation, function cars, flights, materials, chemicals, water/wastewater, direct emissions, energy consumption, waste, etc. and
+is based on internally collected data and externally available conversion factors. All data relate to the 2015 fiscal year.
+2 This figure is based on internally established criteria, which are explained in the explanatory notes. The figure relates to the calendar year 2014 and considers the following
+fields of application: automotive, LED, PC power supply, renewable energy (wind, photovoltaic), drives as well as induction cookers. CO2 savings are calculated on the
+basis of potential savings of technologies in which semiconductors are used. The CO2 savings are allocated on the basis of Infineon market share, semiconductor content
+and lifetime of the technologies concerned, based on internal and external experts' estimations. Despite the fact that CO2 footprint calculations are subject to imprecision
+due to the complex issues involved, the results are nevertheless clear.
+Compliance with legal and customer-specific requirements
+CO₂ burden¹
+Around 1.6 million tons CO2 equivalents
+Target achieved:
+products over their use-phase was
+about 23 times higher than the CO₂
+emissions generated when manufac-
+turing the products.
+103
+The processes involved in manufacturing semiconductors are complex and require a wide
+variety of special chemicals and materials. At Infineon we responsibly manage the handling of
+hazardous substances to safeguard human health and the environment. The products manu-
+factured by Infineon meet all of the requirements set out in the REACH EU chemicals policy
+(Regulation EC 1907/2006).
+In addition to PFC reporting, we calculate emissions for other relevant substances used at
+Infineon and International Rectifier main manufacturing sites on an annual basis. In the 2015
+fiscal year 144,887 kilograms of sulfur oxides (SOX), 293,425 kilograms of nitrogen oxides
+(NOx), 331,160 kilograms of volatile organic compounds (VOCs), and 122,812 kilograms of
+particulate matter (PM) were emitted.
+Scope 2 emissions
+Taking into account provider-specific emission factors of the energy sources used, Scope 2
+emissions totaled 533,921 tons of CO2 in the fiscal year under report.
+This approach was selected in order to illustrate the implementations achieved so far in terms of
+regenerative energy supply, such as connecting the Infineon Campeon corporate headquarters
+to the district heating network of the geothermal plant in nearby Unterhaching (Germany).
+Scope 3 emissions
+We have continued to improve the
+methodology for calculating our carbon
+footprint and induction cookers have
+now also been included in production
+savings.
+Scope 3 emissions refer to those generated for the provision and disposal of all raw materials
+and supplies as well as other utilities, goods transportation, travel and energy supply activi-
+ties (transmission losses). Scope 3 emissions totaled 800,673 tons of CO2.
+Our products and innovations are the key to manufacturing energy-efficient end products and
+applications, and thereby make an important contribution towards improving our carbon
+footprint.
+The products manufactured by Infineon are used in a broad range of applications and contribute
+towards improving the ecological efficiency of end products and applications during their
+use-phase. Our high-performance products make it possible to operate large-scale wind farms
+and photovoltaic facilities and therefore the production of regenerative energy. They are also
+used in industrial applications such as drive systems and engine control units and make it
+possible, for instance, to reduce power losses. Other Infineon products, in turn, enable the
+development of new, more efficient technologies such as LED lighting or induction cookers.
+Together with their products in the fields of drivers and digital control, Infineon delivers energy-
+efficient system solutions for servers, data and telecommunications applications. This is
+illustrated by the two following examples. The 600-volt series CoolMOSTM C7 Superjunction (SJ)
+MOSFETs reduce turn-off losses by 50 percent compared with similar technologies and have
+therefore achieved ultra-low switching losses. High-power applications in switch-mode power
+supplies with stringent requirements regarding efficiency and operating costs such as state-
+of-the-art servers in data centers and base stations for telecommunications benefit in particular.
+The OptiMOST 5 25-volt and 30-volt product family also shows improved performance based
+on the consistent reduction of switching losses by 50 percent when compared to the previous
+technology. These systems can be operated at higher switching frequencies, resulting in sig-
+nificantly lower energy consumption and overall system costs. For example, implementing the
+new OptiMOS 25-volt would mean annual savings of 1.3 gigawatt hours (GWh) for an average
+of 50,000 computers working in a server farm.
+Complex processes and a multitude of influencing factors need to be considered when draw-
+ing up an entity's carbon footprint. By nature, carbon footprint calculations are subject to a
+certain degree of imprecision. However, in order to further minimize the resulting imprecision,
+Infineon has continued to refine its approach.
+During their use-phase, Infineon products in the fields of automotive electronics, industrial
+drives, servers, lighting, photovoltaics and wind energy as well as induction cooking alone
+enable savings of roughly 36.5 million tons of CO2 equivalents, 2.5 times higher than the
+previous year's figure. The increase is attributable to a number of factors. Improvements were
+made in the field of LEDs, where sales volumes have risen significantly. The sharpest increase,
+G see glossary, page 290
+Ecological net benefit
+Target achievement and summary
+of results in the 2015 fiscal year
+> The CO2 saved by Infineon
+products included in end
+Product sustainable value
+The Infineon carbon footprint
+> To harmonize the supplier evaluation
+methodology and reporting with
+International Rectifier in the field
+of CSR.
+These are on the one hand the 2000/53/EC End-of-Life Vehicles Directive (ELV) and on the
+other hand the 2011/65/EU ROHS Directive that restricts the use of certain hazardous sub-
+stances in electrical and electronic equipment.
+and health
+Business
+continuity
+Principles
+of Purchasing
+planning
+Conflict
+of interest
+Environmental
+protection
+Security
+Fair business
+practices
+Business gifts
+Furthermore, our suppliers are contractually obliged to comply with our CSR requirements.
+In the 2015 fiscal year we introduced a supplier management portal to provide our suppliers
+with a centralized platform for registering and updating relevant CSR parameters. This
+enables fast evaluations by the various specialists and the determination of further steps in
+cooperation with the suppliers, if necessary (see supply chain information in the chapter
+"Operations").
+Only suppliers who have committed to following our principles can enter into a business rela-
+tionship with Infineon.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+safety
+Two important EU directives regulate the use of certain hazardous substances in end products
+as defined by EU legislators.
+Occupational
+Labor
+standards
+None of the Infineon products are in the scope of these directives. However, our customers
+expect Infineon products to meet legal requirements in their applications. The Infineon
+products comply with these requirements and conform to the substances restrictions in all
+applicable legal regulations, including those applicable in countries outside Europe.
+Furthermore, we provide our customers with information on the chemical composition of the
+materials contained in our products.
+Infineon works constantly on developing alternatives for certain materials, such as lead, with
+the aim to use them as replacements, beyond the extent required by law.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+105
+Our responsibility along the supply chain
+Long-term partnership between Infineon and its suppliers is a core element of our corporate
+philosophy.
+Compliance with our environmental, occupational safety and CSR requirements is an import-
+ant criterion in selecting future suppliers and assessing our current ones. Our Principles of
+Purchasing are based on internationally recognized guidelines, such as the principles of the
+UN Global Compact and the fundamental principles of the International Labour Organization
+(ILO) as well as our Business Conduct Guidelines. The requirements described therein cover
+the topics shown in diagram 54.
+G54
+Principles of Purchasing
+CSR in the supply chain
+Target achievement and summary
+of results in the 2015 fiscal year
+Target achieved:
+> We installed CSR evaluation
+for suppliers in the new supplier
+management tool and carried out
+evaluations.
+Target for the 2016 fiscal year
+Human rights
+1 In creating the Annual Report 2015 the WSC figures were not available.
+Electricity
+660,362 tCO₂e
+■Infineon Frontends
+Raw materials and supplies
+Infineon function cars
+1 Further emissions along the value chain
+Flights
+Transport
+Altogether, the Infineon carbon footprint totaled 1.57 million tons of CO2 equivalents in the
+2015 fiscal year.
+102
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+The following chart 51 illustrates the emissions by origin. The input streams show emissions
+that were generated in the course of supplying the materials. The output streams show
+emissions that were directly generated during production and through internal and external
+transportation.
+G 51
+Allocation of emissions by origin
+in tons CO2 equivalents (tCO2e)
+Input
+Raw materials
+460,421 tCO₂e
+Waste
+Materials
+Process gases
+74,744 tCO2e
+Fuel and energy supply
+Water consumption
+Wastewater
+G 50
+in tons CO2 equivalents
+1,572,462
+237,868
+Infineon products without DRC conflict minerals
+533,921
+800,673
+Scope 1 - Direct
+Scope 2-Indirect
+Scope 3-Indirect¹
+PFCs
+Gas
+Diesel
+Fueloil
+Petrol
+Firewood
+Electricity
+District heating
+Maximum value
+Process
+chemicals
+13,170 tCO2e
+Infineon
+in tons CO2 per square meter
+3.50
+3.00
+2.50
+2.00
+1.50
+1.00
+0.5
+0
+་་་།།།
+2020
+Infineon
+Infineon
+incl. Int.
+Rectifier
+World Semiconductor Council¹
+Normalized Emission Rate
+Internal and
+external
+transportation
+107,572 tCO₂e
+G52
+However, the growing complexity of our products is leading to an increasing need for green-
+house gases.
+production sites
+Other energy
+32,159 tCO2e
+Drinking water
+1,503 tCO2e
+Wastewater
+3,099 tCO₂e
+Output
+Waste
+1,763 tCO2e
+Air emissions
+217,668 tCO2e
+Normalized Emission Rate
+Target achievement and summary
+of results in the 2015 fiscal year
+> Due to better available data, we have
+changed our method of reporting
+and the resulting target. From now on
+we will orient our reporting on the
+WSC NER target value of 2.2 for 2020.
+Target for the 2016 fiscal year
+> To maintain the Infineon NER below
+2.2 in the 2016 fiscal year. The typically
+growing complexity of our products
+is leading to an increasing need for
+greenhouse gases. Therefore the
+target is a challenging and reasonable
+reference value for the efficiency of
+our emissions' reduction measures.
+Scope 1 emissions
+The semiconductor industry uses various greenhouse gases in wafer-etching processes as well
+as for the cleaning of production equipment. The Perfluorinated Compounds (PFCs), sulfur
+hexafluoride (SF) and nitrogen trifluoride (NF3) used cannot be substituted by another class
+of substances. These gases mean around 92 percent of Scope 1 emissions.
+We minimize the use of these gases firstly by continually optimizing our processes by increas-
+ingly efficient manufacturing methods and intelligent abatement concepts and secondly
+through the use of alternative gases within the PFC group with higher utilization rates and
+lower greenhouse gas potential.
+We have decided to change our PFC reporting from the use of absolute values to the Normalized
+Emission Rate (NER). The emissions from Infineon and International Rectifier will be standard-
+ized to reflect volumes per square centimeter of wafer manufactured. We have selected the
+target of the World Semiconductor Council (WSC) as a reference. Based on the WSC NER value
+from 2010, the WSC aims to reduce its value by 30 percent to a NER of 2.2 by the year 2020.
+Our target is to remain below the maximum value of 2.2. With a NER of 1.62 we achieved our
+target for the 2015 fiscal year.
+In July 2010, the USA's Dodd-Frank Act (Dodd-Frank Wall Street Reform and Consumer Protec-
+tion Act) was adopted. It contains disclosure and reporting obligations for companies listed in
+the USA concerning the utilization of so-called "conflict minerals” that originate from the
+Democratic Republic of Congo (DRC) or its adjoining countries. The term applies to tantalum,
+tin, gold and tungsten, inasmuch as their extraction and/or trade has directly or indirectly
+financed or benefited armed groups in the DRC or its adjoining countries.
+Calculation of the CO2 burden
+P see page 85
+Standardized water consumption
+per square centimeter manufactured wafer
+(excluding wastewater)
+Wastewater-direct discharge
+Wastewater - indirect discharge
+Other water discharges
+27.20%
+23.53%
+O
+49.27%
+G 43
+Water discharges 2015
+G42
+Infineon'
+> The preparation and approval of
+Business Continuity Plans for the
+International Rectifier sites of Temecula
+(USA) and Tijuana (Mexico). Business
+Continuity Plans serve to safeguard
+business activities in case of serious
+unforeseeable events, such as natural
+disasters or fires, and to minimize
+consequential damage for Infineon
+and its customers. Water shortages
+and climate change are part of this
+assessment.
+Targets for the 2016 fiscal year
+5,000,000
+10,000,000
+15,000,000
+20,000,000
+25,000,000
+in cubic meters
+Water consumption
+G41
+During the year under report, Infineon withdrew 21,379,138 cubic meters (m³) of water.
+Infineon sources water either from its own groundwater wells or from local providers, who
+supply both drinking and non-drinking water. Our water sources are shown in graph 41.
+> Regardless of growing product
+complexity, our aim is that our specific
+water consumption does not exceed
+8.5 liters per square centimeter of wafer.
+WSC
+79%
+100%
+In the 2015 fiscal year, waste totaled 32,940 tons, comprising 18,273 tons of non-hazardous
+waste and 14,667 tons of hazardous waste. Increases in production played a significant role in
+the increase in waste volumes compared to the previous year.
+Our sustainable waste management is based on waste separation by type. Secure disposal
+methods including recycling are applied depending on the type of waste. All our manufactur-
+ing sites work with certified waste management companies. Apart from statutory requirements,
+fluctuating production and construction projects have the greatest impact on the amounts
+of waste generated.
+Waste management
+99
+99
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+1 Frontend sites worldwide
+The high priority given to sustainable water consumption at Infineon is documented by
+its participation in the United Nations' "CEO Water Mandate". Our Communication on
+Progress regarding this initiative of the UN General Secretary is available on our website,
+@www.infineon.com/csr_reporting. We report on our handling of water and the associated
+opportunities and risks in the "Carbon Disclosure Project (CDP) Water Disclosure".
+According to the definition of the World Business Council for Sustainable Development
+(WBCSD), a water shortage exists when the total volume of renewable water resources avail-
+able in a given area per capita is lower than 1,700 cubic meters per year. We performed a risk
+analysis at country level using the WBCSD's "Global Water Tools" 2015. As a result, Singapore
+is the only Infineon manufacturing site located in an area impacted by water shortages. The
+Singapore site accommodates mainly office and testing areas with low levels of water demand
+and utilized only 0.59 percent of the entire volume of water consumed by Infineon during the
+2015 fiscal year. Nevertheless, water efficiency measures have been undertaken at the site,
+such as the installation of water-saving sanitary systems. For this reason, a further building at
+the Singapore site was awarded the "Water Efficient Building" certificate by the local water
+authority "PUB" during the 2015 fiscal year.
+The World Semiconductor Council (WSC) has defined water consumption in liters per square
+centimeter of wafer manufactured to measure the efficiency of water consumption. In the
+2014 calendar year, Infineon frontend sites worldwide consumed around 21 percent less water
+to manufacture a square centimeter of wafer than the WSC global average.
+After water has exited the manufacturing area, it is either directly or indirectly discharged,
+depending on its level of purity, the technical conditions and official permissions. The per-
+centages of water discharged are shown in chart 42.
+Some of this water can be re-used several times. During the reporting period, 702,489 cubic
+meters (9.77 percent) of ultrapure water for production purposes and 1,106,540 cubic meters
+(10.98 percent) of production wastewater were re-used.
+If water fails to meet our purity standards, then it is treated and afterwards used in our manu-
+facturing processes, either for cooling purposes, or to produce ultrapure production water.
+Non-drinking water
+Drinking water
+Groundwater
+2015
+Infineon
+incl. Int.
+Rectifier
+2015
+Infineon
+2014
+2013
+2012
+2011
+0
+> Infineon has published its Commu-
+nication on Progress to the UN's
+"CEO Water Mandate" on its website
+at: www.infineon.com/csr_reporting
+9.77 percent of ultrapure water is either
+recycled or reused in other processes.
+"Water Efficient Building" certificate
+received for a further building at the
+Singapore site.
+G45
+than the WSC global average to manu-
+facture one square centimeter of wafer.
+Targets achieved:
+Water balance
+G40
+Efficient water management is an integral part of our environmental management and should
+guarantee the sustainable use of water. The schematic diagram for water management at
+Infineon in the 2015 fiscal year is shown in chart 40.
+Water management
+The growing scarcity of natural resources is one of today's greatest global challenges. Optimiz-
+ing efficiency in the use of resources offers both ecological and economic benefits and is a
+key component in our sustainability strategy worldwide.
+Sustainable use of resources at our manufacturing sites
+Our global management system IMPRES integrates targets and processes relating to ecological
+sustainability (including energy management) as well as occupational safety and health
+protection. IMPRES is certified in accordance with ISO 14001 and OHSAS 18001 worldwide.
+Additionally it has been certified in accordance with ISO 50001 energy management standard
+at our main European manufacturing sites as well as our Campeon corporate headquarters.
+We are currently in the process of integrating sites that have become part of Infineon through
+the acquisition of International Rectifier in our multi-site certification and have begun
+to implement the integrated management system. The figures given in the sections "Water
+management", "Waste management" and "Efficient energy management" include Inter-
+national Rectifier data.
+Environmental sustainability
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+1 The Lost Day Rate is calculated as follows: total number of lost days/total hours worked x 200,000.
+Holidays and public holidays are included in the working hours.
+Water use
+2015
+Infineon
+incl. Int.
+Rectifier
+2014
+2013
+2012
+2011
+0
+2
+4
+6
+8
+10
+2015
+Infineon
+Psee pages 97 f. and 99 f.
+@www.infineon.com/csr_reporting
+Evaporation
+Water withdrawal
+(partly treated):
+21,379,138 m³
+Target achievement and summary
+of results in the 2015 fiscal year
+Water management
+98
+Discharge to river:
+9,784,342 m³
+Discharge to river:
+4,673,037 m³
+Sewage plant:
+5,400,250 m³
+Direct discharge
+Indirect discharge
+In accordance with
+purity requirements
+In accordance with
+purity requirements
+97
+Internal wastewater treatment
+Wastewater: 10,073,287 m³
+Sanitary systems, canteen area
+Water discharge after production: 19,857,629 m³
+Municipal wastewater (sewage plant)
+Non-ultrapure water
+Ultrapure water:
+7,190,245 m³
+Cooling water:
+10,813,469 m³
+Production
+Non-drinking water:
+2,905,087 m³
+Drinking water:
+4,503,492 m³
+Groundwater:
+13,970,559 m³
+> Infineon consumed approxi-
+mately 21 percent less water
+Lost Day Rate (LDR) 1
+Waste management methods
+in the 2015 fiscal year
+10.75%
+0.06
+Petrol
+900
+0.63
+Liquid gas
+1,200
+98.73
+Natural gas
+1,500
+110.27
+Petrol (cars)
+non-renewable
+in gigawatt hours
+0.50
+Firewood
+Energy consumption
+0.50
+renewable
+G47
+Direct energy (Scope 1)
+GWh
+Consumption by energy source is shown in graph 47 and in the adjoining table.
+Direct energy (Scope 1)
+3.65
+600
+Diesel
+Liquid gas
+Electricity
+Natural gas
+Firewood
+101.06
+District heating
+2015
+Infineon
+2015
+Infineon
+incl. Int.
+Rectifier
+| | | |
+1,253.07
+Electricity
+1,354.13
+non-renewable
+Indirect energy (Scope 2)
+2014
+2013
+2012
+2011
+0.28
+Fuel oil
+0
+6.24
+Diesel (cars)
+300
+0.68
+consumers.
+7.20%
+In the 2015 fiscal year, Infineon consumed worldwide roughly 1,467 gigawatt hours (GWh)
+of energy. Furthermore, Infineon gave off approximately 1.54 gigawatt hours to external
+100
+Recycling
+Landfill
+Non-hazardous waste
+2015
+Infineon
+incl. Int.
+Rectifier
+2015
+Infineon
+2014
+2013
+2012
+2011
+Hazardous waste
+0
+■Chemical treatment
+4,000
+12,000
+16,000
+20,000
+in tons
+Waste generation
+G 44
+65.51%
+0
+1.58%
+14.96%
+8,000
+G46
+Incineration
+Composting
+G see glossary, page 291
+> Regardless of growing product
+complexity, our aim is to keep the
+specific waste generation below
+27.5 grams per square centimeter of
+wafer manufactured.
+Target for the 2016 fiscal year
+Approximately 65.51 percent of waste
+generated at Infineon sites was recycled.
+> Compared with the WSC
+global average, Infineon sites
+generated approximately 50 percent
+less waste to manufacture one square
+centimeter of wafer.
+Target achieved:
+of results in the 2015 fiscal year
+Target achievement and summary
+Waste management
+Within its manufacturing chain, Infineon consumes the majority of its energy in its frontend
+manufacturing sites, where the facilities require highly sophisticated physical conditions,
+such as particularly demanding stable conditions in the cleanrooms, which means additional
+energy consumption. Due to their nature, backend processes require less energy than
+frontend processes, followed by the development and office sites, which consume the
+lowest percentage.
+At Infineon, energy is used mainly in the form of electricity in all stages of semiconductor
+manufacturing. Primary energy sources such as oil and gas play only a minor part.
+Efficient energy management
+Energy efficiency and climate protection
+During the 2015 fiscal year, a new waste collection center went into operation at the Villach
+(Austria) site with the aim of improving waste logistics. The center covers a total area of
+1,600 square meters. Furthermore, from the beginning of the new fiscal year, the Villach site
+plans to discontinue recycling its dimethylformamide (DMF) solvent itself and have the work
+performed by an external specialist with further technical capabilities. The change will on the
+one hand improve the quality of the recycled DMF and on the other hand significantly
+increase the recycling rate.
+The WSC has defined the total volume of waste in grams per square centimeter of wafer manu-
+factured to measure the efficiency of waste generation. In the 2014 calendar year, Infineon
+frontend sites worldwide generated around 50 percent less waste per square centimeter of
+wafer manufactured than the WSC global average.
+In the 2015 fiscal year, 67.30 percent of non-hazardous waste and 63.27 percent of hazardous
+waste were recycled. The percentages of the various waste management methods are illus-
+trated in chart 45.
+100%
+50%
+1 Frontend sites worldwide
+WSC
+Infineon'
+per square centimeter manufactured wafer
+Standardized waste generation
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+G39
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+2011
+Petrol (cars)
+Diesel (cars)
+G48
+Standardized electricity consumption
+per square centimeter manufactured wafer
+Infineon'
+WSC
+1 Frontend sites worldwide
+Energy efficiency
+60%
+Petrol
+Diesel
+100%
+Target achieved:
+> This year we implemented
+measures that saved an annual
+volume of 14.31 gigawatt hours (GWh)
+of electricity and district heating.
+We have also integrated our backend
+manufacturing sites in the energy
+savings analysis.
+At our main manufacturing sites and in line with local requirements, we have implemented
+the systematics of the energy management standard ISO 50001 and continually analyze
+options to further improve energy efficiency. Improving energy efficiency means reducing
+specific energy consumption, which in turn means a reduction in the amount of energy
+required per manufactured unit.
+In the semiconductor industry, the WSC defines specific energy consumption as electricity
+consumed per square centimeter of wafer manufactured. Based on this definition, the WSC
+provides companies every year with an international value, which serves as a benchmark.
+Accordingly, in the 2014 calendar year, Infineon frontend manufacturing sites consumed
+approximately 40 percent less electricity per square centimeter of wafer manufactured than
+the worldwide average for the semiconductor industry in accordance with WSC.
+In the 2015 fiscal year, the energy consumption per revenue was 0.25 kilowatt hours per euro.
+Figures from previous years are also shown in graph 49 as a comparison.
+G49
+Target achievement and summary
+of results in the 2015 fiscal year
+Energy consumption per revenue
+■Fuel oil
+District heating
+Since Infineon does not purchase these metals directly from mines or smelters, we identify
+their origin in close cooperation with our direct suppliers. For this purpose we have introduced
+a standardized process throughout the organization, based on the OECD Due Diligence Guidance
+for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Conflict minerals
+Target achievement and summary
+of results in the 2015 fiscal year
+Target achieved:
+> The establishing of a query,
+registration and supplier
+evaluation system in accordance with
+the OECD guidance on implementing
+and maintaining a DRC conflict-free
+supply chain.
+Targets for the 2016 fiscal year
+> To maintain the DRC conflict-free
+supply chain.
+> To integrate International Rectifier
+products in the Infineon conflict
+minerals declaration.
+In the 2015 fiscal year, Infineon identified 100 percent of its potential suppliers of conflict
+minerals and evaluated them with regard to their use. Based on the thorough response of our
+suppliers and in accordance with the requirements of the OECD guidance, we can duly state
+that Infineon products are fully DRC conflict-free. Moreover, we request our suppliers to continue
+purchasing only raw materials from smelters that meet the CFSI requirements or those of an
+equivalent auditing program.
+@www.infineon.com/csr_reporting
+Target achievement and summary
+of results in the 2015 fiscal year
+Target achieved:
+> Employee participation in
+this field has increased. Our
+employees donated €24,000 for
+earthquake victims in Nepal, in addition
+to the sum donated by Infineon.
+Moreover, Infineon has set up an
+account for employees to donate money
+for refugees. For each euro donated,
+Infineon donates an additional euro.
+Target for the 2016 fiscal year
+> To integrate International Rectifier
+Corporate Citizenship activities
+consistent with our guidelines.
+We have determined a Group-wide approach to this topic with the aim of guaranteeing the
+necessary transparency within our own supply chain.
+Infineon uses the above-mentioned materials in the manufacture of its products and their
+functionality is crucial. Infineon is not listed on US stock exchanges and therefore not legally
+required to publish a report on conflict minerals. Nevertheless, as a member of the Conflict-
+Free Sourcing Initiative (CFSI), we are aware of our voluntary commitment and duty of
+due diligence in the supply chain. At the same time, we assist those of our customers who
+are required to perform due diligence within their supply chains in meeting their reporting
+duties in accordance with the requirements of the United States Securities and Exchange
+Commission (SEC).
+Corporate Citizenship
+in kilowatt hours per €
+0.40
+Target for the 2016 fiscal year
+The calculation of CO2 emissions is based on the ISO 14000 standard, which is concretized by
+the PAS (Public Available Specification) 2050 guideline issued by the BSI (British Standards
+Institution) for determining the ecological impact of various products, as well as by the principles
+of the Greenhouse Gas Protocol for determining carbon footprints (relevance, completeness,
+consistency, transparency, and accuracy).
+In calculating the Infineon carbon footprint, we have considered in accordance with PAS 2050
+the entire manufacturing process, including all of the utilities (raw materials and supplies) as
+well as internal and external logistics including final distribution to customers.
+The following emissions and immission have been included in the calculation of the carbon
+footprint:
+1,132,638
+4,273
+16,810
+321,942
+789,613
+The classification of direct and indirect emissions is carried out as set out in the "Greenhouse
+Gas Protocol" in Scope 1, 2 and 3. The new Scope 2 guidelines now require companies to
+calculate and disclose two values for their Scope 2 emissions: "market-based accounting",
+which is based on provider-specific emission factors, and “location-based accounting", based
+on the average for the regional or national grid.
+€
+In-kind giving
+Employee
+volunteering
+Sponsoring
+Donations
+in €
+Corporate Citizenship expenditure
+G55
+In the 2015 fiscal year, Infineon supported 324 activities worldwide. 30 percent of the
+donations were local communities' investments in the communities we interact with, and
+70 percent were donations to charitable activities.
+Total
+At an early stage, Infineon started developing strategies to reduce the amount of material
+used to the technically necessary minimum, thereby minimizing CO2 emissions.
+Greenhouse gas emissions
+101
+0.30
+> To implement projects and measures
+0.20
+at our manufacturing sites worldwide
+which are capable of saving a total
+of 35 GWh of energy by the end of the
+2017 fiscal year.
+35 GWh
+0.10
+||||||
+0
+We have set out our requirements in the Infineon "Conflict Minerals Policy" and the "Supplier
+Code for a Responsible Sourcing of Conflict Minerals", which have been published on our website.
+2012
+2013
+2014
+2015
+2015
+Infineon
+Infineon
+incl. Int.
+Rectifier
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+106
+We understand Corporate Citizenship as our voluntary social commitment for the communities
+in which we operate. In the field of Corporate Citizenship, Infineon has defined four areas of
+activity: "Environmental Sustainability", "Local Social Needs", "Education for Future Genera-
+tions" and help in case of "Natural and Humanitarian Disasters”. In addition to monetary and
+material donations, the commitment of our employees can be expressed in voluntary activities.
+The above-mentioned areas of activity and engagement possibilities are contained in our
+Corporate Citizenship Guidelines. These guidelines ensure that our Corporate Citizenship
+activities are performed transparently and in line with our ethical principles. In addition, we
+have appointed a Citizenship representative at every Infineon site who is the person to
+contact in all matters relating to this topic.
+Corporate Citizenship
+Respect for human rights is a matter of course for Infineon. The avoidance of conflict minerals
+throughout the supply chain is a firm contribution towards the prevention of human rights
+abuses.
+Female
+13,179
+3,136
+10,043
+9,426
+2,415
+7,011
+8,888
+2,265
+6,623
+17,035
+8,312
+8,723
+15,936
+7,715
+8,221
+1,986
+980
+1,006
+1,748
+813
+935
+11,034
+174
+3,499
+Male
+114
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Employees by geographical region
+Europe
+Therein: Germany
+Asia-Pacific
+Therein: China
+Japan
+Americas
+Therein: USA
+14,533
+Total
+Employee reporting was prepared in accordance with the requirements of the global report-
+ing initiative (GRI). Reporting in accordance with GRI covers all active, internal employees.
+Employees and personnel expense
+As of September 30, 2015, Infineon had a worldwide workforce of 35,424 employees, com-
+pared to 29,807 employees one year earlier. In addition, at September 30, 2015, Infineon
+employed a total of 267 apprentices and dual students, 80 interns and 846 working students.
+74 new apprentices and dual students were hired in the 2015 fiscal year.
+2015
+2014
+Total
+Female
+Male
+Total
+Female
+Number of employees
+36
+138
+136
+Full-Time
+Part-Time
+Male
+20,113
+19,626
+487
+17,409
+17,028
+5
+1,335
+1,340
+7
+1,982
+1,989
+Male
+381
+8,734
+9,517
+854
+10,056
+10,910
+Total
+Part-Time
+Full-Time
+Total
+24
+112
+3,682
+1,475
+2,207
+556
+183
+373
+2,136
+35,424
+682
+13,322
+Employees on permanent contracts
+1,454
+183
+373
+22,102
+29,807
+11,058
+18,749
+Due to the acquisition of International Rectifier, there was an increase of 3,126 employees in
+the Americas. Almost half of the entire workforce was employed in the Asia-Pacific region
+(17,035). 41 percent of all employees were employed in Europe (14,533), with the majority
+working in Germany (9,426).
+In the workforce as a whole, at September 30, 2015, 2,412 female employees and 1,989 male
+employees had fixed-term contracts and 10,910 female employees and 20,113 male employees
+had permanent contracts. A total of 1,358 employees were working part-time at that date.
+2015
+2014
+556
+783
+Female
+Infineon has issued two Eurobonds
+with a total amount of €800 million.
+This transaction is the first of its
+kind in the Company's history.
+The issue proceeds replace the
+bridge financing granted by banks,
+which Infineon had secured in
+August 2014 for the acquisition of
+International Rectifier.
+employees
+4,206
+1,014
+659
+2,562
+393
+11
+619
+181
+Rate of newly hired
+employees¹
+11.9
+7.0
+7.0
+15.0
+19.8
+6.3
+16.8
+8.5
+Infineon wants to attract the best possible staff and for that reason attractive, market-oriented
+remuneration and appropriate participation in the Company's success are a matter of course.
+We pay our staff on the basis of work-related criteria, such as job requirements and perfor-
+mance, and in accordance with the respective local market requirements. Men and women are
+paid equally at Infineon. Each employee shall receive appropriate, transparent remuneration
+for their work, in compliance with all legal standards.
+Staff departures
+3,048
+476
+195
+219
+12
+633
+Newly hired
+166
+54.0%
+46.0%
+2,402
+10
+1,541
+1,529
+12
+Employees on fixed-term contracts
+Total
+35,424
+34,066
+1,358
+29,807
+28,626
+1,181
+Employees, who were, for example, on parental leave or in the non-working phase of early
+retirement part-time working arrangements, are not active employees and therefore not
+included in the tables above. Similarly, temporary employees are not included. At September 30,
+2015, 2,654 temporary employees were working for Infineon worldwide, of whom 1,323 were
+women and 1,331 men. Approximately 77 percent of the external workers were employed in
+production, giving Infineon flexibility in its manufacturing capacities.
+The worldwide personnel cost for current internal Infineon employees in the 2015 fiscal year
+totaled €1,939 million (2014 fiscal year: €1,490 million). The amount includes wages and
+salaries, including overtime and allowances, as well as social costs (pension expenses and
+social contributions).
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Our employees
+115
+Employee recruitment and turnover
+In total, 4,206 new employees were hired worldwide during the 2015 fiscal year, of whom
+1,933 were women and 2,273 men. 2,703 employees were under 30 years of age, 1,391
+belonged to the 30-50 age group and 112 were over 50 years of age.
+G 61
+Female/male employees
+(new entries worldwide 2015)
+Total Europe Therein:
+Germany
+Asia- Therein:
+Pacific China
+Japan
+Americas
+Therein:
+USA
+Female
+Male
+Rate of staff
+59.9%
+14.8%
+30 to 50 years
+Over 50 years
+116
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Notable events 2015
+October 2014
+30 years of microchips
+from Regensburg
+The foundations for the first manu-
+facturing building for 1-megabit
+memory chips in Regensburg were
+laid on October 23, 1984. Only two
+years later, in October 1986, the
+first samples were already manu-
+factured. The volume production
+started in December 1987. However,
+memory chips are no longer pro-
+duced in Regensburg. Today, this
+site manufactures sensors, power
+semiconductors and logic and
+radio-frequency components.
+November 2014
+International Rectifier
+shareholders approve
+acquisition
+IOR
+January 2015
+Successful closing of
+the acquisition of
+International Rectifier
+After the shareholders of Inter-
+national Rectifier had approved the
+transaction with a great majority
+in November 2014, the relevant
+authorities also issued the required
+releases. This makes the El Segundo
+(California, USA)-headquartered
+company part of Infineon as of
+January 13, 2015.
+During an extraordinary general
+meeting, the shareholders of Inter-
+national Rectifier agreed to the
+planned acquisition by Infineon by
+a majority of 99.5 percent.
+Infineon +IOR
+=
+A Powerful
+Combination
+November 2014
+Infineon purchases shares
+of Schweizer Electronic
+SCHWEIZER
+ELECTRONIC
+Infineon acquires a 9.4 percent stake in the circuit-board manufacturer Schweizer
+Electronic AG in Schramberg (Germany). Infineon's stake is geared towards the
+development of technologies to embed power semiconductors into circuit boards
+and to expand the chip embedding technology to high-power automotive and
+industrial applications. While circuit boards are assembled on their front and
+backside today, chip embedding technology will enable the semiconductors to
+be "embedded" on the inside of the circuit board in the future. This makes the
+circuit board smaller. Systems with limited space in vehicles will benefit from this
+development; such as the electrical power steering system, active suspension
+or electrical pumps.
+March 2015
+Infineon issues two
+Eurobonds worth a total
+of €800 million
+25.3%
+(Infineon worldwide 2015)
+2.7%
+33.1%
+departures²
+9.0
+3.4
+2.1
+11.6
+11.8
+7.2
+21.7
+9.4
+G62
+1 Figures expressed in percentages based on the workforce at September 30, 2015, in the respective region.
+2 Figures in percent, calculated on the basis of the monthly workforce in the 2015 fiscal year.
+Age structure
+(new entries worldwide 2015)
+2,412
+Under 30 years
+Of the departures, 1,371 were women and 1,677 men. 1,727 employees were in the under-30 age
+group, 1,071 in the middle age group (30-50 years) and 250 in the over-50 age group. The
+worldwide employee turnover rate during the 2015 fiscal year was 9.0 percent, which represents
+a slight increase of 0.1 percentage points compared to 8.9 percent in the previous year. In
+Germany, the employee turnover rate was 2.1 percent (previous year: 3.4 percent). The per-
+centage figure includes voluntary terminations and other reasons for leaving.
+Age structure and length of service
+The average age of employees worldwide in the 2015 fiscal year is 38.1 years, marginally
+higher than one year earlier (2014 fiscal year: 37.1 years). The proportion of employees below
+30 s of age fell (2015 fiscal year: 25.3 percent, 2014 fiscal year: 27.5 percent). Likewise, the
+years
+proportion of the middle age group (2015 fiscal year: 59.9 percent, 2014 fiscal year: 60.2 per-
+cent) is lower, whereas the share of the group over 50 years of age has risen (2015 fiscal year:
+14.8 percent, 2014 fiscal year: 12.3 percent).
+The higher average age of employees is reflected in a slight increase in the average length
+of service of Infineon employees worldwide, which rose from 9.4 years in the previous year
+to 9.6 years in the 2015 fiscal year. The average length of service of Infineon employees in
+Germany was 14.3 years, marginally lower than the previous year's 14.4 years.
+Outlook
+Our human resource-related work is focused on sustaining successful initiatives and programs
+and developing new measures in response to present requirements. The long-term human
+resources strategy contributes ever anew to meeting Infineon's high-performance claim: Our
+aim is for our staff to be deployed competently and correctly, and to be motivated through
+personal success to contribute to Infineon's overall success.
+With this aim in mind, our human resources work continues to focus on the pillars "Leadership
+excellence", "Promoting talent" and "Our workforce". Furthermore, the "HR Operational
+Excellence" initiative continues to improve our key processes in human resources. With stable
+processes, successful HR projects and efficient instruments, in our role as strategic partners
+and advisers to management and staff, we accompany Infineon on its high-performance path.
+30 to 50 years
+Over 50 years
+G 63
+Age structure
+Under 30 years
+64.2%
+There were 3,048 staff departures from Infineon in the 2015 fiscal year. Of these, the majority
+(1,927 employees) were in the Asia-Pacific region, where the majority of new recruitments also
+occurred (2,562 employees). Employee turnover in the Americas region increased to 21.7 per-
+cent in the 2015 fiscal year, compared to 6.3 percent one year earlier. The increase is due to the
+inclusion of the new manufacturing site in Mexico, acquired in conjunction with the integration
+of International Rectifier. A high turnover in manufacturing is commonplace in Mexico. We are
+nevertheless working on bringing the figure down.
+Compensation
+1,927
+In the Asia-Pacific region (including Japan), in addition to these benefits, site-specific life
+insurance as well as hospital group insurance policies are also offered, which extend beyond
+the statutory provisions.
+72.7
+4,912
+Total'
+Over 50 years²
+30 to 50 years²
+Under 30 years²
+Employees
+1 International Rectifier not included
+Total
+Non-management staff
+Entry level management³
+Middle and senior level management³
+nationalities (98)
+Other
+Indonesia
+Austria
+China
+Germany
+26.2%
+6.8%
+8.0%
+25.0%
+8.8%
+Promoting talent
+27.3
+Talent marketing and management
+Due to the international nature of our business, we wish to offer our staff development pros-
+pects beyond organizational and national boundaries. The worldwide Development Confer-
+ences, during which managers discuss the further development of our talents with the Human
+Resources department, are an important instrument in this endeavor.
+In the Asia-Pacific region, due to the expectations of employees and the specific local context,
+in addition to the Infineon career paths we offer specially developed talent management pro-
+grams: "ENGINE" for management careers and "TechStar" for technical careers. Both programs
+focus on the key areas of training, interaction with management and the practical application
+of what has been learnt in specific projects.
+Encouraging diversity
+As an international company, the diversity of our staff is particularly important to us. Our
+global diversity management provides the framework for a corporate culture which values the
+individuality of each staff member and promotes equal opportunities - irrespective of age,
+disability, ethnic-cultural origin, gender, religion, belief, or sexual identity. The focal points of
+our commitment to diversity may vary from one location to another and are tailored to suit
+local needs. For example, the diversity team in the Asia-Pacific region concentrates in particular
+on ethnic-cultural diversity and the demographic trend.
+Infineon employs 35,424 persons of different nationalities. The five most prevalent nationali-
+ties represent a total of 74.8 percent of the workforce, with Malaysian nationals accounting
+for 26.2 percent and German nationals for 25.0 percent. A further 90 nationalities have a share
+of the total workforce of less than 1 percent each.
+Malaysia
+At Infineon, depending on their individual knowledge and talents, development opportunities
+are available to employees in a variety of careers, based on Infineon's needs. Three career paths
+are already established: professional careers as an “Individual Contributor", in which individual
+expertise in a traditional business field, such as finance, purchasing or sales, is promoted; the
+"Technical Ladder", which enables our technical experts to develop; and the Management
+career path for (junior) managers. A further career path - the Project Management career - was
+introduced in summer 2015. This career path aims to offer our project managers clear pros-
+pects for their personal development and careers - and emphasizes the importance of imple-
+menting development projects for Infineon's success. The new career path provides project
+managers with optimum training to fulfil their tasks and empowers them to contribute their
+experience specifically to new projects.
+25.2%
+5,320
+84.1
+46.4
+21,173
+75.4
+24.6
+5,320
+87.0
+13.0
+4,912
+Total¹
+Male²
+Female²
+Employees
+1 International Rectifier not included
+Total
+Non-management staff
+Entry level management³
+Middle and senior level management³
+12.7
+21,173
+38.9
+50.9
+10.2
+31,405
+3.2
+26.8
+13.3
+2 Figures expressed in percentages based on the workforce at September 30, 2015, in the respective comparison group.
+3 At Infineon, the management function includes not only the leadership of employees but also leadership through specialist
+expertise as defined in the internal job evaluation system.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Our employees
+111
+With regard to the breakdown by gender and age structure: Of 13,322 female employees,
+36.2 percent are under 30 years of age, 52.6 percent in the middle age group and 11.2 percent
+are over 50. Of 22,102 male employees, 18.7 percent are under 30 years of age, 64.3 percent
+in the middle age group and 17.0 percent are over 50.
+59.9
+53.6
+(Infineon worldwide 2015)
+G58
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+108
+During the 2015 fiscal year, Infineon enlarged the kindergarten within its Campeon head-
+quarters in Neubiberg (Germany). The extension building now makes it possible for 220 children
+from 34 different countries between the ages of eight months and six years to play together in
+various groups. €4.6 million were invested in enlarging the kindergarten. The Federal State of
+Bavaria contributed roughly one third of the sum. In parallel to the extension and apart from
+other measures, a compensation area was planted. The City of Munich and the local councils
+of Neubiberg, Unterhaching and Ottobrunn were all involved in this inter-communal project.
+The "Sonnenstrahl" association, together with Infineon Technologies Austria AG as cooperation
+partner, opened an international childcare facility focusing on science and technology at
+the Villach (Austria) site. The International Day Care Center has created new, publicly accessible
+childcare facilities and helps employees to combine professional and family life. The public
+facility is based on an innovative concept with an international focus.
+It is our aim to engage with local communities and invest in those. In cooperation with the
+company Kelag, Infineon has again clearly signalized its firm commitment to environment-
+and resource-friendly mobility by installing a state-of-the-art vehicle charging station at its
+Villach (Austria) site. The e-charging station is located on the Infineon parking lot and consists
+of a photovoltaic power plant with an output of 3.8 kilowatts peak (kWp). Charging points
+for e-scooters and e-cars are located under its roof. Battery charging equipment for e-bicycles
+has been installed in the adjacent bicycle parking area. With this project we are contributing
+towards providing the necessary mobility in the most environment- and resource-friendly way
+possible for our employees and the inhabitants in Villach.
+Local investments and services
+> Support of the Regensburg environmental center in Germany
+> Support of the "EcoCap Movement" in Japan
+> Mangroves planting to protect the sea ecosystems in Batam, Indonesia
+Environmental
+Sustainability
+> Earmarked emergency aid for the medical supply of refugees
+> Help for the survivors of the earthquake in Nepal
+Humanitarian Disasters
+Natural and
+> "SOS Kinderdorf" in Moosburg, Germany
+> "Home for single mothers" project in Kulim, Malaysia
+> Foundation "Global Compact Network Germany"
+Infineon also encourages various work-time models aimed at keeping working hours flexible,
+depending on individual employees' circumstances - such as in the form of trust-based work-
+ing hours, part-time work or teleworking arrangements. In the Asia-Pacific region (including
+Japan), for example, 90 percent of all sites already offer flexitime and 70 percent of all sites
+offer teleworking options.
+G56
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Sustainability at Infineon
+107
+Examples of the Corporate Citizenship activities of Infineon in the 2015 fiscal year
+Education for
+Our employees
+Future Generations
+> Haus der Zukunft: Initiative of the Federal Ministry of Education and Research
+> Cooperation with the association of "Industrial Engineers" of the University
+of Technology in Graz, Austria.
+> Chips@school: Pupils and teachers develop new ideas for the use
+of semiconductors
+> LittleTech: Early support in technologies in kindergardens and primary schools
+> "Learn for Life" project in China
+Local Social Needs
+Nationalities
+Our human resource work focuses on the development of our employees and recruitment
+of new colleagues. We are convinced that successful human resource management is key
+to business success, since only satisfied and successful employees make long-term peak
+performance possible and support us in meeting our growth and profitability targets set out
+at the beginning of this report. We endeavor on a daily basis to promote the performance
+and potential of our employees in the best possible way. The three pillars of "Leadership
+excellence", "Promoting talent" and "Our workforce" combine all the activities that we use
+to achieve this objective.
+The integration of US semiconductor manufacturer International Rectifier was a key factor in
+decisively shaping our human resources work during the previous fiscal year. At the time of the
+acquisition in January 2015, International Rectifier had a workforce of some 4,200 employees
+in about 20 countries.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+110
+In the context of reviewing the management career, we intend to offer further management
+training programs under the "Infineon Leadership Excellence Program" from the coming fiscal
+year. By combining specific in-house aspects with proven leadership practices, our aim is to
+continue promoting a uniform understanding of leadership within Infineon.
+An example of our course offerings is the "New Leader Orientation” program – an in-house
+workshop for new managers focusing on leadership culture and management tools at Infineon.
+In addition, Infineon ensures further development of leadership skills through the manage-
+ment training course "Leading People in a High Performance Company", to ensure that
+employees are motivated to meet Infineon's challenging objectives and that these skills can
+be passed on. By the end of the 2015 fiscal year, more than 2,100 managers at various levels
+worldwide had participated in this training. In a further training program “Leadership & Health",
+our top managers learn to identify stress factors at the workplace more effectively and to
+mitigate them. The “Health & Care" computer-based training also presents the aspect of
+health as a management task.
+We provide support for our managers in the form of numerous learning and development
+opportunities at the various leadership levels. Our approach to learning involves a variety
+of methods based on both theory and practice. We work on concrete practical examples at
+face-to-face training events and through computer-based training.
+Good leadership is fundamental for Infineon's success, as it enables each individual to perform
+his or her tasks effectively and thereby contribute to the success of the company. At the same
+time, our employees expect to be able to develop their skills and competences in a suitable
+environment. With this in mind, creating an attractive working environment and long-term
+employee retention at Infineon are key tasks for our managers.
+Management development
+Open feedback is always important to us in constructive dialog with our employees' represen-
+tatives at the various sites. Co-determination is a key factor in our human resources work.
+Together, and in a spirit of trust, we are building the basis for successfully implementing our
+key topics in the respective bodies, and especially in the Central Works Council and the Manage-
+ment Staff Representation Committee.
+The leadership dialog enables managers to obtain structured feedback from their staff, which
+helps them to reflect on their individual leadership conduct, identify strengths and potential
+areas for improvement, and hence promote cooperation, both with and within the team.
+We believe that without honest and open feedback, it is not possible for an organization to
+develop. This basic premise is reflected in our values, which are collectively defined in our
+"High Performance Behavior Model”. These values are not purely theoretical. The High Perfor-
+mance Behavior Model shows how we aim to achieve Infineon's targets and set priorities.
+These behavioral descriptions play a significant role, for example, in our annual dialogs with
+employees under the global STEPS process (abbreviation for "Steps To Employees' Personal
+Success"). However, our fundamental culture of openness does not stop here. Feedback from
+teams to their managers is just as important as feedback from managers to staff. We have,
+therefore, established the format of the "leadership dialog", which is carried out every two
+years, as a supplement to the STEPS dialogs.
+Open and honest feedback
+Leadership excellence
+Our employees
+109
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+and manage
+risks
+Strive for
+excellence
+Our human resource work in the integration process focuses on incorporating the International
+Rectifier organization in the Infineon business structure, planning and implementing measures
+to ensure employee commitment, harmonizing remuneration systems and classifying employ-
+ees with effect from January 1, 2016, and support for cultural integration and guidance for
+managers and employees in this process of change by the change management team. A global
+project team of HR colleagues was set up at an early stage to implement the above-mentioned
+measures.
+The International Rectifier staff supported the integration with openness, great interest and
+a high level of commitment. In August 2015, 84 percent of Infineon and International Rectifier
+employees surveyed in the USA stated that they enjoy working at Infineon. We wish to build
+further on this positive feedback in the future.
+The next step in this cultural integration process is to introduce the Infineon High Performance
+Behavior Model as a basis for the further shaping of our common fundamental values.
+G 57
+High Performance Behavior Model
+Acquisition and integration of International Rectifier
+Trust and
+Be passionate
+about profit
+Foster your
+talents
+Team up
+for best
+results
+We commit.
+We innovate.
+We partner.
+We perform.
+Focus on the
+customer
+Drive value
+through
+innovation
+respect others
+31,405
+Be ambitious
+62.5
+26.3
+28.7
+27.2
+24.8
+29.0
+26.7
+33.9
+28.1
+32.1
+21.9
+26.5
+22.5
+Male¹
+Female¹
+1 International Rectifier not included; calculated on the basis of the monthly workforce in the 2015 fiscal year.
+Per employee¹
+Non-management staff
+Entry level management²
+Middle and senior level management²
+Training hours
+In 2015, our staff participated in a total of 836,554¹ hours of training. 39.41 percent of training
+hours was given to female employees and 60.6¹ percent to male employees. Production
+training hours with 72.8¹ percent accounted for the majority of the hours utilized.
+Our focus in this area is on professional training aimed at developing the technical know-how
+and innovation skills of our workforce; programs concentrating on improving the leadership
+and feedback culture within the organization; training courses on the development of social
+skills and aptitudes; project management training. In addition, in-house training opportunities,
+such as mentoring programs and on-the-job training, are also of importance to us.
+In 2015, Infineon invested €9.21 million (2014: €8.5 million) in the further training of its staff.
+We give high priority to staff training. We keep a permanent eye on our employees with all
+their skills and aptitudes to ensure their personal and professional development.
+Qualifications and training
+At selected leading universities in China, Infineon organizes "Student Dialogs" and "Infineon
+Days" and maintains "Joint Labs” and “Training Labs" to promote applied research and
+teaching.
+P see page 96
+1 International Rectifier not included
+2015
+2014
+Total
+2 At Infineon, the management function includes not only the leadership of employees but also leadership through specialist
+expertise as defined in the internal job evaluation system.
+Production
+Research & Development
+Preventive health program
+37.5
+Company car for work or as additional benefit
+Private car leasing from gross deferred compensation
+Long-service awards
+Flexible transition to retirement pension
+Sabbatical
+Paid sick leave beyond the statutory minimum
+Continued wage payment to surviving dependants
+in the event of death
+Industrial accident insurance
+In Germany and the Asia-Pacific region (including Japan), for example, in addition to employer
+and employee-financed pension plans, benefits granted include the items listed below (the
+exact arrangements are specific to each location):
+Fringe benefits are a longstanding tradition at Infineon and are also offered in various forms.
+All benefits form an integral part of the overall remuneration concept and reflect Infineon's
+responsibility to its staff. The scale and nature of the benefits are determined in accordance
+with the relevant regional statutory and standard market requirements. No distinction is
+made in this respect between full-time and part-time staff.
+Fringe benefits
+Our offering of functional training is made available primarily via the "Academy Connect"
+platform. Cooperation has been established among a total of 11 global “functional academies"
+operating in specific segments and fields, with a view to providing coordinated learning to
+build up professional expertise. Academies exist, for example, in the fields of purchasing, finance,
+manufacturing, quality management and supply chain. The contents of courses available from
+the "PMM Power & RF Academy" have been devised especially for the Power Management &
+Multimarket segment and cover sales, marketing and applications development. The learning
+content on offer is expanded on an ongoing basis, as through the professional and targeted
+development of our staff we aim to reinforce our corporate strategy and increase productivity.
+How do we equip ourselves optimally for the working world of the future? We endeavor to
+answer this question with our strategic competence management program, which identifies
+the skill sets necessary for the future and suggests relevant development paths.
+Competence development
+Our employees
+113
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+1 Not including International Rectifier.
+Sales & Marketing
+Administrative
+Total
+1 International Rectifier not included; calculated on the basis of the monthly workforce in the 2015 fiscal year.
+Per employee¹
+27.0
+2013
+32.4
+18.7
+27.2
+Our workforce
+Health management
+The health of our staff is extremely important to us and therefore we protect and promote it
+through our occupational health management programs. Preventive programs, such as
+"Fit4Health" in Germany and Austria or "Leadership in Healthy Lifestyle" in Singapore, boost
+health awareness in our staff. Additional demand-oriented local health initiatives supplement
+the range of measures on offer. Our occupational health management has received various
+awards: the "Corporate Health Award" for excellence, the quality label "BGF Österreich" and
+the "Singapore Health Award Gold".
+We attach great importance to providing our staff with a safe working environment. Our
+approach to occupational safety and health is based on the principle of prevention (see the
+chapter "Sustainability at Infineon").
+20.9
+7.3
+Training hours
+9.2
+10.2%
+10
+13.0%
+12.5%
+12.1%
+15.0%
+15
+5
+20
+Women in management positions (Infineon worldwide¹)
+G59
+Family-friendly services, such as for example in-house
+kindergartens or working together with local organi-
+zations offering day-care facilities for children, vacation
+activities for children
+3 At Infineon, the management function includes not only the leadership of employees but also leadership through specialist
+expertise as defined in the internal job evaluation system.
+8.5
+The promotion of women in management positions is one of the key focuses of our diversity
+management policy. However, at currently 13 percent, we have not yet quite been able to
+achieve the objective we set ourselves in 2010 of increasing the percentage of female execu-
+tives in middle and upper management (Global Grade/Technical Ladder Grade 13+) to 15 per-
+cent by the end of the 2015 fiscal year. Nevertheless, the continual increase in recent years
+shows that we are on the right track with the measures undertaken to date.
+2 Figures expressed in percentages based on the workforce at September 30, 2015, in the respective comparison group.
+25
+0
+20.0%
+P see page 182 ff.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Training expenses¹
+112
+G 60
+P see page 182 ff.
+Infineon keenly promotes close contact with both students and academics with the aim of
+recruiting young professionals - for instance though special High Potential programs: Infineon
+is a member of the UNITECH network for the promotion of talented engineers in Europe. In
+the 2015 fiscal year, more than 25 “UNITECH fellows" participated in internships at Infineon.
+Cooperation with the Collège des Ingénieurs (CDI) has been very successful. Infineon has
+established itself as an attractive partner for this international MBA program.
+Cooperation with universities
+€ in millions
+2010
+1 International Rectifier not included
+2020
+Target
+Target
+2015
+2015
+2014
+2013
+Under the "Law on Equal Participation of Women and Men in Management Positions in the
+Private and Public Sector", German legislators have introduced the mandatory requirement
+for each gender to have a minimum of 30 percent representation on the supervisory board of
+listed companies subject to co-determination such as Infineon Technologies AG. Furthermore,
+targets have to be set firstly by the Supervisory Board regarding the percentage of women on
+the Management Board and secondly by the Management Board regarding the first two man-
+agement levels below the Management Board (see the chapter "Corporate Governance"). The
+requirement to set targets for the percentage of women also concerns the Supervisory Board
+(in relation to the Board of Directors) and the Board of Directors (in relation to the first two
+management levels below the Board of Directors) of Infineon Technologies Dresden GmbH. Its
+Supervisory Board is also required to set targets regarding the proportion of women on the
+Supervisory Board itself (see the chapter "Corporate Governance").
+September 30,
+2014
++57.7%
+shareholder-structure
+about-infineon/investor/infineon-share/
+September 30,
+2013
+@www.infineon.com/cms/en/
+Performance of the Infineon share and worldwide indices through September 30, 2015 since:
+September 30,
+2012
++12.4%
++22.7%
++36.0%
++103.6%
+DAX
++2.0%
++33.9%
+Philadelphia Semiconductor Index (SOX)
+(5.6%)
++22.8%
+1 The number of shares held by, or attributable to, the investors listed above has been taken from the most recent
+mandatory notification received by Infineon Technologies AG from each of the relevant entities in accordance with
+sections 21 and 22 WPHG. The percentage disclosures are based on the share capital or number of shares at the
+date of receipt of each notification. Details of voting rights notified to the Company in accordance with sections 25
+and 25a WPHG which, in addition to shares actually held and to attributable shares, also take account of financial or
+other instruments which give an entitlement to acquire further shares, are published regularly on Infineon's website.
+Infineon (Xetra)
+Thereof: Massachusetts Financial Services Company MFS
+State of Kuwait
+3.001% (as per February 11, 2015)
+3.001% (as per February 11, 2015)
+Dodge & Cox Investment Managers
+Thereof: Dodge & Cox International Stock Fund
+The Capital Group Companies, Inc.
+Thereof: Capital Research and Management Company
+Thereof: EuroPacific Growth Fund
+BlackRock, Inc.
+Thereof: BlackRock HoldCo 2, Inc.
+Thereof: BlackRock Financial Management, Inc.
+Allianz Global Investors Europe GmbH
+Thereof: Kuwait Investment Authority
+Sun Life Financial Inc.
+Thereof: Sun Life Global Investments Inc.
+Thereof: Sun Life Assurance Company of Canada -
+U.S. Operations Holdings, Inc.
+Thereof: Sun Life Financial (U.S.) Holdings Inc.
+9.95% (as per August 5, 2009)
+9.88% (as per August 5, 2009)
+8.02% (as per September 1, 2012)
+5.06% (as per July 28, 2011)
+4.98% (as per June 9, 2015)
+5.003% (as per May 7, 2015)
+5.004% (as per June 23, 2015)
+5.004% (as per June 23, 2015)
+5.02% (as per April 17, 2015)
+3.25% (as per December 23, 2014)
+3.25% (as per December 23, 2014)
+3.001% (as per February 11, 2015)
+3.001% (as per February 11, 2015)
+3.001% (as per February 11, 2015)
+3.001% (as per February 11, 2015)
+3.001% (as per February 11, 2015)
+Thereof: Sun Life of Canada (U.S.) Financial Services Holdings Inc.
+Thereof: Sun Life Financial (U.S.) Investments LLC
+Dow Jones US Semiconductor Index
+140
++22.7%
+- Infineon
+09 |2015
+08|2015
+07|2015
+06|2015
+05|2015
+04|2015
+03|2015
+02|2015
+01|2015
+-
+12|2014
+10|2014
+80
+6.55
+90
+100
+110
+120
+7.37
+119
+8.19
+11|2014
+DAX
+SOX
+-
++54.3%
+Further share price increase in the 2015 fiscal year
+The upward trend of the Infineon share seen in previous years continued during the 2015 fiscal
+year, finishing the fiscal year at September 30, 2015 at a closing price of €10.06, 23 percent
+higher than its closing price of €8.19 one year earlier.
+After falling slightly at the beginning of the fiscal year, at which stage the low for the year of
+€6.95 was recorded, the share price rose relatively evenly during the remainder of the first half
+of the fiscal year. The volatility of the stock increased in spring 2015, with the Infineon share
+reaching its high for the year of €12.17 at the end of May. The subsequent share price correction
+took the price down to €8.69, followed by a recovery which took it up to its closing price of €10.06.
+The benchmark indices gained significantly less over the course of the 2015 fiscal year and
+were also less volatile. The DAX finished the twelve-month period to September 30, 2015 with
+a small gain of 2 percent. The US benchmark indices were not quite able to make good the
+losses recorded in the summer and closed at September 30, 2015 at levels lower than one year
+earlier, the Philadelphia Semiconductor Index (SOX) was 6 percent down and the Dow Jones US
+Semiconductor was 7 percent down.
+120
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+G 64
+Development of the Infineon Technologies AG share compared to Germany's DAX Index and Philadelphia Semiconductor Index (SOX)
+and the Dow Jones US Semiconductor Index from the beginning of the 2015 fiscal year (daily closing prices)
+Infineon share price in €
+12.29
+11.47
+10.65
+9.83
+тиму
+September 30, 2014 = 100
+150
+130
+9.01
+The second relevant criterion is the euro volume of shares traded during the past 12 months
+in the Xetra system and on the Frankfurt trading floor. The total trading volume of the Infineon
+share climbed from €14.2 billion in the previous fiscal year to €17.7 billion in the 2015 fiscal year.
+This places Infineon in place 21 in the DAX ranking after place 20 in the 2014 fiscal year.
+The criteria applied for testing membership in the DAX are the average market capitalization
+and trading volume in euro. Essential for the calculation of market capitalization are on the
+one hand the number of shares outstanding and on the other hand the number of free-float
+shares. As a result of the exercise of employee stock options, the number of shares in issue
+increased during the 2015 fiscal year by 1,532,251 shares to stand at 1,129,271,481 shares at
+September 30, 2015. The corresponding figure at the end of the previous fiscal year was
+1,127,739,230 shares. With the exception of 6 million own shares held by Infineon, all shares
+are deemed to be free float and hence taken into account in the calculation of the average
+market capitalization, which rose from €9.9 billion in the 2014 fiscal year to €10.9 billion in
+the 2015 fiscal year. In terms of its DAX ranking, Infineon improved by two places, moving up
+from place 24 at the end of the 2014 fiscal year to place 22 at the end of the 2015 fiscal year.
+The Infineon share is traded in the USA in the form of American Depositary Shares ("ADS")
+on the OTCQX International over-the-counter market under the ticker symbol "IFNNY". The
+average trading volume of 147 thousand ADS per day was more than double the 67 thousand
+ADS traded per day in the previous year. The number of ADS outstanding also rose sharply
+to a total of 23.2 million at September 30, 2015, compared to the 10.2 million ADS in circulation
+at the end of the previous fiscal year.
+The average volume of Infineon shares traded per day, measured in units, in the Xetra system,
+on the Frankfurt trading floor and on German regional stock exchanges, increased by 4 percent
+in the 2015 fiscal year to 7.6 million shares, compared to 7.3 million one year earlier. In euro
+terms, the average volume of Infineon shares traded per day rose year on year by 24 percent
+from €59.3 million to €73.7 million.
+Trading volumes and inclusion in indices
+Dow Jones US Semiconductor Index
+(6.8%)
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The Infineon Share
+11,294
+80,678
+Helmut Warnecke (Managing Director of the Dresden site), Klaus Walther (Corporate Vice President
+Communications and Public Authorities & Associations), Federal Minister Prof. Dr. Johanna Wanka,
+Dr. Reinhard Ploss (CEO of Infineon), German Chancellor Dr. Angela Merkel, Prime Minister Stanislaw Tillich,
+Peter Schiefer (President Operations), Mathias Kamolz (Managing Director of the Dresden site).
+From left to right:
+LSPS develops, manufactures and
+sells IPMS (intelligent power mod-
+ules) that enable a higher energy
+efficiency in household appliances
+and air conditioning systems.
+On April 30, 2015, Infineon acquired
+the remaining shares in LS Power
+Semitech Co., Ltd. (LSPS) (Korea).
+The remaining share in the amount
+of 33.6 percent was transferred from
+the previous joint venture partner
+LS Industrial Systems Co., Ltd.
+(Korea) to Infineon.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Dow Jones STOXX Europe 600
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+Dow Jones Germany Titans 30
+MSCI Germany
+S&P-Europe-350
+118
+Dow Jones Sustainability™ Europe Index
+Infineon Technologies AG share capital, shares outstanding and market capitalization
+As of
+September 30, September 30,
+2015
+Change
+2014
+Share capital' € in millions
+2,259
+2,255
++0.1%
+Shares issued' in millions
+Dow Jones Sustainability World Index
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+@A full overview of other major indices,
+in which the Infineon share is repre-
+sented, can be found on Infineon's
+website at www.infineon.com/cms/en/
+about-infineon/investor/infineon-share/
+DAX 30
+IFXGN.DE
+IFX GY (Xetra trading system), IFNNY US
+45662N103
+Index membership
+(selected)
+Reuters
+Bloomberg
+CUSIP
+Identification Number (WKN) 623100
+DE0006231004
+German Security
+ISIN Code
+6 million shares (as of September 30, 2015)
+Shares: Frankfurt Stock Exchange (FSE)
+ADS: over-the-counter (OTC) market (OTCQX)
+Options issued by third parties: inter alia Eurex
+IFX, IFNNY
+€2,259 million (as of September 30, 2015)
+1,129 million (as of September 30, 2015)
+Ordinary registered shares in the form of shares or American Depositary
+Shares (ADS) with a notional value of €2 each (ADS: shares = 1:1)
+Ticker symbol
+Option trading
+Own shares
+Listings
+Share capital
+Shares issued
+Share types
+Share information
+The Infineon Share
+index-membership/
+1,129
+1,128
++0.1%
+Market capitalization' € in millions
+7,602,198
+7,294,896
+8,134,049
+Thereof: Xetra trading in %
+95
+94
+94
+USA: OTCQX closing in US$
+Fiscal year closing (end September)
+11.31
+10.30
+9.98
+Year high
+13.42
+12.84
+10.35
+Year low
+8.80
+9.24
+6.47
+Daily average ADS traded
+146,820
+66,501
+German stock exchanges
+Shareholder structure¹
+Daily average shares traded on regulated
+6.88
+9,190
++22.9%
+Market capitalization' US$ in millions
+12,704
+11,554
++10.0%
+1 The calculation is based on unrounded figures. Own shares were not taken into consideration
+for calculation of market capitalization.
+Infineon share statistics
+Fiscal year ending September 30
+2015
+2014
+2013
+Germany: Xetra closing in €
+Fiscal year closing (end September)
+Year high
+Year low
+10.06
+8.19
+7.40
+12.17
+9.42
+7.61
+6.95
+4.96
+121
+us via e-mail or telephone hotline
+The Infineon share was included in the Dow Jones Sustainability™ Europe Index for the first
+time in September 2010. There is an annual test for each company included to confirm that
+the criteria for retention in the index have been met. Infineon's compliance with these criteria
+was confirmed in September 2015 for the sixth year in succession. Moreover, Infineon was
+also included - for the first time and as the only European semiconductor manufacturer - in
+the Dow Jones Sustainability World Index, putting Infineon into the echelons of the top ten
+percent of sustainable semiconductor manufacturers worldwide. For further information on
+the topic of sustainability, please see the chapter "Sustainability at Infineon”.
+Tijuana M
+Warwick R&D
+Tewksbury R&D
+Leominster R&D M Sa
+Lebanon Sa
+Livonia Sa O
+Kokomo Sa ○
+Durham Sa❤
+Raleigh Sa
+● São Paulo Sa
+Dublin Sa O
+Newport MO
+Temecula M
+Skovlunde R&D
+Warstein R&D M Sa
+Rotterdam Sa ○
+Hanover Sa
+Bristol R&D Sa O
+Reigate R&D
+Duisburg R&D Sa
+°
+● Dresden R&D M
+Saint-Denis Sa
+○
+Neu-Isenburg Sa ●
+Groẞostheim Dc
+Erlangen Sa
+Regensburg R&D M
+Kista Sa O
+Karlsruhe, Hitex Development Tools R&D M Sa
+Chandler R&D
+Torrance R&D
+Irvine R&D
+Dow Jones
+Sustainability Indices
+In Collaboration with RobecoSAM
+Nomination for the
+Deutscher Zukunftspreis
+2015
+Infineon's radar chips were nominated for
+the Deutscher Zukunftspreis 2015, the
+German President's Award for Innovation
+in Science and Technology. The radar chips
+were one out of three technology projects
+from a total of 24 suggestions. The use of
+silicon and silicon germanium instead of
+gallium arsenide as well as an innovative
+package (see above the award from Bosch
+for radar chips) reduced the costs of radar
+systems to a level that they are now increas-
+ingly used in mid-range and low-end cars.
+This significantly increases safety in traffic.
+124
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Infineon worldwide
+Infineon sites
+Dc
+Headquarters
+Mesa M
+Regional headquarters
+R&D Research & Development
+Manufacturing
+Service function
+M
+Sf
+Sa
+Sales
+GRI G4-17
+Hayward Dc ...
+Milpitas Sa ...
+San Jose R&D M
+Morgan Hill R&D M
+El Segundo R&D Sa
+Distribution center
+Ditzingen Sa
+Augsburg R&D
+Zurich Sa
+Le Puy-Sainte-Réparade R&D
+Barcelona Sa ○
+Istanbul Sa
+Seoul R&D Sa
+Cheonan M
+Nagoya Sal
+Osaka Sa O
+Tokyo Sa
+Xi'an Sa O
+Wuxi MOO
+Kulim M
+Ipoh R&D
+The Infineon Share
+Bucharest R&D
+Singapore Dc R&D M Sa
+Shenzhen Sa
+Hong Kong Sa
+Shanghai Dc R&D Sa
+Taipeh Sa
+● Muntinlupa Sf
+Blackburn Sa
+Moscow Sa ○
+126
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Our 2015 fiscal year
+Batam M
+Espoo Sa
+Beijing R&D M Sa ●
+O Padova R&D
+● Porto Sf
+Madrid Sa O
+Bangalore R&D Sa ●
+Milan Sa O
+Pavia R&D O
+Linz, DICE R&D
+Infineon
+Complete acquisition
+of LSPS
+April 2015
+Tech
+Since the site's foundation in 1994, the fab in Dresden has been visited by all
+of the German Chancellors: Dr. Helmut Kohl for the groundbreaking ceremony
+for the 200-millimeter fab in June 1994, Gerhard Schröder for the ground-
+breaking ceremony for the 300-millimeter memory fab in May 2000, and now
+Dr. Angela Merkel in 2015.
+Other items on the agenda included a presentation in the analysis and
+characterization laboratory along with a live broadcast from the fab,
+during which the guests were able to see an existing Industrial Internet
+(Industry 4.0) manufacturing.
+German Chancellor Dr. Angela Merkel visited the Infineon site in Dresden
+on July 14, 2015 as part of her trip to Dresden's microelectronics cluster.
+She was accompanied by the Federal Minister for Education and Research
+Prof. Dr. Johanna Wanka and the Minister President of Saxony Stanislaw Tillich.
+They discussed the political framework for a competitive German development
+and production sector together with representatives from Infineon.
+Chancellor Dr. Angela Merkel visits Infineon Dresden
+July 2015
+In the scope of a capital increase
+by Vienna (Austria)-based TTTech
+Computertechnik AG, Infineon
+acquired a stake in this company
+which is specialized in highly
+reliable, networked and safety-
+relevant control systems in vehicles.
+Infineon and TTTech have worked
+together for many years, includ-
+ing on central driver assistance
+systems such as "ZFAS" by Audi
+(see opening page of "Automotive"
+in the chapter "The segments"
+P see page 54).
+Infineon invests in TTTech
+March 2015
+117
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notable events 2015
+☐
+Neubiberg
+near Munich o
+F&E Sa
+● Vienna Sa
+● Graz R&D
+Klagenfurt Sf
+Villach R&D M Sa
+● Cegléd M
+MEMBER OF
+For the sixth year in a row, Infineon was
+confirmed as a member in the Dow Jones
+Sustainability Index. Additionally, Infineon
+was accepted into the World Index for the
+first time and as the only European semi-
+conductor company. This makes Infineon
+part of the most sustainable 10 percent
+of semiconductor enterprises worldwide.
+In January 2015, the listing was also
+confirmed in the Sustainability Yearbook.
+Only the top 15 percent of the most
+sustainable companies in the world are
+represented here.
+Malacca R&D MO
+September 2015
+@Interested parties are able to participate
+in telephone conferences via a webcast in
+the Investor Relations section of the
+Infineon website:
+www.infineon.com/investor
+@www.infineon.com/investor
+I Retail investors can reach
+with their questions:
+Phone: +49 89 234-26655
+Fax: +49 89 234-955 2987
+E-mail: investor.relations@infineon.com
+122
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+@We use our Financial Calendar to inform
+interested parties of forthcoming reports
+and of our attendance at investor confer-
+ences: www.infineon.com/investor
+Awards
+November 2014
+Work-Life Excellence Award
+The Tripartite Committee on Work-Life
+Strategy in Singapore has awarded
+Infineon for its efforts in creating a
+culture of balance between work and
+time off within the Company.
+European Supply Chain Excellence
+Award 2014
+Infineon received the 18th European Supply
+Chain Excellence Award in the category
+Automotive, Aerospace & Industrial in
+London for its excellent organization and
+administration of the entire supply chain
+as well as the results of the BEAR project
+(Backend Automation Roadmap). This was
+awarded in cooperation with Pricewater-
+houseCoopers.
+December 2014
+Ericsson Supply Excellence
+Award 2014
+Ericsson presented the Supply Excellence
+Award to Infineon for its outstanding
+delivery reliability and delivery quality
+in the 2014 calendar year.
+National Occupational
+Safety and Health
+Excellence Award 2014
+The Malaysian Minister of Human
+Resources, Yang Berhormat Dato' Sri
+Richard Riot Anak Jaem, presented
+the National Occupational Safety and
+Health Excellence Award 2014 to
+Infineon for its continuous efforts to
+increase occupational safety at its
+manufacturing sites.
+Being at the forefront of technology, Infineon is the recipient of numerous awards and
+prizes – in the fields of research and development, production and quality on the one
+hand, as well as for its accomplishments in organization and processes on the other.
+The following overview shows a selection of the awards Infineon received during the
+course of the 2015 fiscal year.
+€0.20
+Proposal 2015
+€0.18
+Infineon is the only
+European semiconductor
+enterprise listed in the
+Dow Jones Sustainability
+World Index
+Dividend
+At the Annual General Meeting held in Munich on February 12, 2015, the shareholders approved
+the proposal, jointly put forward by Infineon's Management Board and Supervisory Board, to
+increase the dividend substantially. In May 2014, Infineon announced that the expected annual
+ratio of investments to revenue will decrease from approximately 15 percent to approximately
+13 percent. Infineon is also convinced that the acquisition of International Rectifier, announced
+on August 20, 2014 and closed on January 13, 2015 will make a positive contribution to Segment
+Result and free cash flow over the full economic cycle. With this in mind, the Management
+and Supervisory Boards presented a proposal at the Annual General Meeting that the dividend
+be increased by 6 cents from €0.12 to €0.18 per share. As a consequence, a total amount of
+€202 million was paid to the shareholders on February 13, 2015. Based on the good earnings
+performance in the 2015 fiscal year and Infineon's positive business outlook, a proposal will
+be made to the Annual General Meeting to be held in February 2016 to increase the dividend
+by a further 2 cents to €0.20.
+Infineon's strategy is to pursue a dividend policy that enables shareholders to adequately
+participate in growing earnings or, in times of flat or declining earnings and/or with negative
+free cash flows, to keep the dividend at least at a constant level.
+Infineon bonds
+In March 2015, Infineon issued two bonds, one maturing in three-and-a-half years (€300 million)
+and one in seven years (€500 million), the first with a nominal interest rate of 1 percent and
+the second with a nominal interest rate of 1.5 percent. The two bonds have been listed since
+March on the Luxembourg Stock Exchange and also traded on German stock markets. The
+ISIN codes for the bonds are XS1191115366 and XS1191116174 respectively.
+Communication with capital markets
+The Annual Report, Quarterly Reports and telephone conferences held in conjunction with the
+release of financial data plus a whole range of detailed information, figures and tables made
+available on the Infineon website, form the basis for our communication with capital market
+participants.
+A further component of our Investor Relations activities is communication with analysts and
+investors at conferences and roadshows. During the 2015 fiscal year, the three members of
+the Management Board, the segment Heads, as well as the Investor Relations team, were all
+involved in capital market communication activities. We participated in nine investor confer-
+ences in Europe and the USA and organized eight roadshows. To provide detailed information
+on the business, a telephone conference was held for the Chip Card & Security segment as
+well as an investor conference in London for the Automotive segment. Investors were able to
+listen to the investor conference via webcast. All presentations and webcasts can be viewed
+and downloaded from the Investor Relations section of the Infineon website via "Reporting/
+Download Center". In addition to the events described above, a whole host of discussions
+were held with analysts and investors at group meetings, on a one-to-one basis and in telephone
+conference calls. More than 35 analysts continuously monitor Infineon's business perfor-
+mance and publish analyses on a regular basis. Prior to the placement of the two bonds in
+March 2015, a bond roadshow was held for institutional investors.
+P see page 92 ff.
+fiscal year
+2010
+Dividend for
+Dividend
+per share
+€0.10
+2011
+€0.12
+2012
+€0.12
+2013
+€0.12
+2014
+GSA honors Infineon as
+outstanding EMEA semi-
+conductor company
+Global Semiconductor Alliance (GSA)
+presents this prize, which Infineon
+The prime objective of our communications with the capital market is to provide regular
+and detailed information to analysts as well as to current and future shareholders, investors
+and bondholders about Infineon's economic and technological developments.
+2014 AWARDS
+Awards
+123
+February 2015
+Gold status from Ecovadis
+Ecovadis, an independent rating agency
+that monitors the sustainability of
+suppliers, analyzed Infineon with regard
+to ecological, social, ethical and financial
+influencing factors and awarded it the
+"Gold" status.
+March 2015
+2015
+CSR Rating
+GOLD
+ecoVadis
+Best Quality Award from Xiaomi
+During the 2015 Annual Supplier Days
+organized by the Chinese mobile tele-
+phone manufacturer Xiaomi, Infineon
+received the Best Quality Award for the
+first time.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+April 2015
+June 2015
+Distinguished Partners
+in Progress Award
+For its important role in the creation
+of jobs and added value in Singapore
+in the last 45 years, Infineon received
+the Distinguished Partners in Progress
+Award from the Minister of Finance
+and Deputy Prime Minister Tharman
+Shanmugaratnam. The exclusive
+circle of award winners only includes
+33 enterprises so far.
+July 2015
+GLOB
+GLOBAL PLAYER
+AWARD2015
+As part of Export Day 2015, Infineon was
+presented the Global Player Award by
+the Austrian Vice-Chancellor Reinhold
+Mitterlehner and the President of the
+Austrian Federal Economic Chamber
+Christoph Leitl for its successful inter-
+nationalization.
+Accolade for radar chips
+from Bosch
+GSA
+Bosch has awarded Infineon as an excel-
+lent supplier for the fifth time. This year
+the Group received the Innovation Prize
+for its radar system, which monolithically
+integrates the transmitter and receiver
+on one single chip in a package. Bosch
+uses the system to measure distances
+for adaptive distance and cruise control
+units, emergency brakes and a traffic
+jam assistant.
+Excellent Quality Award from Toyota
+Infineon received the Excellent Quality
+Award from Toyota in April 2015 for
+supplying products with a consistently
+outstanding quality for many years. The
+award was presented by Toyota's largest
+car factory, the Hirose plant (Japan).
+modules to be used in electric and hybrid vehicles, which were customized for BYD.
+Global Player Award
+Two awards from BYD
+The Chinese car manufacturer BYD granted
+Infineon the Excellent Supplier Award 2014 as
+the most reliable supplier of semiconductors
+and the Technical Support Award 2014 for the IGBT
+received in December
+2014, to semiconductor
+companies in the region
+of Europe, Middle East
+and Africa (EMEA)
+WINNER
+excellence
+enc
+awards 2014
+WINNER
+Automotive, Aerospace & Industrial
+Two awards from Huawei
+Infineon received two awards from the
+Chinese network manufacturer Huawei
+in the calendar year 2014. For its close
+partnership during the LTE development
+in China, Infineon was honored with
+the Excellent Core Partner Award. The
+Group also received the Excellent
+Quality Award.
+Supplier Gold Award from Midea
+In a group of ten award winners, Infineon
+was the only semiconductor manufacturer
+to receive the Supplier Gold Award from
+Midea in China for its IGBTs designed for
+home appliances.
+Supply ChainStandard
+european
+supply chain
+GREEN
+FREIGHT
+Green Label for shipping and transport
+Infineon takes care to reduce fuel consumption
+and thereby the cost and CO2 emissions in the
+shipment and transport of its products. Green
+Freight Asia, a nonprofit organization based in
+Singapore, has awarded the Green Label to the
+Group for the introduction of environmentally
+friendly practices.
+January 2015
+BSR
+GREEN
+FREIGHT
+ASIA
+GFA Lab Le Le One
+that have proven to be
+the strongest in terms
+of products, vision,
+leadership and market
+success. Members of
+the GSA include companies along the
+entire semiconductor supply chain
+from 30 countries.
+Infineon Technologies
+Asia Pacific Pte Ltd
+Singapore
+2014
+CERTIFICATE OF
+EXCELLENCE
+ASIA
+receg of your company's co
+2015
+2014
+Psee page 52 ff.
+31%
+11% 0%
+17%
+41%
+Share of Group Revenue 2015
+Automotive
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+Positive currency impact on revenue from strong US dollar
+The currency impact is measured by applying the previous fiscal year's relevant average
+exchange rates to the 2015 fiscal year revenue.
+GRI G4-22
+€ in millions, except percentages
+Changes year-on-year
+Other Operating Corporate and
+Segments Elimininations
+Revenue
+Industrial Power Control
+A large share of revenue was generated in foreign currencies in the 2015 fiscal year, with
+revenue denominated in US dollars accounting for the highest share. The average euro/
+US dollar exchange rate moved from 1.36 in the previous fiscal year to 1.14 in the 2015 fiscal
+year. The impact of the fluctuation in the value of the US dollar was correspondingly high,
+a fact compounded by the high volumes recorded. Across all currencies and over the fiscal
+year as a whole, currency factors contributed a mid-triple-digit million amount to the
+revenue increase.
+783
+Power
+Management
+& Multimarket
+Revenue by segment
+2015
+€ in millions
+2,500
+2,351
+2,000
+1,965
+1,500
+1,000
+Chip Card &
+Security
+1,794
+971
+666
+500
+494
+14 22
+0
+(1) (5)
+Automotive
+Industrial
+Power Control
+1,061
+2014
+2,666
+4,320
+43%
+Therein: China
+1,337
+23%
+868
+20%
+Japan
+399
+7%
+284
+7%
+Americas
+710
+12%
+484
+11%
+Therein: USA
+Total
+G 65
+1,845
+5,795
+46%
+20%
+34%
+12%
+129
+130
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Importance of Asia-Pacific continues to grow
+€ in millions, except percentages
+2015
+2014
+Europe, Middle East, Africa
+2,020
+35%
+1,707
+39%
+Therein: Germany
+942
+16%
+859
+Asia-Pacific (excluding Japan)
+As in the previous year, business disposals had no impact on revenue in the 2015 fiscal year.
+Selling, general and administrative expenses
+Sharp increase in revenue
+174 Corporate Governance Report
+179 Declaration concerning the management of the company
+186 Compensation report
+Combined
+Management Report
+Our 2015 fiscal year
+127
+128
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Group performance
+Review of results of operations
+The consolidated statement of operations
+€ in millions, except earnings per share
+Revenue
+Gross profit
+Research and development expenses
+Other operating income and expenses, net
+Operating income
+Net financial result (financial income and expenses, net)
+170 Information pursuant to section 289, paragraph 4, and section 315,
+paragraph 4, of the German Commercial Code (HGB)
+Income from investments accounted for using the equity method
+Income tax
+CORPORATE GOVERNANCE
+INFINEON TECHNOLOGIES AG
+568
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+128
+144
+161
+165
+167
+169
+170
+GROUP PERFORMANCE
+128 Review of results of operations
+136 Review of financial condition
+139 Review of liquidity
+REPORT ON EXPECTED DEVELOPMENTS, TOGETHER WITH
+ASSOCIATED MATERIAL RISKS AND OPPORTUNITIES
+144 Outlook
+149 Risk and opportunity report
+TREASURY AND CAPITAL REQUIREMENTS
+OVERALL STATEMENT OF THE MANAGEMENT BOARD WITH RESPECT TO
+INFINEON'S FINANCIAL CONDITION AS OF THE DATE OF THIS REPORT
+SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
+Revenue grew by €1,475 million to €5,795 million in the year under report (2014: €4,320 million).
+Thanks to the continuing upward trend on the semiconductor market, increased market share
+through organic growth, the acquisition of International Rectifier (International Rectifier
+contributed €682 million to revenue growth), as well as the strength of the US dollar, all four
+operating segments achieved year-on-year revenue growth: Automotive (up 20 percent or
+€386 million), Industrial Power Control (up 24 percent or €188 million), Power Management &
+Multimarket (up 69 percent or €733 million) and Chip Card & Security (up 35 percent or
+€172 million) (see detailed comments in the respective sections to the individual segments in
+the chapter "The segments").
+Income from continuing operations
+Net income
+622
+488
+12
+47
+634
+535
+0.56
+0.48
+0.56
+0.48
+0.60
+0.48
+GRI G4-22
+P see page 135
+Sharp improvement in net income and adjusted earnings per share
+Net income improved year-on-year by €99 million to €634 million for the 2015 fiscal year.
+The upward trend in Infineon's business performance, the acquisition of International Rectifier
+and the strong US dollar during the 2015 fiscal year brought about a 34 percent rise in revenue.
+The contribution to earnings from higher revenue was offset almost entirely by the combined
+effect of higher expenses due to the strong US dollar and high acquisition-related expenses
+totaling €274 million (in particular expenses recognized in conjunction with the purchase price
+allocation and integration-related expenses) for International Rectifier. The reassessment and
+appreciation in value of deferred tax assets on loss carry-forwards amounting to €209 million
+rise to a net tax benefit of €102 million.
+gave
+Earnings per share (basic and diluted) amounted to €0.56 per share and were therefore higher
+than one year earlier (2014: €0.48).
+Adjusted earnings per share (diluted) improved from €0.48 to €0.60 per share (see "Sharp
+improvement in adjusted earnings per share" in this chapter for details of the calculation).
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+Review of results of operations
+(31)
+Gain from discontinued operations, net of income taxes
+102
+4
+Basic earnings per share (in euro)
+Diluted earnings per share (in euro)
+Adjusted diluted earnings per share (in euro)
+2015
+2014
+5,795
+4,320
+2,080
+1,647
+(717)
+(550)
+(778)
+(496)
+(30)
+(76)
+555
+525
+(39)
+(9)
+3
+10%
+1,845
+8%
+Non-current liabilities
+11%
+Current liabilities
+9%
+13%
+Total assets
+8%
+Non-current assets
+38%
+Current assets
+24%
+23%
+8,741
+€ in millions, except percentages
+Review of financial condition
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Assets
+G 71
+136
+135
+P see page 233 f.
+Adjusted net income and adjusted earnings per share (diluted) should not be seen as
+a replacement or superior performance indicator, but rather as additional information
+to the net income and earnings per share (diluted) determined in accordance with IFRS.
+The calculation of earnings per share in accordance with IFRS is presented in detail in note 10
+to the Consolidated Financial Statements "Earnings per share".
+6,438
+1 The calculation of the adjusted earnings per share is based on unrounded figures.
+Total liabilities
+Total equity
+1,603
+1,585
+36%
+6,438
+8,741
+85%
+2,504
+4,626
+5%
+3,934
+26%
+4,115
+2014
+2015
+2014
+2015
+6%
+5%
+6%
+7%
+4%
+20%
+Change
+year-on-year
+0.48
+0.60
+1,123.0
+Impact on earnings of restructuring and closures, net
+31
+classified as held for sale, net of reversals
+491
+620
+2014
+2015
+Impairments on assets including assets
+Plus/minus:
+Earnings from continuing operations attributable to
+shareholders of Infineon Technologies AG - diluted
+13
+€ in millions (unless otherwise stated)
+Earnings per share in accordance with IFRS are influenced by amounts relating to purchase
+price allocations for acquisitions (in particular International Rectifier) as well as by other
+exceptional items.
+Sharp improvement in adjusted earnings per share
+In line with the increase in net income, earnings per share (basic and diluted) rose from €0.48
+in the previous year to €0.56 in the 2015 fiscal year.
+Net income of €634 million for the 2015 fiscal year was above the previous year's figure of
+€535 million.
+Higher earnings per share
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+Review of results of operations
+Further information regarding the result from discontinued operations, net of income taxes,
+can be found in note 4 to the Consolidated Financial Statements.
+The result from discontinued operations, net of income taxes was a positive amount of
+€12 million for the 2015 fiscal year, compared to a positive amount of €47 million one year
+earlier. Income of €12 million was recognized during the 2015 fiscal year as a result of the
+reversal of provisions previously recorded in connection with risks relating to the Qimonda
+insolvency. See note 32 to the Consolidated Financial Statements “Legal risks" for information
+on risks relating to the Qimonda insolvency.
+P see page 227 f.
+Psee page 265 ff.
+To enable better comparability of operating performance over time, Infineon computes
+adjusted earnings per share (diluted) as follows:
+Share-based compensation expense
+6
+Acquisition-related depreciation/amortization and other expenses
+1,125.3
+539
+680
+Adjusted earnings per share (in euro) - diluted'
+Weighted-average number of shares outstanding - diluted
+shareholders of Infineon Technologies AG - diluted
+Adjusted earnings from continuing operations attributable to
+(48)
+(209)
+the annually updated earnings forecast
+Revaluation of deferred tax assets resulting from
+1
+(73)
+Tax effects on adjustments
+72
+16
+(2)
+2
+3868
+Other income and expense, net
+or interests in subsidiaries, net
+Gains (losses) on sales of assets, businesses,
+274
+(1%)
+2,491
+677
+268%
+€ in millions
+2014
+2015
+53%
+65%
+7%
+5%
+6%
+5%
+10%
+2015 2014
+21%
+10%
+9%
+6,438
+8,741
+Liabilities and equity
+G72
+6,438
+8,741
+6 Calculation see following section about ROCE in this chapter
+404
+3%
+6%
+Trade and
+other payables
+802
+367
+Current assets went up by 5 percent to €4,115 million at the end of the reporting period,
+compared to €3,934 million as of September 30, 2014. Infineon's gross cash position (sum
+total of cash and cash equivalents and financial investments) decreased by €405 million (see
+"Gross cash position and net cash position" in the chapter "Review of liquidity"). By contrast,
+trade receivables and inventories went up by a total of €583 million as a result of the segment's
+organic revenue growth, the acquisition of International Rectifier and currency factors.
+Slight increase in current assets
+Key performance ratios for the 2015 fiscal year also changed accordingly, with the return
+on assets and ROCE down, despite increased earnings, to 7.3 percent (2014: 8.3 percent) and
+12.8 percent (2014: 20.3 percent) respectively, and the return on equity up to 13.6 percent
+(2014: 12.9 percent).
+Statement of financial position ratios changed accordingly, with the debt-to-equity ratio rising
+to 38.4 percent (mainly due to debt raised to partially finance the acquisition of International
+Rectifier) and the return on equity ratio falling to 53.4 percent.
+Compared to September 30, 2014, total assets increased by €2,303 million from €6,438 million
+to €8,741 million, mainly due to the acquisition of International Rectifier, with current assets
+up by €181 million and non-current assets up by €2,122 million. On the equity and liabilities
+side, liabilities increased by €1,796 million and equity by €507 million.
+Total assets up sharply due to acquisition of International Rectifier
+8,741 6,438
+4,665 4,158
+Equity
+407
+581
+Other liabilities
+379
+660
+474
+Provisions
+426
+similar commitments
+Pension plans and
+186
+1,793
+Debt
+648
+422
+47
+5 Inventory intensity = Inventories (net)/Total assets
+4 Debt-to-equity ratio = (long-term and short-term debt)/Total equity
+Trade and
+2,418
+2,013
+Gross cash position
+13.6%
+Return on equity 3
+2014
+2015
+€ in millions
+64.6%
+other receivables
+53.4%
+8.3%
+7.3%
+Return on assets 1
+Statement of Financial Position Ratios:
+12%
+4,158
+4,665
+79%
+2,280
+4,076
+Equity ratio 2
+742
+581
+Inventories
+378
+604
+Deferred tax assets
+3 Return on equity = Net income/Total equity
+250
+1,738
+Intangible assets
+2 Equity ratio = Total equity/Total assets
+1,700
+2,093
+and equipment
+20.3%
+12.8%
+11.0%
+12.9%
+4.5%
+38.4%
+1 Return on assets = Net income/Total assets
+Inventory intensity5
+ROCE 6
+Debt-to-equity ratio 4
+Property, plant
+707
+1,129
+Other assets
+12
+12.9%
+10
+■Revenue
+Orders received
+2015
+2014
+1.11
+班
+5,795
+6,421
+4,320
+4,857
+Book-to-bill ratio
+1.12
+€ in millions,
+Orders received and revenue
+G 67
+A part of the cost of goods sold is incurred in currencies other than the euro. To some extent,
+the effects of exchange rates on the cost of goods sold offset a similar impact on revenue.
+Exchange rates had a net positive impact on gross profit in the low-triple-digit million range
+in the 2015 fiscal year.
+The gross margin fell accordingly year-on-year from 38.1 percent to 35.9 percent. The drop
+compared to the previous fiscal year, which arose despite the revenue increase and the
+positive impact of the strong US dollar, was primarily due to the earnings impact on the cost
+of goods sold arising in conjunction with the purchase price allocation as well as acquisition-
+related expenses for International Rectifier amounting to €143 million. The main items in
+this context were higher amortization/depreciation on intangible assets and property, plant
+and equipment that have been stepped up to fair values in the course of the purchase price
+allocation as well as the additional expense of consuming inventories revalued to their fair
+value. Moreover, further investments were made in manufacturing facilities, with a view to
+creating a broader base for sustainable growth.
+Gross profit (revenue less cost of goods sold) amounted to €2,080 million in the 2015 fiscal year,
+an improvement of €433 million or 26 percent compared to €1,647 million one year earlier,
+and hence underproportionally to the 34 percent increase in revenue.
+> effects from the purchase price allocation of International Rectifier.
+> government grants received that are spread over the useful lives of production plants and
+> inventory risks
+> product warranty costs,
+except book-to-bill ratio
+> amortization of purchased and internally generated intangible assets,
+€ in millions, except percentages
+2015
+1,647
+38.1%
+€ in millions
+Gross profit and gross margin
+G 68
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+132
+38.1%
+35.9%
+Percentage of revenue (gross margin)
+Cost of goods sold
+1,647
+Gross profit
+61.9%
+64.1%
+Percentage of revenue
+6%
+39%
+Change year-on-year
+2,673
+3,715
+2014
+2,080
+› capacity utilization level of production facilities and related idle costs,
+In addition to volume-related factors, the cost of goods sold is also influenced by the following:
+> manufacturing support, including buildings, supply facilities, quality control and
+management costs.
+0
+500
+1,000
+1,500
+1,707
+2,020
+2,000
+2,500
+2,666
+3,000
+710
+€ in millions
+G66
+Within the Asia-Pacific region (excluding Japan), China accounted for revenue of €1,337 million
+(23 percent) and therefore the largest share at individual country level. Germany followed in
+second place with €942 million (16 percent). It nevertheless remains an important technology
+center for the Automotive and Industrial sectors and, going forward, will continue to play
+a major role, firstly in the development of new products and solutions and secondly as
+a sales market.
+The Asia-Pacific region (excluding Japan) had already become the largest region in the previous
+fiscal year, when it accounted for 43 percent of revenue, ahead of the Europe, Middle East
+and Africa region with 39 percent. The importance of the Asia-Pacific region (excluding Japan)
+continued to grow in the year under report, accounting for 46 percent of revenue, compared to
+the 35 percent generated in the Europe, Middle East and Africa region. The two regions together
+accounted for 81 percent (2014: 82 percent) of revenue and, therefore, remain Infineon's
+largest markets.
+Of the total year-on-year revenue increase of €1,475 million, more than one half (€821 million
+or 56 percent) related to the Asia-Pacific region (excluding Japan), followed by the Europe,
+Middle East and Africa region, where revenue rose by €313 million or 21 percent of the total
+revenue increase. In the Americas region - and within that region particularly the USA, which
+remains the driving force for innovation - revenue grew by €226 million or 15 percent of the
+total revenue increase.
+All regions contributed to revenue growth in the 2015 fiscal year. The acquisition of International
+Rectifier granted better access to the Chinese and US markets, a fact reflected in above-average
+growth rates in these countries.
+100%
+4,320
+100%
+5,795
+8
+Revenue by region
+484
+399 284
+Europe,
+Middle East,
+Africa
+> foundry as well as assembly and test costs charged by subcontractors and
+> overheads, including the maintenance of production facilities, operational supplies and
+license fees,
+› depreciation and amortization,
+> personnel expenses,
+> material expenses – in particular for raw wafers,
+Cost of goods sold comprises mainly:
+Reduction in gross margin
+The book-to-bill ratio was practically unchanged at 1.11 (2014: 1.12) and therefore remains
+at a high level. The value of orders received increased by 32 percent from €4,857 million to
+€6,421 million, boosted by organic growth, the strength of the US dollar and the acquisition
+of International Rectifier.
+Book-to-bill ratio still at high level
+131
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+Review of results of operations
+Americas
+Share of Group Revenue 2015
+Europe, Middle East, Africa
+Asia-Pacific (excluding Japan)
+Japan
+35%
+46%
+0
+12%
+7%
+2014
+2015
+Americas
+Japan
+Asia-Pacific
+(excluding
+Japan)
+2,080
+H
+Cost of goods sold in the 2015 fiscal year amounted to €3,715 million, an increase of
+€1,042 million or 39 percent compared to €2,673 million in the previous fiscal year.
+2015
+Other operating income includes the gain of €9 million arising on the sale of patents (the
+majority of which were acquired from Qimonda) to Polaris Innovations Limited (Ireland),
+a subsidiary of Wi-Lan Inc. (Canada), and to Samsung Electronics Ltd. (Korea).
+Other operating expenses include a charge of €19 million recognized in connection with the
+closure of the Techview manufacturing facility in Singapore (acquired in conjunction with the
+acquisition of International Rectifier), comprising a restructuring provision (€9 million) as well
+as impairment losses on property, plant and equipment and intangible assets (€10 million).
+Other operating income and expenses gave rise to a net expense of €30 million for the 2015
+fiscal year, compared to a net expense of €76 million one year earlier. The improvement was
+mainly attributable to the inclusion in the previous fiscal year of a fine totaling €83 million
+in conjunction with chip card antitrust proceedings, offset by higher write-downs and
+restructuring expenses in the 2015 fiscal year.
+Other operating income and expenses improved to a net negative amount
+of €30 million
+13.4%
+2015
+2014
+11.5%
+H
+778
+Further details relating to other operating income and expenses are provided in note 7 to the
+Consolidated Financial Statements.
+496
+Selling, general and
+administrative expenses
+G70
+We incur only minor marketing expenses for advertising and trade fairs due to our sales and
+customer structure.
+At 13.4 percent of revenue selling, general and administrative expenses were higher than in
+the previous fiscal year (11.5 percent). In absolute terms, selling, general and administrative
+expenses increased by €282 million to €778 million, mainly reflecting the first-time inclusion
+of International Rectifier; the earnings impact arising from the purchase price allocation;
+integration expenses incurred in conjunction with the acquisition; salary rises; and expenses
+incurred to expand the sales organization. Excluding the earnings impact arising from the pur-
+chase price allocation and integration expenses, the ratio of selling, general and administrative
+expenses, expressed as a percentage of revenue, was similar to the previous year.
+11.5%
+13.4%
+13%
+57%
+496
+778
+€ in millions
+-
+Selling, general and
+administrative expenses
+Percentage of revenue
+29
+2014
+12
+2014
+2015
+Result from discontinued operations, net of income taxes
+Wireless mobile phone business
+Wireline Communications business
+Qimonda
+€ in millions
+The result from discontinued operations, net of income taxes comprised the following:
+Positive result from discontinued operations
+Further details regarding income tax are provided in note 9 to the Consolidated Financial
+Statements.
+In the 2015 fiscal year, the reassessment of the valuation allowance on deferred tax assets,
+relating primarily to tax loss carry-forwards and the utilization of previously unrecognized tax
+benefits, resulted in income of €209 million arising on the reversal of previously recognized
+valuation allowances on deferred tax assets on loss carry-forwards. In addition, expenses
+recognized in the 2015 fiscal year in conjunction with the purchase price allocation relating to
+the acquisition of International Rectifier reduced income from continuing operations before
+income taxes, and gave rise to related deferred tax income.
+As in the previous fiscal year, tax expense for the 2015 fiscal year was affected by foreign tax
+rates, non-deductible expenses, tax credits and changes in valuation allowances on deferred
+tax assets. Based on income from continuing operations before income taxes of €520 million,
+a tax benefit of €102 million arose due to the reversal of previously recognized valuation
+allowances on deferred tax assets. In the previous fiscal year, a tax expense of €31 million arose
+on income from continuing operations before income taxes of €519 million.
+Tax benefit following reassessment of deferred tax assets
+P see page 231 ff.
+The net financial result (financial income less financial expenses) for the 2015 fiscal year was
+a negative €39 million, a deterioration by €30 million compared to the negative €9 million
+recorded one year earlier, mainly due to higher financing expenses. External debt of approxi-
+mately €1.6 billion raised to finance the purchase price payment to acquire International
+Rectifier resulted in higher financing expenses. Despite the deterioration in the gross cash
+position (see "Gross cash position and net cash position" in the chapter "Review of liquidity")
+and only a minimal amount of interest earned on liquidity, financial income remained
+unchanged to the previous year at €10 million, due to gains arising on the sale of marketable
+securities.
+Negative impact on net finance result from additional debt capital
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+P see page 143
+134
+133
+2014
+2015
+P see page 230
+Change year-on-year
+66
+59
+12.7%
+12.4%
+5%
+30%
+550
+717
+2015
+Percentage of research and development expenses
+For information: capitalized development costs
+Percentage of revenue
+Therein included grants received
+Percentage of revenue
+Change year-on-year
+Research and development expenses
+€ in millions, except percentages
+Percentage of revenue (gross margin)
+Gross profit
+R&D expenses consist primarily of personnel expenses, material expenses, depreciation and
+amortization and the cost of maintaining laboratory facilities required for R&D activities.
+R&D projects include technology and product development projects. R&D expenses also cover
+third-party costs related to technology and product development, as well as the cost of joint
+product and technology development arrangements with partners. Grants received in con-
+junction with R&D projects and capitalized development costs reduce the reported expense.
+Percentage of revenue
+Acquisition- and integration-related costs result in higher operating expenses
+Operating expenses (research and development expenses and selling, general and
+administrative expenses) increased by €449 million to €1,495 million in the year under report
+(2014: €1,046 million), corresponding to 25.8 percent of revenue (2014: 24.2 percent).
+Research and development expenses (R&D expenses)
+35.9%
+1.0%
+1.5%
+2014
+92
+€ in millions, except percentages
+General and administrative expenses primarily consist of personnel expenses for administrative
+staff and non-manufacturing-related overhead costs, consultancy, legal and other fees for
+professional services as well as earnings impacts arising from the purchase price allocation
+and integration expenses incurred in conjunction with the acquisition of International Rectifier.
+Selling expenses primarily comprise personnel and non-personnel expenses related to selling
+activities as well as the cost of marketing, customer samples, marketing incentives and other
+marketing activities.
+100
+13.9%
+Selling, general and administrative expenses
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+Review of results of operations
+The principal R&D activities undertaken during the 2015 fiscal year are described in more
+detail in the chapter "Research and development".
+Selling, general and administrative expenses
+At €59 million, grants and subsidies were lower than in the previous fiscal year (€66 million).
+Capitalized development costs amounted to €100 million in the 2015 fiscal year, compared to
+€92 million one year earlier.
+12.4%
+P see page 70 ff.
+Percentage of revenue
+R&D expenses
+R&D expenses amounted to €717 million in the 2015 fiscal year, an increase of €167 million
+compared to the previous year's figure of €550 million or 12.4 percent (2014: 12.7 percent) of
+revenue. Thanks to economies of scale from higher revenue in the 2015 fiscal year, the figure
+remains within the target range of a low to mid-teen percentage of revenue. The increase in
+absolute terms compared to the previous year mainly relates to the integration of International
+Rectifier. In addition, research and development activities were intensified and additional staff
+recruited with the aim of broadening the basis for further growth. A total of 5,778 employees,
+including those from International Rectifier, worked in research and development functions
+at the end of the reporting period (September 30, 2014: 4,822 employees). Salary rises also
+contributed to the increase in research and development expenses.
+2014
+717
+16.7%
+550
+12.7%
+€ in millions
+2015
+R&D expenses
+G 69
+(272)
+Acquisition of International Rectifier results in substantial negative free cash flow
+Free cash flow in the 2015 fiscal year was a negative amount of €1,654 million, compared to a
+positive free cash flow of €317 million in the previous year. Of the figure for the 2015 fiscal year,
+€1,869 million (after deduction of cash acquired) related to the acquisition of International
+Rectifier. The payments to the Qimonda insolvency administrator, net of proceeds from the
+sale of the Qimonda patents, and the payment made to the EU Commission reduced free cash
+flow from continuing operations by €178 million. Excluding these exceptional items, free cash
+flow from continuing operations in the 2015 fiscal year would have totaled €393 million.
+Free cash flow in the previous fiscal year amounted to €317 million. Net cash provided by
+operating activities from continuing operations amounting to €988 million exceeded
+investments in property, plant and equipment and intangible assets totaling €668 million.
+G76
+Free cash flow
+€ in millions
+(2,593)
+(1,654)
+988
+(18)
+(399)
+317
+957
+(1,654)
+2015
+(18)
+(272)
+(2,593)
+988
+957
+2014
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Purchases of (proceeds from sales of) financial investments, net
+Free cash flow
+€ in millions
+142
+As of September 30, 2015
+Infineon reports the free cash flow figure, defined as net cash provided by and/or used in
+operating activities and net cash provided by and/or used in or investing activities, both
+from continuing operations, after adjusting for cash flows related to the purchase and sale
+of financial investments. Free cash flow serves as an additional performance indicator, since
+Infineon holds part of its liquidity in the form of financial investments. This does not mean
+that the free cash flow calculated in this way is available to cover other disbursements, since
+dividend, debt-servicing obligations and other fixed disbursements are not deducted. Free
+cash flow should not be seen as a replacement or superior performance indicator, but rather
+as an additional useful piece of information over and above the disclosure of the cash flow
+reported in the Consolidated Statement of Cash Flows, and as a supplementary disclosure to
+other liquidity performance indicators and other performance indicators derived from the
+IFRS figures. Free cash flow includes only amounts from continuing operations, and is derived
+as follows from the Consolidated Statement of Cash Flows:
+Free cash flow
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+(399)
+■Net cash provided by operating activities
+1,058
+Net cash used in investing activities
+33
+1 Before effect of foreign exchange rate changes on cash and cash equivalents of €28 million and €2 million for the 2015 and 2014 fiscal year, respectively.
+35
+2,418
+2,013
+1,360
+1,340
+673
+Septem-
+ber 30, 2014
+Septem-
+ber 30, 2015
+Net cash position
+Total debt
+Short-term debt and current maturities of long-term debt
+Long-term debt
+from continuing operations
+Less:
+Financial investments
+Cash and cash equivalents
+€ in millions
+The following table reconciles the gross cash position and net cash position (i.e. after deduction
+of debt). Since some liquid funds are held in the form of financial investments, which for IFRS
+purposes are not considered to be "cash and cash equivalents”, Infineon reports on its gross
+and net cash positions in order to provide investors with a better understanding of its overall
+liquidity. The gross and net cash positions are determined as follows from the Consolidated
+Statement of Financial Position:
+Gross cash position and net cash position
+143
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+Free cash flow
+of financial investments, net
+Purchase of and proceeds from sales
+As of September 30, 2014
+317
+from continuing operations
+Gross cash position
+■■■2014
+(8)
+Net increase (decrease)
+in cash and cash equivalents'
+Net cash used in investing activities from continuing operations in the 2015 fiscal year
+totaled €2,593 million, of which €1,869 million (after deduction of cash acquired) related to
+the acquisition of International Rectifier (see note 3 to the Consolidated Financial Statements
+"Acquisitions"). €646 million was invested in property, plant and equipment and €139 million
+in intangible and other assets, the latter figure including an amount of €21 million relating
+to the acquisition of the Qimonda patents, most of which were sold in July 2015. In addition,
+€14 million in total was used to acquire shares in Schweizer Electronic AG, Schramberg
+(Germany) and TTTech Computertechnik AG, Vienna (Austria). Proceeds of €57 million were
+received on the disposal of items of property, plant and equipment and other assets, including
+€30 million arising on the sale of practically all of the Qimonda patents in July 2015, which
+had been acquired in conjunction with the settlement reached with the Qimonda insolvency
+administrator in October 2014. €18 million of cash was provided by the (net) sale of financial
+investments, mainly comprising money deposits with a term of between three and twelve
+months. The change in these items does not have any impact on Infineon's gross cash position,
+since the latter includes financial investments as well as cash and cash equivalents.
+High level of cash used in investing activities from continuing operations
+due to acquisition of International Rectifier
+In the previous fiscal year, taking income from continuing operations before depreciation,
+amortization and impairment losses, interest and income taxes of €1,045 million as the starting
+point, the principal items reducing net cash provided by operating activities from continuing
+operations were the increase in inventories and trade receivables (in aggregate €147 million)
+and income taxes paid (€52 million). Increases in trade payables and changes in other assets
+and liabilities (in aggregate €173 million) worked in the opposite direction. This figure also
+included the €83 million fine imposed on Infineon by the EU Commission.
+Net cash provided by operating activities from continuing operations amounted to
+€957 million and was thus €31 million lower than in the previous fiscal year (€988 million).
+The figure reported includes the payment of €104 million to settle disputes relating to the
+continuation of the right to use Qimonda patents as well as the payment of €83 million to the
+EU Commission in connection with the fine imposed in conjunction with chip card antitrust
+proceedings. Taking income from continuing operations before depreciation, amortization
+and impairment losses, interest and income taxes of €1,353 million as the starting point,
+cash-relevant changes in trade receivables and payables, provisions not relating to Qimonda,
+other assets and liabilities (excluding the payment to the EU Commission) and inventories,
+totaling €104 million, also reduced cash and cash equivalents. Income tax payments during
+the fiscal year under report totaled €93 million.
+Net cash provided by operating activities from continuing operations
+lower than in previous year
+P see page 225 ff.
+Combined Management Report - Our 2015 fiscal year
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+140
+139
+531
+(385)
+2
+In the previous fiscal year, net cash used in investing activities from continuing operations
+amounted to €272 million. Cash outflows included €567 million for property, plant and
+equipment, €101 million for intangible assets and €7 million (net of cash acquired) to increase
+Infineon's investment in LSPS. A net amount of €399 million was provided by the sale of
+financial investments.
+28
+(413)
+(140)
+(179)
+1,363
+(272)
+(2,593)
+988
+2014
+2015
+Effect of foreign exchange rate changes on cash and cash equivalents
+Change in cash and cash equivalents
+Net change in cash and cash equivalents
+1,760
+Net cash provided by (used in) financing activities from continuing operations
+Net change in cash and cash equivalents from discontinued operations
+529
+2015
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+Debt raised to finance International Rectifier acquisition results in net cash
+Net cash used from
+discontinued operations
+Net cash provided by (used in)
+financing activities from
+continuing operations
+Net cash used in investing
+activities from
+continuing operations
+Net cash provided by
+operating activities from
+continuing operations
+(4,000)
+(2,593)
+(3,000)
+(2,000)
+(413)
+(140) (8)
+(179)
+(272)
+(1,000)
+141
+།
+529
+957 988
+1,000
+Review of liquidity
+1,363
+2,000
+€ in millions
+Cash flow
+G75
+Change in cash and cash equivalents from discontinued operations negatively
+impacted by payments in conjunction with the Qimonda partial settlement
+Net cash used from discontinued operations in the 2015 fiscal year totaled €140 million,
+of which €125 million (net of value added tax) related to payments in conjunction with the
+settlement reached with the Qimonda insolvency administrator. These payments were made
+as part of an amicable agreement reached to terminate the proceedings relating to claims
+pertaining to intragroup payments (which had been contested under insolvency law), and the
+settlement of other extra-judicial claims. The payments were also deemed to settle all other
+claims of the insolvency administrator, to the extent that they do not pertain to the alleged
+activation of a shell company and the liability for impairment of capital, as well as the residual
+liability of Qimonda Dresden.
+In the previous fiscal year, net cash used in financing activities from continuing operations
+amounted to €179 million, including €129 million used to pay the dividend for the 2013
+fiscal year and €35 million to repurchase parts of the convertible bond that fell due in 2014.
+A net amount of €25 million was used to repay non-current financial liabilities.
+Net cash provided by financing activities from continuing operations totaled €1,363 million
+in the 2015 fiscal year. Credit lines agreed with various national and international banks in
+August 2014 to finance the International Rectifier acquisition were drawn down in January 2015.
+€800 million of these amounts were repaid in March 2015 following the issue of two senior and
+unsecured bonds with a total nominal value of €800 million. Overall, net cash inflows totaled
+€1,584 million. In addition, the dividend for the 2014 fiscal year amounting to €202 million was
+also paid. An amount of €15 million was used to acquire the remaining 33.6 percent of the
+shares of LSPS.
+provided by financing activities from continuing operations
+0
+151
+About €850 million
+186
+Increase to €500
+to €600 million
+In the range of 30-40%
+relative to revenue, therefore
+within the target of 30-40%
+Net cash position (gross cash
+position higher than debt)
+220
+2,013
+34.7%
+In the range of 30-40%
+relative to revenue, therefore
+within the target of 30-40%
+Net cash position (gross cash
+position higher than debt)
+In the range of 40-50%
+relative to revenue, therefore
+above the target of 30-40%
+Net cash position (gross cash
+position higher than debt)
+Increase to €350
+to €450 million
+(52)
+Working capital
+2,232
+Net cash position
+2,418
+56%
+Gross cash position
+performance indicators
+550
+Liquidity
+57%
+Growth in line with or slightly
+below revenue growth
+717
+30%
+778
+2 percentage points
+Slight increase compared to
+FY 2015
+35.9%
+2 percentage points
+Considerable decrease
+compared to 38.1%
+in FY 2014
+Growth in line with or slightly
+below revenue growth
+Growth considerably above
+revenue growth
+Growth in line with or slightly
+above sales growth
+Growth in line with or slightly
+above sales growth
+administrative expenses
+496
+Selling, general and
+development expenses
+550
+Research and
+Growth slightly below
+revenue growth
+Increase by 13% plus/minus
+Between €700 and
+Investments
+Net cash used in investing activities from continuing operations
+In view of the economic situation described above, Infineon expects Group revenue to
+increase by 13 percent, plus or minus 2 percentage points, in the 2016 fiscal year. The Power
+Management & Multimarket segment is expected to grow faster than the Group average.
+Revenue growth in the Industrial Power Control segment should be roughly in line with the
+Group average. The Automotive and Chip Card & Security segments are expected to be
+slightly lower than the Group average.
+Revenue increase of 13 percent expected, plus or minus 2 percentage points,
+compared to the previous fiscal year
+Forecasts for the five-year period from 2015 to 2019 also show growth rates for these three
+sectors at above the expected level for the global semiconductor market as a whole, which,
+according to IHS, will grow by an average of 3 percent over this period. The fastest annual
+growth rate (9 percent) is predicted for the industrial sector. Over the same period, the
+automotive sector is expected to grow at an average rate of 6 percent, compared to a rate of
+5 percent for the chip card semiconductor market. By contrast, according to the IHS forecast,
+the semiconductor markets for communications, consumer electronics and computing
+applications will grow at rates below those of the global semiconductor market as a whole.
+For the 2016 calendar year, IHS forecasts growth of 2 percent for the global semiconductor
+market. The base scenario for this assessment is that the growth rate of the world economy
+will pick up to 3.0 percent. The fastest growth rate in 2016 (10 percent) is predicted for the
+industrial sector. The chip card and automotive semiconductor markets are expected to record
+growth of 8 and 7 percent respectively.
+In the 2014 calendar year, the global semiconductor market as denominated in US dollar
+grew at an above-average rate of 9 percent. Demand developed positively across all market
+segments, with only the semiconductor market for consumer electronic applications down
+compared to the previous year. Experts at the market research firm IHS forecast that semi-
+conductor revenues worldwide will decrease by just under 1 percent in the 2015 calendar year.
+In the automotive, industrial and chip card market sectors relevant for Infineon, however,
+growth rates of between 4 and 11 percent are forecast for the 2015 calendar year. By contrast,
+revenue in other semiconductor segments is expected to fall.
+Economic experts from the International Monetary Fund (IMF) forecast a slight improvement
+for the 2016 calendar year, with a growth rate of 3.0 percent. This more optimistic forecast is
+based on the assumption that the USA's economic upturn will continue and China's growth
+rate will remain at a somewhat slower, but still above-average rate. The experts predict
+a continuation of the Chinese government's policies aimed at preventing a faster economic
+slowdown. Japan's growth rate is also set to gain pace, albeit only moderately. The IMF forecasts
+further economic improvement for the eurozone on the back of low oil prices, a comparatively
+weak euro and continued expansionary monetary policies.
+The world economy grew by 2.7 percent in the 2014 calendar year and is expected to grow
+by around 2.5 percent in the 2015 calendar year, slowed down by various unfavorable
+developments, including concerns about the economic situation in China and other emerging
+economies, a further escalation of the world's geopolitical crises and turbulence in financial
+markets around mid-year.
+Growth prospects for the world economy and the semiconductor market
+In terms of revenue, the impact of exchange rates is limited almost entirely to the euro/
+US dollar rate, where a deviation of 1 cent in the actual exchange rate compared to the fore-
+cast rate would have an impact on revenue of between €7 million and €8 million per quarter,
+or approximately €30 million per fiscal year. Planning for the 2016 fiscal year is based on an
+assumed average exchange rate for the US dollar against the euro of US$1.10.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+146
+As a globally operating organization, Infineon generates revenue not only in euros, but also
+in foreign currencies, predominantly US dollars. It also incurs expenses both in US dollars and
+in currencies closely correlated to the US dollar, such as the Singapore dollar, the Malaysian
+ringgit and the Chinese renminbi. The impact of non-euro denominated revenue and expenses
+does not always balance out. For this reason, fluctuations in exchange rates, particularly
+between the euro and the US dollar, influence the amounts reported for revenue and earnings.
+Excluding the effect of currency hedging instruments, the impact of a deviation of 1 cent in
+the actual exchange rate of the US dollar against the euro compared to the forecast rate would
+amount to a change in Segment Result of approximately €2 to €3 million per quarter, or
+approximately €8 to €12 million per fiscal year compared to the forecast value. These figures
+assume, however, that the exchange rates of currencies correlated with the US dollar - in
+which expenses arise for Infineon - change in parallel to the euro/US dollar exchange rate.
+€850 million
+Assumed euro/US dollar exchange rate
+Operating expenses also developed as predicted. Research and development expenses
+increased by 30 percent, 4 percentage points below the rate of revenue growth. At 57 percent,
+the increase in selling, general and administrative expenses was, as expected, considerably
+higher than the revenue growth rate of 34 percent. A high proportion of the increase in selling,
+general and administrative expenses was attributable to acquisition-related expenses incurred
+in conjunction with the acquisition of International Rectifier. For this reason, the ratio of
+selling, general and administrative expenses to revenue in the 2015 fiscal year (13.4 percent)
+was at the upper end of the longer-term target range of a low-teen percentage of revenue.
+At 12.4 percent of revenue, research and development expenses were within the longer-term
+target range of a low to mid-teen percentage of revenue.
+Due to the integration of International Rectifier and the related expenses, a considerable
+decrease in the gross margin was forecast. In actual fact, the gross margin finished at
+35.9 percent for the 2015 fiscal year, compared to 38.1 percent one year earlier.
+The outcomes for the supplementary performance indicators were also in line with forecast.
+Revenue growth of 34 percent, for instance, was at the lower end of the forecast range of
+36 percent, plus or minus 2 percentage points.
+A sharp decrease in the Return on Capital Employed (ROCE) was forecast due to the acquisition
+of International Rectifier. The actual value of 12.8 percent recorded for the 2015 fiscal year was
+well below the previous year's figure of 20.3 percent, in line with expectations. The decrease
+reflects the sharp rise in capital employed, which rose by €2,724 million to €5,176 million.
+In light of the purchase price payment for International Rectifier, payments made in connection
+with the partial Qimonda settlement and the payment of the fine imposed by the European
+Commission, a high negative free cash flow had been forecast for the 2015 fiscal year. With
+an actual negative free cash flow of €1,654 million, the mid-point of the forecast range was
+achieved. At about €400 million, the actual outcome for free cash flow adjusted for these
+exceptional items was also within the forecast range of between €350 and €500 million.
+Infineon's principal performance indicators comprise Segment Result Margin, free cash flow
+from continuing operations and RoCE. With a Segment Result Margin of 15.5 percent, Infineon
+was slightly ahead of its forecast value of 15 percent for the 2015 fiscal year.
+Outlook
+145
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+785
+About €800 million
+About €700 million
+668
+Infineon's forecasts for the 2016 fiscal year are summarized in the table above and discussed
+in detail below.
+34%
+Increase by 36% plus/minus
+Increase by 8% plus/minus
+2 percentage points
+About the same as in
+FY 2014
+Principal
+FY 2014
+Actuals
+€ in millions, except percentages
+Combined Management Report - Our 2015 fiscal year
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+144
+Debt
+Net cash position
+Gross cash position
+186
+2014
+2015
+performance indicators
+['T II.
+2,418
+1,793
+220
+2,013
+€ in millions
+Liquidity position as of September 30, 2015 and 2014 by comparison
+G 77
+P see page 248
+The net cash position, which is defined as the gross cash position less short-term and long-term
+debt, was positive as of September 30, 2015, despite the high negative free cash flow figure
+caused by the various factors described above. The net cash position amounted to €220 million
+at the end of the reporting period (September 30, 2014: €2,232 million), after dipping during
+the year to a negative amount of €176 million as of March 31, 2015 following payment of the
+purchase consideration for International Rectifier, payment of the dividend and payments
+to both the Qimonda insolvency administrator and the EU Commission. Infineon's net cash
+position had already returned to a positive amount of €49 million by June 30, 2015, thus
+bringing the capital structure back within the targeted range for the net cash position (see
+note 25 of the Consolidated Financial Statements "Capital management"), just one quarter
+after signing the contract to acquire International Rectifier.
+The gross cash position as of September 30, 2015 amounted to €2,013 million, down by
+€405 million on the €2,418 million reported at September 30, 2014. In addition to the negative
+free cash flow of €1,654 million described above, the gross cash position was also reduced
+by the dividend payment of €202 million and by payments totaling €140 million relating to
+the Qimonda insolvency and reported as net cash used from discontinued operations. Net
+debt raised amounting to €1,567 million and exchange gains of €28 million on cash and cash
+equivalents worked in the opposite direction.
+Review of liquidity
+2,232
+220
+2,232
+Segment Result Margin
+14.4%
+Free cash flow from
+continuing operations
+ROCE
+38.1%
+Gross margin
+compared to previous year
+12%
+Change in revenue
+performance indicators
+Growth and profitability
+performance indicators
+About 16% (at the
+mid-point of the planned
+range for revenue growth)
+Between €500 and
+€600 million
+Slight increase compared to
+FY 2015
+FY 2016
+Outlook
+12.8%
+(1,654)
+15.5%
+About 15% (at the
+mid-point of the planned
+range for revenue growth)
+Between a negative amount
+of €1.6 billion to €1.7 billion
+Sharp decrease compared to
+previous fiscal year
+About 14% (at the
+mid-point of the planned
+range for revenue growth)
+Between €0 and
+€100 million
+Slight decrease compared to
+FY 2014
+FY 2015
+Actuals
+Outlook FY 2015, March 31, 2015
+After integration of
+International Rectifier
+FY 2015
+Original Outlook
+In addition, the original forecasts for the 2015 fiscal year, as presented in the 2014 Annual
+Report, are shown in the third column. These forecasts related to the expected development
+of the Infineon Group, without taking account of financial figures for International Rectifier:
+The following table as well as the subsequent comments compare the actual values of
+Infineon's key performance indicators with the forecasts updated in the Half-Year Financial
+Report to March 31, 2015 following closure of the acquisition of International Rectifier and
+show the outlook for the 2016 fiscal year. The forecasts for the 2016 fiscal year include the
+financial figures of International Rectifier for a full fiscal year. The performance figures shown
+for the 2015 fiscal year include figures for International Rectifier from January 13, 2015
+onwards, in other words with effect from the acquisition closure date.
+Actual and target values for performance indicators
+Outlook
+Report on expected developments,
+together with associated
+material risks and opportunities
+Supplementary
+20.3%
+317
+1,793
+Net cash provided by operating activities from continuing operations
+957
+Cash flow
+53%
+46%
+1,793
+186
+1%
+2015
+Debt by currencies
+92%
+2014
+€ in millions
+2015
+2014
+Euro
+947
+8%
+G73
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+138
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+137
+Review of financial condition
+Non-current assets higher due to acquisition of International Rectifier
+Non-current assets rose by €2,122 million (85 percent) from €2,504 million as of September 30,
+2014 to €4,626 million as of September 30, 2015, mostly due to the acquisition of International
+Rectifier and the expansion of manufacturing facilities.
+Based on the preliminary purchase price allocation (see note 3 to the Consolidated Financial
+Statements "Acquisitions"), goodwill of €729 million arose at the date of acquisition. This
+figure increased to €778 million as of September 30, 2015 due to exchange rate factors. Other
+intangible assets acquired in conjunction with the acquisition of International Rectifier, such
+as customer relationships and technologies, were measured at €701 million at the acquisition
+date, while acquired property, plant and equipment were recognized at a value of €379 million.
+Other investments in property, plant and equipment and intangible assets in the 2015 fiscal
+year totaled €785 million. Investments related mainly to the manufacturing sites in Germany
+(mainly Regensburg and Dresden), Malaysia (Malacca and Kulim), and Austria (Villach).
+Depreciation and amortization on property, plant and equipment as well as on intangible
+assets amounted to €760 million in the 2015 fiscal year.
+Deferred tax assets increased by €226 million to €604 million (September 30, 2014: €378 million),
+primarily as a result of reversals of previously recognized valuation allowances on deferred tax
+assets relating to tax loss carry-forwards (see note 9 to the Consolidated Financial Statements
+"Income tax").
+Current liabilities nearly unchanged
+Current liabilities stood at €1,585 million at the end of the reporting period, €18 million
+(1 percent) lower than at September 30, 2014 (€1,603 million).
+Current provisions went down by €188 million during the twelve-month period. Current
+provisions relating to Qimonda decreased by €265 million, primarily due to payments made
+in conjunction with the partial settlement reached with Qimonda's insolvency administrator
+(see note 32 to the Consolidated Financial Statements "Legal risks"). Current provisions
+for obligations to employees increased by €88 million, largely reflecting the fact that the
+creation of provisions for the 2015 fiscal year exceeded payments for prior-year performance-
+related remuneration. Alongside current provisions, other current liabilities decreased by
+€36 million, partly due to an increase of €62 million in payables to employees mostly due to
+the acquisition of International Rectifier. By contrast, other current liabilities decreased as
+a result of the payment of €83 million in conjunction with the fine imposed by the European
+Commission ("EU Commission"), against which Infineon has meanwhile filed an appeal
+(see note 32 to the Consolidated Financial Statements "Legal risks").
+While current provisions and other current liabilities decreased in total by €224 million, trade
+payables increased by €154 million to stand at €802 million at the end of the reporting period
+(September 30, 2014: €648 million). This increase was partly due to the addition of trade
+payables from International Rectifier and partly to higher business volumes and investments.
+P see page 225 f.
+P see page 231 ff.
+P see page 265
+Psee page 264 f.
+171
+US dollar
+828
+Other
+Equity increased by €507 million (12 percent) to €4,665 million at the end of the reporting
+period (September 30, 2014: €4,158 million). In addition to the net income of €634 million
+earned in the 2015 fiscal year, currency factors also added €100 million to equity. Equity was
+increased by €40 million due to the expiry of non-exercised put options on own shares.
+The dividend payment for the 2014 fiscal year reduced equity by €202 million. A further
+reduction by €27 million after tax resulted from actuarial losses, which arose on the measure-
+ment of pensions and similar obligations.
+The equity ratio fell to 53.4 percent at the end of the reporting period (September 30, 2014:
+64.6 percent) primarily due to debt taken on to finance the acquisition of International Rectifier.
+ROCE down due to increase in capital employed
+The Return on Capital Employed (ROCE) for the 2015 fiscal year fell to 12.8 percent from
+20.3 percent one year earlier.
+Capital employed increased during the twelve-month period from €2,452 million to
+€5,176 million, mostly due to the acquisition of International Rectifier, but also in part as
+a result of the reduction in provisions for Qimonda. The increase in operating income from
+continuing operations, net of tax, from €497 million in the previous year to €664 million in
+the 2015 fiscal year was insufficient to offset this effect.
+Capital employed - ROCE
+ROCE for the 2015 and 2014 fiscal years is calculated as follows:
+€ in millions
+Operating income
+Plus:
+Financial income excluding interest income¹
+Gain from investments accounted for using the equity method
+555
+2014
+Equity up due to net income and currency factors
+€ in millions
+Deferred tax liabilities increased by €142 million to €147 million, mostly due to the revaluation
+of the carrying amounts of International Rectifier's assets and liabilities to their fair value as
+part of the purchase price allocation. Pensions and similar obligations went up by €47 million
+to €426 million (September 30, 2014: €379 million), mainly due to actuarial losses totaling
+€27 million.
+Non-current liabilities increased by €1,814 million to stand at €2,491 million at the end of
+the reporting period (September 30, 2014: €677 million).
+18
+15
+1,793
+186
+G 74
+ROCE
+€ in millions
+2,452
+5,176
+H
+20.3%
+2014
+2015
+12.8%
+Non-current liabilities increased by debt raised to finance acquisition
+of International Rectifier
+Non-current financial liabilities went up by €1,609 million to €1,760 million at the end of the
+reporting period (September 30, 2014: €151 million) as a result of debt raised in conjunction
+with the acquisition of International Rectifier (see note 22 to the Consolidated Financial State-
+ments "Debt"). In the 2015 fiscal year, the share of debt denominated in US dollars increased
+to 46 percent (September 30, 2014: 0 percent) as a result of a loan amounting to US$934 million.
+The share of debt denominated in euros decreased accordingly to 53 percent (September 30,
+2014: 92 percent). Information on debt maturities is provided in note 22 to the Consolidated
+Financial Statements "Debt".
+2015
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Group performance
+Review of liquidity
+102
+(1,058)
+(673)
+Cash and cash equivalents
+Less:
+8,741
+Assets
+497
+664
+Financial investments
+Operating income from continuing operations after tax ①
+Financial expense excluding interest expense²
+(31)
+Income tax
+Less:
+3
+4
+4
+525
+(1)
+(1,340)
+6,438
+Assets classified as held for sale
+Review of liquidity
+P see page 231
+P see page 231
+The reported ROCE was calculated using actual capital employed, without adjustment for
+exceptional factors such as provisions recorded in connection with the Qimonda insolvency
+and current liabilities arising in the previous year on the issue of put options on own shares
+in conjunction with Infineon's capital return program, both of which had the effect of reducing
+capital employed.
+(1,360)
+20.3%
+12.8%
+2,452
+5,176
+ROCE 1/②
+1 Financial income in the 2015 and 2014 fiscal year amounted to €10 million and €10 million, respectively, and consisted of
+€6 million and €10 million, respectively, of interest income (see note 8 to the Consolidated Financial Statements).
+2 Financial expense in the 2015 and 2014 fiscal year amounted to €49 million and €19 million, respectively, and consisted of
+€48 million and €19 million, respectively, of interest expense (see note 8 to the Consolidated Financial Statements).
+Liabilities classified as held for sale
+35
+33
+Short-term debt and current maturities of long-term debt
+Plus:
+(1,603)
+(1,585)
+Total current liabilities
+Capital employed ②
+Overall statement on the expected development of the Infineon group
+Based on forecasts of global economic development for the 2016 calendar year, Infineon
+predicts year-on-year revenue growth of 13 percent, plus or minus 2 percentage points. The
+gross margin is expected to increase slightly. At the mid-point of the planned range for revenue
+growth, the Segment Result Margin is expected to come in at about 16 percent of revenue.
+Summary of outlook for revenue and earnings
+2015
+34%
+Change in revenue compared to
+15.5%
+Gross margin
+35.9%
+Segment Result Margin
+Frontend and backend manufacturing need to be optimally synchronized to enable Infineon
+to develop competitive and high-quality products designed to provide customized techno-
+logical solutions. In view of the rapid pace of technological change and increasingly stringent
+customer requirements, coordination processes need to become increasingly sophisticated.
+Failure to continue making progress in this area could result in quality problems, product
+development or market maturity delays as well as higher R&D expenses and hence adversely
+impact earnings performance.
+Capital employed is expected to rise only slightly in the 2016 fiscal year, whereas net income
+is forecast to rise sharply. Therefore the Return on Capital Employed (ROCE) is likely to increase
+slightly compared to the previous year's level of 12.8 percent.
+Increase by 13% plus or minus
+2 percentage points
+Slight increase compared to FY 2015
+About 16% (at the mid-point of the
+planned range for revenue growth)
+the previous year
+ROCE
+volume requirements. The prices of raw materials and energy have recently been subject to
+significant fluctuation, and there is no reason to assume the situation will change in the near
+future. If we are unable to offset cost rises or pass them on to customers, it could have an
+adverse impact on earnings.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Investments in the 2016 fiscal year will be in the region of €850 million. Depreciation
+and amortization as well will amount to approximately €850 million. Free cash flow from
+continuing operations will increase to an amount between €500 million and €600 million.
+The Return on Capital Employed (ROCE) is expected to increase slightly compared to the past
+year value of 12.8 percent.
+Working capital expected to increase
+As of September 30, 2015 the working capital amounted to €550 million. This figure is forecast
+to rise to between €700 million and €850 million at the end of the 2016 fiscal year.
+Investments and depreciation/amortization
+Investments (defined by Infineon as the sum of purchases of property, plant and equipment,
+purchases of intangible assets and capitalized research and development assets) are planned to
+rise to approximately €850 million in the 2016 fiscal year, compared with €785 million in the
+2015 fiscal year that comprised €646 million for property, plant and equipment and €139 million
+for capitalized development costs and intangible assets.
+Investments in property, plant and equipment at existing facilities and in intangible assets,
+including capitalized development costs, planned for the 2016 year will be in line with the
+target level of 13 percent of revenue.
+These targets are expected to be reached by the end of the 2016 fiscal year. Based on forecast
+performance, and despite the expected dividend payment, both the gross cash position and
+the net cash position should be higher than their levels of €2,013 million and €220 million
+respectively at September 30, 2015.
+The investments in operations relate in roughly equal portions to frontend-related capacity
+expansion measures, improvements to existing frontend manufacturing facilities and back-
+end-related investments. The plan is to expand both 200-millimeter and 300-millimeter
+manufacturing capacities. Continuous investments in automation, quality, innovation and
+infrastructure will also ensure that frontend manufacturing facilities keep pace with changing
+technological requirements. Around one third of capital expenditure in the 2016 fiscal year
+will be backend-related, focusing both on existing manufacturing facilities in terms of changes
+of the product portfolio, automation, quality, innovation and infrastructure as well as on the
+expansion of backend manufacturing capacities. The construction of a second manufacturing
+building at the Wuxi (China) site has already started.
+Free cash flow from continuing operations
+As a result of the purchase price payment for International Rectifier, payments made in
+connection with the partial Qimonda settlement, Qimonda patents and the payment of the
+fine imposed by the European Commission, free cash flow from continuing operations for the
+2015 fiscal year deteriorated to a negative amount of €1,654 million. At €957 million, cash
+provided by operating activities from continuing operations in the 2015 fiscal year was highly
+positive. This figure is forecast to rise to between €1,300 million and €1,400 million in the 2016
+fiscal year. Overall, free cash flow from continuing operations is expected to rise to between
+€500 million and €600 million.
+Cash flows from financing activities
+A proposal will be put forward at the Annual General Meeting to take place in Munich (Germany)
+on February 18, 2016 that the dividend for the 2015 fiscal year be raised from €0.18 to €0.20.
+Assuming the Annual General Meeting approves this proposal, the total dividend will amount
+to approximately €225 million. Apart from the dividend payment, no other major changes
+in the cash flows from financing activities are expected as a result of cash inflows or outflows.
+Gross cash position and net cash position
+Infineon pursues the long-term target of maintaining a gross cash position of between 30 and
+40 percent of revenue. Further targets are to maintain a net cash position and to keep gross
+debt to a maximum level of twice the level of EBITDA.
+Depreciation and amortization will rise to approximately €850 million, compared to €760 million
+in the 2015 fiscal year.
+Risk and opportunity report
+Further information regarding the management of financial risks is provided in note 31 to the
+Consolidated Financial Statements.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Our global business strategy requires the maintenance of R&D locations and manufacturing
+sites throughout the world. The location of such facilities is determined by market entry
+hurdles, technology and cost factors. Risks could, therefore, arise from adverse economic
+and geo-political developments in our regional markets, changes in legislation, and policies
+affecting trade and investment aimed at limiting free trade and varying practices of the
+regulatory, tax, judicial and administrative bodies in the jurisdictions where we operate.
+These risks could restrict our business activities in those countries. We could also be exposed
+to fines, sanctions and damage to our reputation.
+Impact of our global operations (RC: medium)
+We cannot rule out that patent infringement claims will be upheld in a court of law, thus
+resulting in significant claims for damages or restrictions in selling the products concerned.
+Any such outcome could in turn have an adverse impact on our earnings performance.
+Further information is provided in note 32 to the Consolidated Financial Statements.
+Whilst we often benefit from cross-licensing arrangements with major competitors and are
+keen to broaden the protection offered in this area by entering into new agreements, no
+such opportunities exist to safeguard against risks of this nature in the case of companies
+specializing in the exploitation of patent rights.
+As with many other companies in the semiconductor industry, allegations are made against
+us from time to time that we have infringed other parties' protected rights. Regardless of the
+prospects of success of such claims, substantial legal defense costs can arise.
+Intellectual property rights and patents (RC: medium)
+Provisions are recognized in connection with these matters as of September 30, 2015. The
+provisions reflect the amount of those liabilities that management believes are probable and
+can be estimated with reasonable accuracy at that time. There can be no assurance that such
+provisions recorded will be sufficient to cover all liabilities that may ultimately be incurred
+in relation to these matters.
+Due to the insolvency proceedings relating to Qimonda and claims brought against Infineon,
+we are exposed - even after the partial settlement reached on September 11, 2014 - to
+a substantial amount of potential liabilities, which are described in detail in note 32 to the
+Consolidated Financial Statements.
+Qimonda insolvency (RC: medium)
+Legal and compliance risks
+Combined Management Report - Our 2015 fiscal year
+Specified currencies are hedged Group-wide by means of derivative financial instruments.
+These hedges are based on forecasts of future cash flows, the occurrence of which is uncertain.
+Under these circumstances, exchange rate fluctuations could - despite hedging measures -
+also have a negative impact on earnings.
+Our involvement and participation in various regional markets around the world creates cash
+flows in a number of currencies other than the euro - primarily in US dollars. A significant
+share of revenue on the one hand and of operating costs and investments on the other is
+denominated in US dollars and correlated currencies. For the most part, Infineon generates
+a US dollar surplus from these transactions.
+Currency risks (RC: medium)
+Risk policy: Underlying principles of our risk and opportunity management
+Effective risk and opportunity management is central to all of our business activities and
+plays an important role in implementing the strategic targets described in the chapter "Group
+strategy" - namely achieving sustainable, profitable growth and preserving our financial
+resources through efficient employment of capital. Infineon's risk and opportunity profile is
+characterized by periods of rapid growth, followed by periods of significant market decline,
+a substantial need for capital investment in order to achieve and sustain our market position
+and an extraordinarily rapid pace of technological change. Gaining a leading edge through
+technological innovation also has a legal dimension. Against this background, Infineon's risk
+policy is aimed firstly at taking advantage of identified opportunities as quickly as possible in
+a way most appropriate to increasing the value of the business, and secondly at pro-actively
+mitigating risks – particularly those capable of posing a threat to Infineon's going-concern
+status - by adopting appropriate countermeasures. Risk management at Infineon is therefore
+closely linked to forecasting and the implementation of our business strategies. Ultimate
+responsibility for risk management lies with the Infineon Management Board.
+Psee page 265 ff.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+156
+155
+The relatively high level of our holdings of liquid funds (gross cash position) exposes us to
+the potential risk of default by banking partners with whom we do business. We counter this
+risk - which could still arise, despite various state-insured deposit protection mechanisms -
+by a combination of risk avoidance analyses and risk-spreading measures. The failure of
+these measures could have a materially adverse impact on Infineon's financial condition and
+liquidity situation.
+Risk of default by banking partners (RC: medium)
+Financial risks
+One of our key success factors is the availability of sufficient qualified employees at all times.
+There is, however, a general risk of losing qualified staff or not being able to recruit, train and
+retain adequately qualified staff within the business. A lack of technical or management staff
+could, among other things, restrict future growth and hence adversely impact our earnings
+performance.
+Need for qualified staff (RC: medium)
+We cooperate with numerous suppliers who provide us with materials and services, or who
+manage parts of our supply chain. We do not always have alternative sources for some of these
+suppliers and therefore depend on their ability to deliver products of the required quality.
+Failure of one or more of these suppliers to meet their obligations to Infineon could have an
+adverse impact on our earnings performance.
+Dependence on individual suppliers (RC: medium)
+Our South East Asian manufacturing sites are of critical importance for our production. If, for
+example, political upheavals or natural disasters in the region were to impede our ability to
+manufacture at these sites on the planned scale or to export products manufactured at those
+sites, it would have a negative impact on our financial condition, liquidity and earnings.
+Our current manufacturing capacities in this region are, to a large extent, not insured against
+political risks such as expropriation of assets. The transfer of manufacturing capacities from
+these sites would, therefore, not only involve a great deal of time and technical effort, Infineon
+would also be required to bear the necessary cost of investment.
+Dependence on individual manufacturing sites (RC: medium)
+One risk that semiconductor companies operating in-house manufacturing facilities typically
+face is that of delays in the ramping-up of production volumes at new manufacturing sites,
+coupled with required transfer of technology. One good example is in the Automotive segment,
+where customers' product approval and testing processes can take place over an extended
+period of time, thus influencing our global manufacturing strategy as well as short- and
+medium-term capacity utilization. Failure to anticipate necessary manufacturing changes in
+good time could result in capacity shortages and hence lower revenue on the one hand as
+well as costs incurred due to under-utilization on the other.
+Determining and adjusting manufacturing volumes (RC: medium)
+P see page 261 ff.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+2016
+The effective current tax rate (cash tax) for the Infineon Group in the 2016 fiscal year is
+forecast at approximately 15 percent. This tax rate is based on income, excluding the impact
+of the purchase price allocation in connection with the International Rectifier acquisition,
+and comprises the cash-effective German and foreign income taxes of Infineon Group entities.
+In Germany, Infineon's current tax expense is based on the applicable "minimum taxation"
+rules, under which only 40 percent of taxable profits arising in Germany are subject to current
+tax as a result of the utilization of tax loss carry-forwards. This results in a cash-effective tax
+rate of approximately 12 percent in Germany. At September 30, 2015, tax loss carry-forwards
+for German corporation tax and municipal trade tax purposes amounted to €2.3 billion and
+€3.4 billion respectively.
+The Internal Control System is an integral part of the accounting process in all relevant legal
+entities and corporate functions. The system monitors compliance with stated principles
+and stipulated procedures based on preventive and detective controls. Among other things,
+we regularly check that:
+> Group-wide financial reporting, measurement and accounting guidelines are continuously
+updated and adhered to;
+› Intragroup transactions are fully accounted for and properly eliminated;
+> Issues relevant for financial reporting and disclosures in connection with agreements
+entered into are recognized and appropriately presented;
+151
+152
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+> Processes and controls are in place to explicitly guarantee the completeness and correctness
+of the year-end financial statements and financial reporting;
+> Processes are in place for the segregation of duties and for the dual control principle in
+the context of preparing financial statements, as well as for authorization and access rules
+for relevant IT accounting systems.
+Assessment of effectiveness
+We systematically assess the effectiveness of the ICS with regard to the corporate accounting
+process. An annual risk analysis is initially performed and the defined controls are revised, as
+and when required. The assessment involves identifying and updating significant risks relating
+to accounting and financial reporting in the relevant legal entities and corporate functions.
+The controls defined for identifying risks are documented in accordance with Group-wide
+guidelines. Regular random tests are performed to assess the effectiveness of the controls.
+These tests constitute the basis for the self-assessment of the appropriate extent and effective-
+ness of the controls. The results of this self-assessment are documented and reported in
+a global IT system. Any deficiencies identified are remedied with due consideration given to
+their potential impact.
+At the end of the annual cycle, the material legal entities review and confirm the effectiveness
+of the ICS with regard to the accounting and financial reporting process. The Management
+Board and the Investment, Finance and Audit Committee of the Supervisory Board are regularly
+informed of any significant control deficiencies and the effectiveness of the internal controls.
+The Risk Management and ICS are continuously reviewed to ensure compliance with internal
+and external requirements. Regular improvements made to the system contribute to the
+continuous monitoring of the relevant risk areas within the responsible organizational units.
+Internal controls at International Rectifier, defined on the basis of the Sarbanes-Oxley Act,
+were reviewed for their materiality and tested on a sample basis during the 2015 fiscal year.
+International Rectifier's ICS will be integrated in the Infineon Group's ICS during the 2016
+fiscal year in conjunction with the merger of legal entities and processes.
+Likelihood of Occurrence
+Significant risks
+In the following section, we describe risks that could have a significant or materially adverse
+impact on Infineon's operations, liquidity, earnings, cash flows and reputation. Depending
+on the potential degree of impact and the estimated likelihood of occurrence, the risk class is
+shown in parentheses for each risk (e.g. "RC: high").
+Strategic risks
+Unsettled political and economic climate (RC: high)
+As a globally operating company, our business is highly dependent on global economic
+developments. A worldwide economic downturn - particularly in the markets we serve - may
+result in lower revenues than originally expected, with the consequence that we may not
+achieve our strategic target compound annual revenue growth rate of 8 percent. Risks can
+also arise due to political and social changes in countries in which we manufacture and/or
+sell our products.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+We therefore continue to monitor the European debt crisis where, under the pressure of high
+levels of public sector debt, governments are implementing a wide range of measures to
+consolidate budgetary shortfalls and cut investment expenditure. As a consequence of these
+developments, the level of trust of consumers and companies is characterized by uncertainty,
+while unemployment figures remain high in many EU countries. Added to this are the current
+geopolitical risks arising from the crisis in the Ukraine and the unrest in the Middle East.
+The economic recovery in the USA - a market which accounts for 10 percent (fiscal year 2014:
+8 percent) of our revenues, after the integration of International Rectifier - continues to pro-
+ceed at a slow pace. Strong revenue growth was achieved in China, where the share of Group
+revenue rose from 20 percent in 2014 to 23 percent in 2015. As a result, the risk exposure in
+the event of a further slowdown of growth in China, combined with a further deterioration in
+demand for exports, has increased. Regardless of our assessment of potential scenarios and
+outcomes within this complex construct of risks, these developments could have an adverse
+impact on Infineon's operations, financial condition, liquidity, cash flows and earnings.
+Cyclical market and sector development (RC: high)
+Particularly in the past, the global semiconductor market has been of a highly cyclical nature.
+Our target markets continue to be exposed to the risk of short-term market fluctuations.
+As a result, our own forecasts of future business developments are subject to a high degree
+of uncertainty. In the past, the cyclical pattern was fairly regular, at the end of which Infineon
+was able to participate in the upturn after a period of market weakness. It is, however, possible
+that future market downturns will follow another pattern, for example an L-shape. The absence
+of market growth or its decline would make it considerably more difficult to attain our own
+growth target. In the event that we are unprepared for market fluctuations, or our response to
+such fluctuations turns out to be inappropriate, this could have a sustained materially adverse
+impact on Infineon's operations, financial condition, liquidity and earnings.
+The principal focus of the ICS is on the financial reporting process, with the aim of monitoring
+the proper maintenance and effectiveness of accounting systems and financial reporting.
+The primary objective of the ICS is to minimize the risk of misstatement in Infineon's internal
+and external reporting and to ensure with a reasonable amount of certainty that the Consoli-
+dated Financial Statements comply with all relevant regulations. Appropriate controls must
+therefore be in place throughout the organization to ensure such compliance. Clear lines of
+responsibility are assigned to each of the processes.
+Internal Control System with respect to the financial reporting process
+Risk and Opportunity Managers are designated at appropriate hierarchical levels to manage
+and monitor identified risks and opportunities, and are responsible for formally determining
+a set of appropriate strategies (avoidance, mitigation, transfer to other parties, acceptance).
+Working closely with corporate functions and individual managers, the Risk and Opportunity
+Manager is also responsible for defining and monitoring the measures aimed at implementing
+the adopted management strategy. For our system to be successful, it is essential that risks and
+opportunities are managed and monitored pro-actively and with a great deal of commitment.
+Compliance with the ERM approach is monitored by the corporate Risk Management and ICS
+departments using procedures incorporated in business processes. Group Internal Audit also
+employs procedures to test compliance with legal requirements and Infineon guidelines and,
+where appropriate, rules relating to Risk and Opportunity management and initiates corrective
+measures. The Supervisory Board's Investment, Finance and Audit Committee oversees the
+effectiveness of the Risk Management System. As part of the statutory audit, the external Group
+auditor also examines our early warning system pursuant to section 91, paragraph 2, of the
+German Stock Corporation Act to ascertain its suitability to detect risks that could pose a threat
+to Infineon's going-concern status and reports annually thereon to the Chief Financial Officer
+(CFO) and the Investment, Finance and Audit Committee of the Supervisory Board.
+All reported risks and opportunities in their entirety are reviewed for the Infineon Group
+for possible correlation and overlap factors and are analyzed using an Infineon-specific
+categorization model. Regular risks and opportunities analysis and new developments in risk
+management culture are supplemented by interdisciplinary workshops held at segment,
+corporate and regional levels. Important information relevant for Infineon's Risk and Oppor-
+tunity Management System is available to all employees via our intranet system, including
+access to ERM tools and ERM guidelines, containing job descriptions for all functions involved
+in the process as well as all information necessary for reporting purposes.
+148
+3
+2
+2 >€20 million Minor
+3 >€60 million Moderate
+4 > €100 million Significant
+5 >€250 million Major
+1 <10% Unlikely
+2 <40% Possible
+3 <60% Likely
+4 <90% Probable
+Increased market competition and commoditization of products (RC: high)
+The rapid pace of technological change in the market also results in a greater replaceability
+of our products. Due to the resulting aggressive pricing policies, we may possibly be unable
+to achieve our long-term strategic goals of increasing and/or maintaining market share and
+product pricing. Moreover, M&A activities in the semiconductor sector are resulting in an
+increasingly competitive environment. Potential benefits for competitors in this market include
+improved cost structures and stronger sales channels. The net effect could entail a negative
+impact on Infineon's earnings, especially on our strategic profitability target of achieving an
+average Segment Result Margin of 15 percent over the cycle.
+5 >90% Certain
+1
+2
+3
+4
+5
+Likelihood of Occurrence
+Low Risk
+Medium Risk
+High Risk
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Based on the potential degree of impact on operations, liquidity, earnings, cash flows and
+reputation as well as the estimated probability of occurrence, a risk is classified as “high”,
+"medium" or "low".
+1
+Operational risks
+In addition, all legal entities, segments and relevant corporate functions confirm with their
+Representation Letter that all business transactions are accounted for, all assets and liabilities
+have been reflected in the Statement of Financial Condition and all expenses and income are
+accounted for.
+The reliability and security of Infineon's information technology systems is of crucial
+importance. At the same time, the world has seen a general rise in the level of threats to data
+security. This applies increasingly to both the application of IT systems to support business
+processes and to internal and external communications. Despite the array of precautionary
+measures put in place, any major disruption to these systems could result in risks relating
+to the confidentiality, availability and reliability of data and systems used in development,
+manufacturing, selling or administration functions, which, in turn, could have an adverse
+impact on our reputation, competitiveness and operations.
+Risks and opportunities are measured on a net basis, i.e. after factoring in any risk mitigation
+or hedging measures, but without offsetting any provisions recognized. The time periods and
+the measurement categories used are closely linked to our short- and medium-term business
+planning and Group targets.
+In organizational terms, the Risk and Opportunity Management System is structured in a closed-
+loop, multiple-stage process, which stipulates the manner and criteria to be applied to identify,
+measure, manage and report on risks and opportunities and defines how the system is to be
+monitored as a whole. Major components of the system are a quarterly analysis of risks and
+opportunities, reporting by all consolidated entities, an analysis of the overall situation at
+segment, regional and Group level, and reporting to the Management Board on the risks and
+opportunities situation as well as major management measures undertaken. The Management
+Board, in turn, reports regularly to the Supervisory Board's Investment, Finance and Audit
+Committee. Where necessary, standard processes are supplemented by the ad-hoc reporting
+of any major risks identified between regular reporting dates.
+Responsibility for processes and systems relating to Risk and Opportunity Management rests
+with the Risk Management and Internal Control System (ICS) function within the corporate
+finance department and with designated Risk Officers working at segment, corporate function
+and regional levels. Responsibility for the identification, measurement, management and
+reporting of risks and opportunities lies with the management of the organizational unit
+concerned.
+Infineon's centralized risk management system is based on a Group-wide, management-
+oriented Enterprise Risk Management (ERM) approach, which aims to cover all relevant risks
+and opportunities. The approach is based on the "Enterprise Risk Management - Integrated
+Framework" developed by the Committee of Sponsoring Organizations of the Treadway
+Commission (COSO). The objective of the system is the early identification, assessment and
+management of risks that could have a significant influence on Infineon's ability to achieve
+its strategic, operational, financial and compliance-related targets. We therefore define risk/
+opportunity as the occurrence of future uncertainties that could result in a negative or posi-
+tive variance from business planning. We incorporate all relevant organizational units within
+the Group in this analysis, thus covering all segments, significant centralized functions and
+regions. Accordingly, in conjunction with the acquisition of International Rectifier, the relevant
+organizational units at segment and regional level have been integrated in Infineon's Risk and
+Opportunity Management System.
+Risk and Opportunity Management System
+Combined Management Report - Our 2015 fiscal year
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+150
+149
+P see page 32 ff.
+Various coordinated risk management and control system elements are in place that
+enable us to pursue our stated risk policy in practice. Alongside the "Risk and Opportunity
+Management System" and the "Internal Control System with respect to Financial Reporting
+Processes" described below, it also includes the related forecasting, management and
+internal reporting processes as well as the Compliance Management System.
+All relevant risks and opportunities are assessed uniformly across the Group in quantitative
+and/or qualitative terms, based on the variable degree of impact on operations, liquidity,
+earnings, cash flows and reputation on the one hand and likelihood of occurrence on the other.
+The scales used to measure these two factors (degree of impact and likelihood of occurrence)
+and the resulting risk assessment matrix are depicted in the following table.
+147
+Gross margin expected to increase slightly
+The gross margin in the 2015 fiscal year was 35.9 percent. This figure includes the impact of
+acquisition-related expenses totaling €143 million. Adjusted for these expenses, the gross
+margin was 38.4 percent. At the mid-point of the range for forecast revenue growth, the gross
+margin for the 2016 fiscal year is expected to increase slightly.
+Operating expenses expected to increase
+Based on the forecast revenue growth, Infineon expects operating expenses to increase in
+absolute terms. As a percentage of revenue, however, the increase should be lower than revenue
+growth overall. Research and development expenses are forecast to grow in percentage terms
+at a similar rate to, or at a slightly lower rate than, revenue. Selling, general and administrative
+expenses are likely to increase less than revenue. The level of acquisition-related expenses
+included in operating expenses will be significantly lower than in the previous fiscal year.
+Segment Result Margin of approximately 16 percent expected
+Based on the forecast changes in revenue and expenses described above, the Segment
+Result Margin in the 2016 fiscal year is expected to increase to approximately 16 percent,
+at the mid-point of the planned range for revenue growth.
+Non-segment result
+Infineon expects the non-segment result for the 2016 fiscal year to be a negative amount of
+between €200 million and €250 million, mainly attributable to acquisition-related expenses.
+The non-segment result in the 2015 fiscal year was a negative amount of €274 million.
+Financial result
+Infineon has taken on additional debt to finance the acquisition of International Rectifier.
+At September 30, 2015, debt amounted to €1,793 million, compared with cash and cash
+equivalents and financial investments totaling €2,013 million. Due to the increased interest
+payments on the higher level of debt and only minimal interest income earned on liquidity,
+the financial result for the 2016 fiscal year is expected to be in the region of a net expense of
+€40 million. In the 2015 fiscal year, the net expense was €39 million.
+Income taxes
+Data and IT systems security (RC: high)
+G78
+Outlook
+Degree of Impact
+153
+Risk assessment matrix
+154
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Product quality trends (RC: medium)
+Increasingly dynamic markets (RC: medium)
+The accelerating pace of events in the markets in which we operate, increased demands for
+flexibility by our customers, and short-term changes in order volumes could result in rising
+costs due to the under-utilization of manufacturing capacities, higher inventory levels and
+unfulfilled supplier contracts.
+Thus, despite the fact that manufacturing processes and sites have become even more
+flexible, fluctuations in capacity utilization levels and purchase commitments, coupled with
+idle costs at manufacturing sites, nevertheless pose risks to our cost position. These risks
+could possibly jeopardize our ability to attain growth and profitability targets, which are based
+on cycle averages.
+The situation is exacerbated by the fact that our products are highly dependent on the degree
+of success achieved by individual customers in their own markets. Furthermore, there is a risk
+of losing future business and design wins if we are unable to deliver volumes over and above
+our contractual obligations if called upon by the customer to do so. In the case of unexpectedly
+high demand, we therefore face the challenge of having to deliver increased volumes that
+require an appropriate level of upfront investment. This would put our target to limit investment
+to 13 percent of revenue over the economic cycle under pressure and have a correspondingly
+adverse impact on earnings.
+Dependence on the success of specific customers may also grow if they account for an
+above-average share of Infineon's revenue and earnings. This situation could be driven by
+an exceptionally strong performance by the relevant customer, resulting, for instance, from
+exceptional demand for its products or from consolidation trends, in particular those affecting
+our first- and second-tier customers.
+Product development delays (RC: medium)
+Product quality assurance is a key success factor for the business. Potential quality risks - for
+example due to the high utilization levels - can affect yield fluctuations and hence our ability
+to supply customers. The slightest shortfalls in product quality can lead to product recalls and
+potential costs related to liability claims. In addition, quality risks could also damage Infineon's
+reputation and thus have a negative impact on future results of operations.
+The ever-increasing complexity of technologies and products, shorter development cycles
+and higher customer expectations can cause a great deal of tension in the field of product
+development. Buffer times built into processes to compensate for potential delays are
+reduced accordingly. In the event of being unable to execute our development plans at
+the desired quality levels, the outcome could be development delays and increased develop-
+ment costs, which could have an adverse impact on our financial condition, liquidity, cash
+flows and earnings.
+5
+4
+Degree of Impact
+on Segment Result
+1
+Potential virus attacks, in particular on IT systems used in manufacturing processes, present
+additional risks that could result in loss of manufacturing or supply bottlenecks.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Moreover, our dependence on various raw materials (such as gold and copper) used in manu-
+facturing and our energy requirements expose us to substantial price risks. We are also depen-
+dent on supplies of the so-called rare earths required for selected manufacturing processes in
+conjunction with process integration. At the time of writing, financial instruments are in place
+to hedge our price risk exposure for gold wire during the 2016 fiscal year, based on planned
+Manufacturing cost trends - raw material prices, cost of materials
+and process costs (RC: medium)
+Our medium- and long-term forecasts as well as the strategic profitability target of a 15 percent
+Segment Result Margin over the economic cycle are based on expected manufacturing cost
+trends. In this context, measures aimed at optimizing manufacturing costs for raw materials
+and supplies, energy, labor and automation, as well as for bought-in services from external
+business partners, may not be feasible to the extent envisaged.
+<€20 million Marginal
+Further information regarding derivative financial instruments and the management of
+financial risks is provided in notes 30 and 31 to the Consolidated Financial Statements;
+information relating to put options on own shares is provided in note 24 to the Consolidated
+Financial Statements.
+We do not use derivative financial instruments for trading or speculative purposes.
+We employ the following derivative financial instruments for hedging purposes: forward
+foreign currency contracts to reduce exchange rate exposures and commodity swaps to
+reduce price risks for expected purchases of gold. We have employed put options on own
+shares in conjunction with our capital returns program.
+Derivative financial instruments
+P see page 247 and 257 ff.
+Taking into account the financial resources available to Infineon - including internal liquidity
+on hand, net cash that can be generated and available credit facilities - we assume that
+we will be able to cover our planned capital requirements for the 2016 fiscal year. Infineon
+has not undertaken steps for obtaining an official rating from any of the leading rating
+agencies. The Company expects to continue to have access to sufficient levels of financing
+on competitive terms without such rating, as evidenced by the successful issuance of two bonds
+in March 2015.
+Coverage of capital requirements
+A dividend of €0.20 per share will be proposed to Infineon's shareholders for the 2015 fiscal
+year. Subject to shareholder approval, this would result in a distribution of approximately
+€225 million (for the previous fiscal year: €202 million). For further information, see note 24
+to the Consolidated Financial Statements.
+Proposed dividend
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Psee page 90
+P see page 247 f.
+Our gross cash position as of September 30, 2015 amounted to €2,013 million. We also have
+access to various stand-alone short- and long-term credit facilities from various financial
+institutions totaling €77 million. Free cash flow from continuing operations (for definition
+see the chapter "Internal Management System") will be €500 to €600 million in the 2016 fiscal
+year, since cash provided by operating activities is expected to exceed planned investments.
+We have also applied for government grants in connection with specified investment projects.
+There is no assurance, however, that these funds will be approved, either on time or at all.
+Further information regarding grants received is provided in note 5 to the Consolidated
+Financial Statements.
+P see page 229
+166
+Overall statement of the
+Management Board with respect
+to Infineon's financial condition
+as of the date of this report
+The 2015 fiscal year was a successful one for Infineon. With the acquisition of International
+Rectifier on January 13, 2015 we undertook the largest acquisition in Infineon's corporate
+history. The subsequent integration phase has now been largely completed. The 2015 fiscal
+year was also a good one in financial terms: Revenue rose by 34 percent to €5,795 million,
+Segment Result increased by 45 percent to €897 million and the Segment Result Margin
+improved by 1.1 percentage points to 15.5 percent, helped in part by tailwind from the stronger
+US dollar against the euro. After adjustment for the three major exceptional items - the
+International Rectifier acquisition, the Qimonda patents and the EU Commission – adjusted
+free cash flow from continuing operations was highly positive at €393 million and 24 percent
+higher than free cash flow from continuing operations one year earlier.
+-
+Even after the International Rectifier acquisition, which we financed partly with existing liquidity
+and partly by borrowings, the structure of Infineon's Statement of Financial Position remains
+extremely solid. Just three months after completion of the acquisition of International Rectifier,
+Infineon's net cash position had already returned to a positive amount of €49 million as of
+June 30, 2015, thus bringing the capital structure back within the targeted range for the net
+cash position (see note 25 of the Consolidated Financial Statements "Capital management").
+As of September 30, 2015 we report an equity ratio of 53.4 percent and a gross cash position in
+excess of €2 billion, enabling us to raise the dividend once again. Accordingly, a proposal will
+be made to the Annual General Meeting to raise the dividend for the 2015 fiscal year by 2 cents
+to 20 cents per share.
+In recent years, we have focused systematically on growth markets where performance is being
+driven by modern-day social, economic and ecological trends. Our semiconductor solutions
+help make life easier, safer and more compatible with the environment - with technologies
+that perform better, consume less and are readily available to everyone. Microelectronics
+from Infineon are the key to a worthwhile future, by enabling us to combine the analog with
+the digital world. Our aspiration to contribute towards better living standards is set out in
+our new guiding principles. The acquisition of International Rectifier is helping us to perform
+better than ever in our growth markets.
+We remain fully committed to achieving our targets and plan to grow at a compound annual
+revenue growth rate of 8 percent over the cycle, thereby generating a Segment Result Margin
+of 15 percent. Our intention is to achieve this growth with an average ratio of investments to
+revenue of 13 percent over the economic cycle.
+P see page 248
+165
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+For the 2016 fiscal year, we expect year-on-year revenue growth of 13 percent, plus or
+minus 2 percentage points, based on an assumed US dollar/euro exchange rate of US$1.10.
+We originally set out to raise International Rectifier's contribution margin to at least match
+Infineon's target of 15 percent for the Segment Result Margin over the economic cycle by
+the 2017 fiscal year. We achieved this target already in the last quarter of the 2015 fiscal year
+and therefore forecast a Segment Result Margin for the 2016 fiscal year of approximately
+16 percent at the mid-point of the range for forecast revenue. Planned investments for the
+2016 fiscal year are in the region of €850 million.
+Application of accounting options and discretionary planning opportunities
+The description and assessment of Infineon's performance, financial condition and results
+of operations as presented in the Combined Management Report depend on the recognition
+and measurement methods applied as well as the assumptions and estimates used. These are
+described in detail in note 2 to the Consolidated Financial Statements and are, in all material
+respects, unchanged from the previous year.
+Off-balance-sheet financing arrangements such as the sale of receivables, sale-and-lease-
+back transactions or similar arrangements were not entered into during the 2015 and 2014
+fiscal years.
+164
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Overall statement of the Management Board with respect to Infineon's financial condition as of the date of this report
+P see pages 156 f. and 267 ff.
+> make scheduled debt and interest payments,
+P see page 88
+New technologies and materials (OC: high)
+We are constantly striving to develop new technologies, products and solutions and to
+improve on existing ones, both separately and in collaboration with customers. We therefore
+continually invest in research and development relating to the use of new technologies
+and materials. Technologies and materials in current use may well lose their predominance
+in the foreseeable future, such as silicon, which could reach its physical limits in some areas
+of application.
+We see numerous opportunities for working with new materials, such as those associated
+with gallium nitride or silicon carbide, to develop new, more powerful and lower-cost
+products. These materials could well have a positive influence on our ability to attain our
+strategic growth and profitability targets.
+Strategic initiative "Product to System" (OC: high)
+With our extended "Product to System" strategy, we seek to identify additional benefits for
+our customers, in system terms, from within our broad portfolio of technologies and products.
+The strategy enables us to effectively exploit available revenue potential to an even greater
+degree and thereby achieve our growth and margin targets. This approach also helps us reduce
+the level of development costs incurred by customers and shorten the lead-time required to
+bring their products to market.
+Population growth and increasing industrialization in all parts of the world are resulting in
+ever-greater global demand for energy. Electricity is becoming the most important energy
+carrier of the 21st century. Fossil fuel sources exploited to cover energy and electricity require-
+ments are likely to become increasingly scarce and could even run out entirely at some point
+in the future. Alternative energy sources such as renewable energy need to be additionally
+explored. At the same time, it is imperative to reduce CO2 emissions, or at least any increase in
+them needs to be kept to a minimum. In order to achieve this goal, it is essential to increase
+the efficiency of electric power consumption.
+Infineon's semiconductors enable electricity to be generated from renewable energy sources.
+They also boost energy efficiency and offer efficiency gains at all stages of the energy
+industry's value-added chain, whether in generation, transmission, or above all in the use
+of electrical power. They form the basis for the intelligent and efficient use of energy in
+industrial applications, in power supplies for computers and consumer electronics, and in
+vehicles. These innovative technologies may enable us to grow revenue beyond our strategic
+target of 8 percent per annum.
+Ability to supply due to available capacities (OC: medium)
+Our own in-house frontend and backend capacities, the availability of external manufacturing
+capacities and the options available to expand manufacturing capacities at our sites in
+Dresden (Germany) and Kulim (Malaysia) place us in a flexible position to deliver the required
+production volumes. The availability of additional capacities, combined with the pro-active
+strategic and operational planning of internal and external resources, enable us to meet rising
+demand from both existing and new customers in the event of a market upturn. This, in turn,
+could have a positive impact on Infineon's future market share and earnings performance,
+with the consequence that the actual Segment Result Margin could be higher than the targeted
+level of 15 percent.
+Market access and activities in China (OC: medium)
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Our activities in China, which we consider to be a highly significant market, are currently
+Vehicle production in China is still expanding, albeit at a slower pace. China is also pressing
+ahead with expanding its high-speed railway infrastructure and is, meanwhile, one of the
+world's largest markets in the field of rail vehicles.
+New wind turbines are being built with increasingly powerful generators, resulting in greater
+semiconductor content per unit.
+159
+160
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Our starting position with photovoltaic systems in China is a highly promising one. We col-
+laborate with several leading Chinese inverter manufacturers and this year in particular have
+expanded the scope of our collaboration with the Chinese market leader. We also have a strong
+presence in China in the solar energy systems sector, which has become the most important
+single market in the world.
+If we succeed in positioning Infineon in China as an integral part of Chinese industry (and hence
+Chinese society), it can open up a multitude of new opportunities that will have a positive
+impact on the growth and profitability of our business.
+Further growth in semiconductor content in vehicles (OC: medium)
+We expect semiconductor content per vehicle to continue growing. The primary driving force
+behind this trend is the rising demand for active safety features and driver assistance systems.
+We are also convinced that the CO2 targets currently in place cannot be achieved without
+further electrification. In this context, electrification not only relates to hybrid and electric
+drives, but also to technologies such as electric power steering and electronic power brakes.
+IT security within the vehicle is also gaining in importance. Thanks to its expertise in the field of
+security controllers, Infineon is extremely well positioned to exploit opportunities in this area.
+on a scale that leaves a good deal of potential for expansion going forward. This relates to the
+following markets:
+The principal opportunities are described in the following section. The list is not exhaustive
+and represents only a cross-section of the opportunities available. Our assessment of these
+opportunities is subject to continuous change, reflecting the fact that our business, our markets
+and the technologies we deploy are continuously subject to new developments, bringing
+with them fresh opportunities, causing others to become less relevant, or otherwise changing
+the significance of an opportunity from our perspective. Depending on the potential degree
+of impact and the estimated probability of occurrence, each of these opportunities is assigned
+to an "opportunity class" in the same way that risks are allocated to a risk class. These classi-
+fications are shown in parentheses (e.g. "OC: medium”).
+Opportunities
+The overall risk assessment is based on a consolidated view of all significant individual risks.
+We are not currently aware of any substantial risks capable of jeopardizing Infineon's going-
+concern status.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Asian markets are particularly important to our long-term growth strategy. Our operations
+in China are impacted by the fact that the legal system in that country is still undergoing a
+phase of development and change. One example is the fact that local regulations could make
+it mandatory to enter into partnerships with local companies. These circumstances could lead
+to Infineon's intellectual property no longer being sufficiently protected and that intellectual
+property developed in China could not be freely transferred to other countries and locations,
+thus impairing revenue and profitability.
+Acquisitions and cooperation arrangements (RC: medium)
+In order to develop or expand our business, we may seek to acquire other businesses or enter
+into various forms of cooperation arrangements. In the case of acquisitions, there is a risk
+that these activities prove to be unsuccessful, particularly regarding the integration of people
+and products in existing business structures. These issues could adversely impact our financial
+condition and earnings performance.
+In the case of smaller acquisitions or portfolio decisions, there is always a risk of non-com-
+pliance with antitrust regulations due to lack of knowledge or failure to make the people
+involved in such transactions adequately aware of the issues. This can result in high levels of
+cost (e.g. significant time spent by management, assignment of attorneys) and fines. Infineon's
+reputation may also suffer under these circumstances.
+The acquisition of International Rectifier was successfully executed in 2015 as planned.
+The risks described above, especially in terms of assimilating the two businesses, have not
+materialized to date.
+Tax, fair trade and capital market regulations can all entail additional risks. In order to mitigate
+these risks, we rely upon the advice of both in-house and external experts and provide suitable
+training to our employees.
+Measures to implement our risk management strategy
+At a strategic risk level, we endeavor to mitigate the typical risks that arise in the semiconductor
+sector from economic and demand fluctuations and the risks related to Infineon's operations,
+financial condition, liquidity and earnings by closely monitoring changes in early warning
+indicators as well as by developing specific response strategies appropriate to the current
+position within the economic cycle. This can be done, for instance, by rigorously adjusting
+capacities and inventory levels at an early stage, initiating cost-saving measures and making
+flexible use of external production capacities, both at frontend and backend facilities.
+A raft of measures to improve manufacturing productivity was introduced under the "Next Level
+of Productivity" program during the 2015 fiscal year.
+At an operational level, we have adopted various quality management strategies aimed at
+avoiding quality risks (such as “Zero Defects” and “Six Sigma"), to prevent or solve problems
+and to improve our business processes. Our company-wide quality management system
+has been certified on a worldwide basis in accordance with ISO 9001 and ISO/TS 16949 for
+a number of years and also encompasses supplier development. Our processes and initiatives
+to ensure continuous quality improvement in corporate procedures are aimed at identifying
+and eliminating the reasons for quality-related problems at an early stage.
+A structured project management system is in place to handle development projects, including
+customer-specific projects. Clear project milestones and verification procedures required
+to be carried out during a project as well as clearly defined limits of authority help us identify
+potential project risks at an early stage and counter these risks with specific measures.
+157
+158
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+We seek to minimize procurement-related risks through appropriate purchasing strategies
+and techniques, including constant product and cost analysis ("Best Cost Country Sourcing"
+and "Focus-on-Value"). These programs include cross-functional teams of experts, who are
+responsible for the standardization of purchasing processes with respect to material and
+technical equipment.
+In response to the general increase in threats to data security and the high degree of pro-
+fessionalism meanwhile applied in the area of cybercrime, we have initiated a data security
+program to provide the greatest possible protection against hacking attacks and related risks
+to our IT systems, networks, products, solutions and services. Once the required measures
+have been defined, they are then implemented in successive stages.
+We are subject to legislation with regard to the environment, climate protection and the use
+of energy. Present or future environmental legislation and other government regulations,
+or amendments thereto, could require an adjustment to our operating activities and result
+in higher costs. Infineon keeps abreast of planned legislative changes and engages in these
+issues in various associations and organizations on an ongoing basis.
+In the past, energy prices have been subject to fluctuations and, at times, to increases as a
+result of regulations. For this reason too, a high degree of energy efficiency has been an integral
+part of our sustainability strategy for many years.
+We minimize legal risks relating to intellectual property rights and patents by pursuing a
+well-defined patent strategy, including thorough patent research and selective development
+and registration of Infineon patents as well as precautionary protective measures in the form
+of agreements with major competitors. We aim to increase the number and scope of such
+cross-licensing agreements with leading competitors in order to reduce patent-related risks.
+However, no such opportunities exist to safeguard against risks of this nature in the case of
+companies specializing in exploiting patent rights.
+We have established a Group-wide compliance management system with the aim of managing
+compliance-related risks on a systematic, comprehensive and sustainable basis. Under this
+system, major preventive procedures are continuously developed, other elements of the
+system revamped or strengthened, and appropriate responses established for possible or
+actual incidences of non-compliance with internal or external regulations.
+In certain cases,
+‚ insurance policies have been taken out to protect against potential claims
+and liability risks, with the aim of avoiding or at least minimizing any adverse impact on
+Infineon's financial condition and liquidity.
+Overall statement by Group Management on risk situation
+Growth from mobile applications (OC: medium)
+P see page 144 ff.
+The continued trend towards mobility is also reflected in unbroken high demand for smart-
+phones and tablets. We are benefiting from this trend in two ways: firstly, through the compo-
+nents we supply for mobile devices (silicon-MEMS microphones, TVS diodes, GPS amplifiers,
+CMOS-RF switches), and secondly, through power semiconductors, which form the key
+components for energy-efficient chargers (high-voltage and low-voltage power transistors,
+driver ICs and control ICs).
+The trend towards electronic identity documents is having a positive impact on Chip Card &
+Security segment revenue. Paper-based documents are increasingly being replaced by chip-
+based documents, thanks to the security offered by the latter. The story is similar with credit
+cards: Chip-based credit cards are rapidly replacing magnetic stripe cards. The migration
+to chip-based passports, electronic identity documents and credit cards will continue over
+the coming years and take place in various regions.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Treasury and capital requirements
+163
+Capital requirements for the 2016 fiscal year
+We require capital for the 2016 fiscal year amongst others to
+> finance our operations,
+> finance planned investments,
+> settle provisions and contingent liabilities, if and when they become payable or arise and
+> pay the proposed dividend.
+We expect to meet these requirements through
+> cash flows generated from operations,
+A crucial factor for the reliable implementation of treasury responsibilities is the use of
+capable and financially sound financial institutions. Partner banks worldwide are selected
+on the basis of the Treasury department's banking principles. Infineon maintains business
+relationships with various international and local commercial and investment banks and
+avoids becoming dependent on individual banks. Partner banks must demonstrate a high
+level of creditworthiness. Infineon assesses the creditworthiness of banks using a method-
+ology that calculates investment limits for individual banks each day, based on current ratings
+(Standard & Poor's, Moody's or Fitch) and credit default swap premiums. Any breaches of
+stipulated thresholds must be reported and risk exposures reduced. Infineon has spread its
+excess liquidity investments across more than ten banks. At September 30, 2015 no financial
+institution was responsible for more than 15 percent of Infineon's liquidity investments.
+› available cash funds and our cash reserves in the form of financial investments and
+Financing our operations
+Based on our forecast for the 2016 fiscal year, we anticipate being able to finance operating
+activities out of cash flows provided by operating activities. Further information regarding
+fixed contractual obligations as of September 30, 2015 (such as leasing arrangements, fixed
+service and supply agreements for commodities, input materials, electricity, gas and other
+similar items) is provided in note 33 to the Consolidated Financial Statements.
+P see page 268 f.
+Investments
+Semiconductor manufacturing is very capital-intensive. Infineon's target ratio for future
+fiscal years for expected investments as a percentage of revenue over the economic cycle
+(for definition see the chapter "Internal Management System") is approximately 13 percent.
+Depending on the business situation, Infineon is currently planning investments for the 2016
+fiscal year of approximately €850 million (for details see "Outlook" in the chapter "Report
+on expected developments, together with associated material risks and opportunities").
+Firm investment commitments as of September 30, 2015 totaled €202 million.
+Debt repayment
+As of September 30, 2015 Infineon's debt totaled €1,793 million, of which an amount of
+€33 million falls due for repayment in the 2016 fiscal year.
+Provisions and contingent liabilities
+Infineon issues guarantees in the ordinary course of business, primarily for the payment of
+import duties, the rental of buildings and contingent obligations related to government grants
+received. As of September 30, 2015, the undiscounted amount of potential future payments
+for guarantees was €72 million, of which up to a maximum of €14 million could have a cash flow
+impact in the 2016 fiscal year.
+In addition, provisions and contingent liabilities exist for various risks which could result in
+further cash outflows if the risks materialize (for detailed information see the section "Legal
+and compliance risks" in the chapter "Report on expected developments, together with
+associated material risks and opportunities" as well as note 33 and 32 to the Consolidated
+Financial Statements).
+> available credit facilities.
+Furthermore, to the extent permitted by law, all financing activities and credit lines worldwide
+are arranged, structured and managed either directly or indirectly by the central Finance
+& Treasury department in accordance with stipulated treasury principles. Debt is normally
+unsecured and based on customary market terms and conditions.
+Liquidity accumulated at Group level is invested centrally by the Treasury department, based
+on a conservative approach to investments, in which security takes precedence over rates of
+return. The central Treasury department is also responsible for the efficient management of
+currency and interest rate risks. These risks are determined on the basis of consolidated cash
+flow forecasts, since only foreign currency cash flows not offset within the Group are hedged
+externally (for further information see note 31 to the Consolidated Financial Statements).
+Cash pooling structures are in place for corporate liquidity management purposes. To the
+extent permitted by law and economically feasible, subsidiaries transfer all surplus cash to
+corporate bank accounts in order to ensure the best possible allocation of liquidity within the
+Group and to cover the financing requirements of other Group companies. In this way we are
+able to minimize external financing requirements and maintain an optimal capital structure
+with a correspondingly positive impact on financing costs. Settling intragroup transactions via
+internal bank accounts set up in accordance with our in-house banking approach, we are also
+able to reduce the volume of external banking transactions and hence bank fees.
+Our current liquidity position, which we describe in the chapter "Review of liquidity”, enables
+us to obtain favorable refinancing conditions. This fact gives Infineon both the financial
+headroom and the entrepreneurial flexibility it needs to implement its business strategies
+and initiatives.
+International Rectifier acquisition (OC: medium)
+The opportunities arising from the integration of International Rectifier are described in detail
+in the chapter "Group strategy”. Many of International Rectifier's products and technologies
+complement our own key focus areas. International Rectifier offers IGBT modules and IGBT
+driver ICs in the low-power range, whereas prior to the acquisition we have focused on high-
+performance modules. International Rectifier possesses a great deal of expertise when it comes
+to the new power semiconductor material, gallium nitride, whereas we have gained a wealth
+of experience over the years with silicon carbide. In terms of digitally controlled voltage con-
+version-related products, we used to concentrate mainly on servers, whereas International
+Rectifier has a strong position in the field of games consoles, graphic cards and in the network
+and cellular infrastructure sector. Our principal focus is on selling directly to customers, whereas
+International Rectifier's strength lies in sales through distribution channels. In regional terms,
+Infineon is particularly strong in Europe due to our origins, whereas International Rectifier
+complements us in particular in its home country, the USA, as well as in Asia. We intend to
+combine these compatible strengths to generate further economies of scope.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Treasury and capital requirements
+161
+Treasury and capital requirements
+Structure and principles of Infineon's treasury
+Our principal objective for Group-wide treasury activities at Infineon is ensuring financial
+flexibility based on a solid capital structure. It is of prime importance for all companies in the
+semiconductor industry that sufficient cash funds are available to finance operating activities
+and planned investments throughout all phases of the business cycle. Furthermore, debt
+should only constitute a modest proportion of the financing mix. Based on these principles,
+Infineon has defined the following three key objectives for capital management, all of which
+continue to be pursued also after the acquisition of International Rectifier:
+> Gross cash position of between 30 and 40 percent of revenue,
+> Positive net cash position and
+> Gross debt at a maximum of 2 x EBITDA (earnings from continuing operations before interest
+and taxes plus scheduled depreciation and amortization).
+We are not subject to any statutory or legal capital requirements, nor are any defined in the
+Articles of Association.
+Treasury principles and responsibilities
+Group-wide treasury principles are in place regarding all issues relating to liquidity and
+financing, such as banking policies and strategies, execution of financing agreements, liquidity
+and investment management worldwide, currency and interest rate risk management and the
+handling of external and intragroup cash flows. Treasury principles, which apply throughout
+Infineon, are set out in the corresponding "Treasury Policy" and are regularly reviewed and
+updated. Three levels of responsibility play a key role for treasury principles:
+> The CFO is responsible for setting treasury principles and after consultation with the CEO,
+for approving the Treasury Policy. The Treasury Committee, consisting of the CFO and
+selected members of senior management, decides on treasury-related matters, including
+exchange rates for planning purposes and currency hedging strategies, and issues the
+appropriate guidelines to ensure that these strategies are implemented.
+> The Group Finance and Treasury department is responsible for specific corporate treasury
+transactions and for ensuring that Infineon's treasury principles are implemented worldwide.
+> At subsidiary company level, responsibility for treasury matters lies with local financial
+executives and heads of finance, or, in the case of larger entities, with dedicated treasurers.
+Controlling functions at Group level ensure that transactions undertaken by individual
+business entities are in keeping with treasury principles.
+162
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+P see page 261 ff.
+Corporate treasury function
+Treasury at Infineon is based on a centralized approach, in which the Group Finance & Treasury
+department is responsible for all major tasks and processes worldwide relating to financing
+and treasury matters. The starting point is the creation of a multi-year business plan with
+various scenarios for free cash flow. For the purposes of short-term liquidity management at
+operational level, all consolidated subsidiaries are included in a monthly rolling cash flow
+forecast. Simultaneously, a cash flow forecast is drawn up using a bottom-up approach
+based on the operating segments' forecasts. At the end of each quarter, the two forecasts are
+reconciled at a quarterly liquidity management meeting and checked for plausibility and
+possible deviations.
+Security applications (OC: medium)
+Support for change in energy policies and consideration of climate change issues
+(OC: medium)
+Liquidity position (OC: medium)
+Directors' dealings
+Active difference resulting from offsetting
+28
+39
+Prepaid expenses
+3,301
+3,670
+Current assets
+2,339
+1,672
+Cash and cash equivalents, marketable securities
+618
+1,481
+Receivables and other assets
+3
+344
+4,125
+5,775
+Inventories
+Non-current assets
+3,651
+5,245
+474
+530
+2014
+2015
+Financial assets
+Intangible assets, property, plant and equipment
+€ in millions
+517
+Statement of financial position of Infineon Technologies AG in accordance with
+the German Commercial Code (condensed)
+4
+9,487
+615
+504
+Provisions
+553
+362
+62
+142
+1
+1
+Other provisions
+Provisions for pensions and similar obligations
+Special reserve with an equity portion
+6,002
+Total assets
+6,389
+226
+2,365
+2,737
+1,165
+1,179
+2,243
+2,247
+Shareholders' equity
+Distributable profit
+Retained earnings
+Capital reserves
+Share capital
+7,458
+229
+Net assets and financial position
+Combined Management Report - Our 2015 fiscal year
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+(400)
+General and administrative expenses
+(138)
+(153)
+Selling expenses
+(547)
+(724)
+Research and development expenses
+1,073
+1,545
+Gross profit
+(3,528)
+(3,698)
+(186)
+Cost of goods sold
+5,243
+Revenue
+2014
+2015
+€ in millions
+the German Commercial Code (condensed)
+Statement of income of Infineon Technologies AG in accordance with
+Earnings position
+Unlike the Consolidated Financial Statements, which are prepared in accordance with Inter-
+national Financial Reporting Standards ("IFRS”), Infineon Technologies AG's Separate Financial
+Statements are prepared in accordance with the provisions of the German Commercial Code
+("HGB"). The complete Separate Financial Statements are published separately.
+Infineon Technologies AG is the parent company of the Infineon Group and performs the
+Group's management and corporate functions. It takes on major group-wide responsibilities
+such as Finance and Accounting, Corporate Compliance, Human Resources, strategic and
+product-oriented R&D activities and also Corporate and Marketing Communication worldwide.
+Furthermore, it manages logistical processes throughout the Group. Infineon Technologies AG
+has its own manufacturing facilities, located in Regensburg and Warstein (both in Germany).
+In addition to reporting on the Infineon Group, in the following section we also report on the
+performance of Infineon Technologies AG.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Infineon Technologies AG
+Infineon Technologies AG
+4,601
+Other income (expense), net
+48
+39
+168
+167
+Infineon Technologies AG's net income for the 2015 fiscal year was positively impacted by
+income from the reversal of an impairment loss previously recorded on its investment in
+Infineon Technologies Holding B.V. The carrying amount of the investment was increased by
+€208 million (September 30, 2014: €774 million). Infineon Technologies AG recorded sharp
+rises in revenue (14 percent) and gross profit (44 percent) for the 2015 fiscal year. Cost of goods
+sold increased by 5 percent.
+Infineon Technologies AG reports a net income of €571 million for the 2015 fiscal year. After
+transferring a total of €345 million to revenue reserves, unappropriated profit amounted to
+€226 million.
+229
+226
+(784)
+(208)
+(228)
+(137)
+Transfers to retained earnings according to section 58 paragraph 2 AktG
+Transfers to retained earnings according to section 58 paragraph 2a AktG
+Unappropriated profit at the end of year
+1,241
+571
+(28)
+(47)
+1,269
+618
+47
+(7)
+Net income
+Income tax
+Income before taxes
+Other financial result
+(22)
+(52)
+Interest result
+1,003
+361
+Result from investments, net
+Bonds
+804
+Liabilities to banks
+795
+Comparable arrangements for employees are only in place in a small number of individual cases.
+The change-of-control clauses agreed with the members of the Management Board correspond
+to the recommendation made in section 4.2.3, paragraph 5, of the German Corporate Gover-
+nance Code. Such clauses are intended to give members of the Management Board security
+if a change-of-control situation occurs, and to preserve their independence in the event of
+a takeover bid.
+If a member of the Management Board leaves his or her position in connection with a change
+of control, that member is currently entitled to continued payment of the relevant annual
+remuneration for the entire remaining contract term. In accordance with a special contract
+termination right granted to members of the Management Board, the period of continued
+payment is capped at a maximum of 36 months in the event that the member resigns, or at a
+minimum of 24 months and a maximum of 36 months in the event that the member is removed
+from office or dismissed by Infineon Technologies AG. Further details are contained in the
+Compensation Report.
+Agreements for compensation in the event of a takeover bid
+Psee page 186 f.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+174
+Psee page 243 f.
+program-2013
+about-infineon/investor/capital-returns/
+@www.infineon.com/cms/en/
+P see page 247
+Furthermore, certain patent cross-licensing agreements, development agreements, subsidy
+agreements and approvals, supply contracts, joint venture agreements and license agreements
+contain customary change-of-control clauses, according to which a change in control of
+Infineon Technologies AG triggers the right of the other party at its sole discretion to terminate
+or to continue the agreement as well as other rights which may, under certain circumstances,
+be unfavorable for Infineon.
+@www.infineon.com/cms/en/
+about-infineon/investor/
+Significant agreements in the event of a change of control as a result of a takeover bid
+The credit facility agreement entered into in connection with the acquisition of International
+Rectifier as well as the eurobonds issued by Infineon (see note 22 to the Consolidated Financial
+Statements) contain defined change-of-control clauses which give creditors the right to
+terminate the instruments concerned and to call for early repayment. These clauses reflect
+standard market practice.
+The use of own shares, acquired through derivative instruments, is governed by the same
+rules as applicable for the direct acquisitions of own shares.
+Shareholders have a right to sell their Infineon shares in this connection only insofar as the
+Company is required to accept the shares under the derivative transactions. No other right to
+sell shares will apply in this connection.
+If own shares are acquired using derivatives in accordance with the requirements stipulated
+in the authorization, any right of the shareholders to conclude such derivative transactions
+with the Company will be excluded in analogous application of section 186, paragraph 3,
+sentence 4, AktG. Similarly, the shareholders have no right to conclude derivative transactions
+with the Company insofar as arrangements for the conclusion of derivative transactions
+include a preferred offer for the conclusion of derivative transactions concerning small
+volumes of shares.
+with warrants and convertible bonds and stock option plans, offered for sale or granted as
+a remuneration component to members of representative bodies and employees within the
+Group, and/or used to repay securities-backed loans. The subscription right of shareholders
+is excluded in all of the above cases (except when the shares are cancelled). In addition, the
+subscription rights of shareholders are excluded in respect of fractional amounts in instances
+in which the shares are sold through a public offer addressed to all shareholders.
+According to a resolution passed by the Annual General Meeting on February 28, 2013, the
+acquisition of Infineon Technologies AG shares may also be effected using equity derivatives.
+The total number of shares that can be acquired using derivatives may not exceed 5 percent
+of the Company's share capital, determined either at the time of this authorization becoming
+effective or at the time of its exercise through the use of the derivatives. The shares acquired
+through the exercise of this authorization are to be counted toward the acquisition threshold
+for the shares acquired in accordance with the authorization to acquire own shares as
+described above. The authorization stipulates other restrictions when derivatives are deployed,
+including their execution, term, servicing and acquisition price.
+173
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+Infineon shares acquired or being acquired on the basis of this or an earlier authorization
+may - if not sold either via the stock exchange or by means of a public purchase offer addressed
+to all shareholders - be used for all legally admissible purposes. The shares may also be can-
+celled or offered to third parties in conjunction with business combinations or the acquisition
+of companies, parts of companies or participations in companies. Under specified circum-
+stances subject to the consent of the Supervisory Board, the shares may also be sold to third
+parties in return for cash payment (including by means other than through the stock exchange
+or through an offer to all shareholders), used to meet the Company's obligations under bonds
+A resolution passed by the Annual General Meeting on February 28, 2013 authorizes Infineon
+Technologies AG, in the period through to February 27, 2018, to acquire its own shares,
+within the statutory boundaries, in an aggregate amount not exceeding 10 percent of the share
+capital at the time the resolution was passed or - if the latter amount is lower - of the share
+capital in existence at the time the authorization is exercised. The Company may not use the
+authorization for the purposes of trading in its own shares. The Management Board decides
+whether own shares are acquired through the stock exchange, by means of a public offer to
+purchase addressed to all shareholders or a public invitation to submit offers for sale or via a
+bank or other entity that meets the requirements of section 186, paragraph 5 sentence 1 AktG.
+The authorization includes differentiating requirements - in particular with regard to the
+permissible purchase price – for each method of acquisition.
+Purchase of own shares
+The Management Board is authorized, subject to the requirements resolved by shareholders
+at the Annual General Meeting, to determine the further details of the bond issue, including its
+terms and conditions.
+Even if the dilution protection regulations are applied, the option or conversion price must
+equal at least 90 percent of the average stock exchange price of the Company's shares in the
+Xetra closing auction on the Frankfurt Stock Exchange (or a comparable successor system);
+further details - including the conditions under which the option or conversion price may be
+reduced - are set out in the authorization.
+> in order to exclude fractional amounts resulting from a given subscription ratio from the
+subscription rights of the shareholders to the bonds or insofar as such action is necessary in
+order to grant holders of option or conversion rights from bonds that have already been or
+will in future be issued by the Company or its subordinated Group companies subscription
+rights to that extent to which they would be entitled after exercise of their rights or after
+fulfillment of any conversion obligations.
+> if the issue price is not substantially lower than the theoretical market value of the bonds,
+as determined in accordance with accepted methods of financial mathematics; however
+this only applies insofar as the shares to be issued to service the option and/or conversion
+rights established on this basis in aggregate do not exceed 10 percent of the share capital,
+either at the time of this authorization becoming effective or at the time of its exercise;
+In November 2013, the Company resolved a new capital returns program which expired on
+September 30, 2015. Program details are provided in note 24 to the Consolidated Financial
+Statements. Information relevant to the program was also regularly published on the
+Company's website.
+corporate-governance/compliance/
+business-conduct-guidelines/
+Corporate Governance Report
+Corporate Governance practices
+Infineon's financial reporting system for the 2015 fiscal year is audited by KPMG AG Wirt-
+schaftsprüfungsgesellschaft, Munich (KPMG). The Quarterly and Half-Year Financial Reports
+were also subject to review by KPMG. The audit also considers the Company's system for the
+early identification of risks and the submission of the Declaration of Compliance in accordance
+with section 161 AktG. The Investment, Finance and Audit Committee discusses the Quarterly
+and Half-Year Financial Reports with the Management Board prior to publication. We have
+agreed with KPMG that the Chairman of the committee should be informed without delay if any
+possible reasons for exclusion or bias occur during the audit, unless they can be eliminated
+immediately. The auditors should also report immediately on all findings and occurrences
+material to the Supervisory Board's work that arise in the course of the audit and review
+engagements.
+Starting with the 2009 fiscal year, Infineon Technologies AG has prepared its Consolidated
+Financial Statements exclusively in accordance with International Financial Reporting
+Standards (IFRS) as applicable in the EU. The separate Financial Statements of Infineon
+Technologies AG are prepared in accordance with the German Commercial Code (HGB). The
+separate and consolidated Financial Statements of Infineon Technologies AG and the com-
+bined Management Report (Lagebericht) are published within 90 days of the end of the fiscal
+year upon approval by the Supervisory Board.
+Financial reporting and auditing
+The Company maintains a directors' and officers' group liability insurance policy ("D&O
+Insurance"). The D&O Insurance policy covers personal liability in the event of claims made
+in particular against members of the Management and Supervisory Boards for the indemnifi-
+cation of losses incurred in the performance of their duties. A deductible of 10 percent of the
+loss up to the amount of one-and-a-half times the annual fixed compensation of the member
+of the Management or Supervisory Board concerned has been agreed upon in accordance
+with the statutory regulation in section 93, paragraph 2, of the German Stock Corporation
+Act (AktG) (for the Management Board) and the recommendation in section 3.8 of the DCGK
+(for the Supervisory Board).
+D&O insurance
+German law requires the Management Board to render a responsibility statement ("Bilanzeid").
+The information required for this purpose is confirmed internally to the Management Board
+by senior executives bearing management responsibility.
+The Company has a Disclosure Committee comprising experienced managers from the investor
+relations, communication, finance, financial reporting and accounting, legal and internal
+audit departments. The Disclosure Committee – in a different composition, as deemed appro-
+priate - reviews and approves specified financial and other material information published
+in conjunction with regular financial reporting or ad hoc announcements.
+Infineon Technologies AG also issues ad hoc announcements in addition to its regular
+reporting to publish information that is not in the public domain and the disclosure of which
+is deemed to have a significant impact on the value of the Infineon share.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+176
+175
+@www.infineon.com
+P see page 149 ff.
+We submit a quarterly report to our shareholders according to a defined financial calendar,
+covering our business development as well as financial position and financial performance.
+The members of the Management Board regularly inform shareholders, analysts, media
+and the general public about the quarterly and annual results. Our comprehensive investor
+relations service features regular meetings and telephone conferences with analysts and
+institutional investors. Reports, notices and disclosures are usually available on our website
+in German and English.
+Transparent management
+Details of risk management at Infineon are presented in the chapter "Risk and opportunity
+report", which provides an in-depth description of both risk and opportunity management
+and the internal control system at Infineon.
+Our Group-wide Risk and Opportunity Management System, which is continuously adapted
+to changes in circumstances, consists of the following sub-processes: identification, analysis,
+controlling and monitoring of opportunities. Its effectiveness is reviewed regularly by the
+Supervisory Board's Investment, Finance and Audit Committee.
+The Management Board sees the systematic and effective management of risks and oppor-
+tunities as an important part of good corporate governance and a key success factor for
+our business. The system in place ensures that risks and opportunities are detected at an
+early stage and risk exposures are minimized. The transparency of the Group's risk profile
+contributes to the systematic and continuous increase of the value of the business.
+Risk management
+The external audit of the Compliance Management System at Infineon Technologies AG and at
+two other major Group entities, commissioned at the end of the 2012 fiscal year, was completed
+in June 2014. Under the terms of this engagement, the Management Board commissioned an
+independent audit firm to test and report on the appropriateness, implementation and effec-
+tiveness of the Compliance Management System. The audit was conducted in accordance with
+the "Principles for the Proper Performance of Reasonable Assurance Engagements Relating
+to Compliance Management Systems (IDW PS 980)❞ issued by the Institute of Public Auditors
+in Germany (IDW). The main points of emphasis were the prevention of corruption and com-
+pliance with antitrust laws. Since the 2015 fiscal year the sustainability of the Compliance
+Management System in place at Group companies is additionally being ensured by regular
+audits primarily conducted in accordance with Audit Standard IDW PS 980.
+The Corporate Compliance Officer is supported by regional Compliance Officers. The Company
+has also established a Compliance Panel that meets on a regular basis and is composed of
+experienced managers from the Legal, Human Resources, Internal Audit and Security depart-
+ments and the Corporate Compliance Officer. The primary task of the panel is to deliberate
+on the current status of compliance throughout Infineon and to discuss key issues and reach
+decisions aimed at improving the compliance system. A whistleblowing system has been
+established as an important component of the compliance system. Infineon employees can
+contact the Corporate Compliance Officer on a confidential basis (anonymously, if desired) to
+report non-compliance with internal guidelines and applicable laws. Since 2011, an external
+lawyer serving in the capacity of an independent ombudsman has also been available to enable
+employees and business partners to pass on confidential information (anonymously, if desired)
+with respect to legal violations at Infineon. In collaboration with the Compliance Panel, the
+Corporate Compliance Officer follows up on every item of information communicated before
+deciding whether to initiate an internal investigation.
+Infineon Technologies AG's Corporate Compliance Officer reports directly to the Chief Financial
+Officer (CFO). The Corporate Compliance Officer coordinates the Compliance Management
+System, develops the Infineon compliance program based on a risk-oriented approach, draws
+up and revises guidelines, advises employees, receives complaints and tip-offs, including those
+made anonymously, and leads investigations aimed at clarifying compliance-related cases.
+In addition, he or she carries out regular compliance training measures for employees on topics
+such as antitrust law and the prevention of corruption. Extensive training measures were
+again carried out during the 2015 fiscal year.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Corporate Governance Report
+Infineon maintains an independent Compliance Office. The additional resources allocated
+underline Infineon's clear commitment to absolute compliance with the law and to maintaining
+ethical standards which protect the legitimate interests of employees, suppliers, customers,
+and shareholders, safeguard Infineon's reputation, and nonetheless take account of Infineon's
+needs. Beside the traditional compliance objectives, such as risk mitigation and increases in
+efficiency and effectiveness, compliance is promoted with a view to strengthening Infineon's
+image as a reliable and fair business partner and thus contributing to its overall success.
+Corporate Compliance Officer and Compliance Panel
+We conduct our business responsibly and in compliance with legal requirements and adminis-
+trative regulations. We have established several guidelines that contribute towards achieving
+this objective. Infineon Technologies AG's Business Conduct Guidelines - as one of the key
+elements of our corporate governance system – are published on the internet and are manda-
+tory for the Management Board and all employees worldwide. The Business Conduct Guide-
+lines are regularly reviewed and updated. They include regulations on compliance with the
+law, interaction with business partners and third parties, the avoidance of conflicts of interest,
+interaction with Company institutions, data and information management as well as environ-
+mental protection, health and safety topics. Also included are regulations for the handling
+of complaints and communication relating to violations of the Business Conduct Guidelines
+and other mandatory Infineon specific rules.
+-
+Business Conduct Guidelines
+Corporate Governance - standards for effective and responsible corporate management
+The Management Board and the Supervisory Board of Infineon Technologies AG view corporate
+governance as a comprehensive concept for responsible, transparent and value-led corporate
+management. Good corporate governance contributes towards increasing the value of the
+business on a sustainable basis, while at the same fostering trust in our entity among national
+and international investors, the financial markets, business partners, employees and the
+public. The Management Board, the Supervisory Board and the management ensure that
+corporate governance is actively implemented and continuously developed throughout the
+entity. Corporate governance at Infineon encompasses not only the German Corporate Gover-
+nance Code (Deutscher Corporate Governance Kodex - "DCGK"), but also the standards of
+the internal control system, compliance – particularly the Infineon's "Business Conduct
+Guidelines" - and regulations on organizational and supervisory duties within the entity. The
+Business Conduct Guidelines and the Regulations on Organizational and Supervisory Duties
+are available to all employees on the Infineon intranet for review and download.
+The Annual General Meeting held on February 13, 2014 authorized the Management Board, in
+the period through February 12, 2019, either once or in partial amounts, to issue bonds with
+warrants and/or convertible bonds (referred to collectively as "bonds") in an aggregate nominal
+amount of up to €2,000,000,000, to guarantee such bonds issued by subordinated Group
+companies of the Company and to grant holders of bond options or conversion rights to up to
+130,000,000 no-par-value registered Company shares, representing a notional portion of the
+share capital of up to €260,000,000, in accordance with the relevant terms of the bonds. The
+Management Board is authorized, with the approval of the Supervisory Board, to exclude the
+subscription rights of the shareholders to the bonds,
+"Persons discharging managerial responsibilities”- which in Infineon's case includes members
+of the Management and Supervisory Boards as well as parties related to them - are required
+pursuant to Section 15a of the German Securities Trading Act (Wertpapierhandelsgesetz) to
+notify the Company as well as the Federal Financial Supervisory Authority (Bundesanstalt
+für Finanzdienstleistungsaufsicht - BaFin) of own transactions involving Company shares or
+related financial instruments. This requirement, however, applies only if the total value of the
+transactions made by one of the above-mentioned persons amounts to €5,000 or more in one
+calendar year. The Company is obliged to publish the notifications it receives without undue
+delay and have them recorded in the Company Register. Such notices are also reported to BaFin.
+Authorization to issue bonds with warrants and/or convertible bonds
+172
+Psee page 149 ff.
+P see page 121
+Most transactions within the Infineon Group involving derivative financial instruments are
+handled by Infineon Technologies AG. The comments provided in the chapter "Treasury and
+capital requirements” regarding the nature and scope of transactions with derivative financial
+instruments and hedged risks apply to Infineon Technologies AG. Reference is also made to
+the notes to the Separate Financial Statements of Infineon Technologies AG.
+Expected developments, together with associated material risks and opportunities
+The expected developments, together with associated material risks and opportunities of
+Infineon Technologies AG are very similar to those of the Infineon Group. Moreover, it is
+assumed that the result from investments will play a major role in Infineon Technologies AG's
+earnings performance. As a general rule, Infineon Technologies AG participates in the risks
+of its subsidiaries and equity investments on the basis of the relevant shareholding. As the
+parent company, Infineon Technologies AG is integrated in the Infineon Group's overall risk
+management system and internal control system. For information in this context and a
+description of the expected developments, risks and opportunities of Infineon Technologies AG,
+please see the "Risk and opportunity report" in the chapter "Report on expected developments,
+together with associated material risks and opportunities”.
+For information regarding Infineon's long-term dividend policy, see the section "Dividend"
+in the chapter "The Infineon share".
+For the 2014 fiscal year, the Company paid a dividend of €0.18 per share (€202 million in total).
+Infineon Technologies AG reports unappropriated profit of €226 million in its financial state-
+ments for the fiscal year ended September 30, 2015. A cash dividend of €0.20 per share shall
+be proposed for this period at the Annual General Meeting. The disbursement of the proposed
+dividend is subject to approval by shareholders.
+Under the German Stock Corporation Act (Aktiengesetz), the amount of dividends available
+for distribution to shareholders is based on the level of unappropriated profit (Bilanzgewinn)
+recorded by the ultimate parent, as determined in accordance with the German Commercial
+Code (HGB).
+Dividend
+The equity ratio at the end of the reporting period was 67.3 percent, compared to 80.5 percent
+one year earlier.
+The increase in equity (€387 million) was mainly attributable to net income of €571 million
+recorded in the 2015 fiscal year. Payment of the dividend for the 2014 fiscal year (€202 million)
+reduced equity accordingly.
+169
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Significant events after the end of the reporting period
+P❘ see page 164
+The carrying amount of investments was increased by the reversal of an impairment loss
+previously recognized on the investment in Infineon Technologies Holding B.V. (€208 million)
+and reduced by a capital repayment of €149 million from the same entity. Cash and cash
+equivalents and marketable securities went down by €667 million during fiscal year 2015.
+Provisions for pensions and similar obligations increased by €80 million resulting from the
+reduction in the average market interest rate for the past seven years. Other provisions fell
+by €191 million in the 2015 fiscal year, primarily due to payments made in conjunction with
+the partial settlement reached with Qimonda's insolvency administrator (see note 32 to the
+Consolidated Financial Statements). The line item “Trade payables, liabilities to affiliated
+companies and other liabilities” increased by €160 million over the twelve-month period,
+mainly owing to a €184 million increase in liabilities to affiliated companies, while other
+liabilities decreased by €70 million.
+P see page 265
+7,458
+9,487
+Total liabilities and shareholders' equity
+21
+15
+Deferred income
+819
+2,578
+Liabilities
+819
+979
+Trade payables, liabilities to affiliated companies and other liabilities
+Infineon Technologies AG's financial condition in the 2015 fiscal year was significantly impacted
+by the acquisition of International Rectifier. On the assets side, increases were recorded for
+financial assets as well as for receivables and assets. The acquisition-related increase of financial
+assets and receivables primarily reflects a contribution to Infineon Technologies US HoldCo
+Inc. of €1,519 million including the offsetting impact from the hedging of foreign currency risk
+from the purchase price obligation for the acquisition of International Rectifier of €140 million
+and a loan receivable from Infineon Technologies US HoldCo Inc. amounting to €792 million.
+The Company issued two senior and unsecured bonds with a total nominal value of €800 million
+to finance the acquisition of International Rectifier. In addition, a bank loan amounting to
+€792 million (US$934 million) was procured.
+Significant events after the end
+of the reporting period
+No significant events occurred between the end of the reporting period and the submission
+of the Consolidated Financial Statements to the Supervisory Board.
+Psee page 245 f.
+The powers of the Management Board to issue shares derive from section 4 of the Articles of
+Association, in conjunction with applicable legal provisions. Further information relating
+to the Company's existing Authorized and Conditional Capital can be found in note 24 to the
+Consolidated Financial Statements.
+Powers of the Management Board to issue shares
+Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of Asso-
+ciation rests with the Annual General Meeting. However section 10, paragraph 4, of the Articles
+of Association gives the Supervisory Board the authority to amend the Articles of Association
+insofar as such amendments relate merely to the wording, such as changes in the share capital
+amount resulting from a capital increase out of conditional or authorized capital or a capital
+decrease by means of cancellation of own shares. Unless the Articles of Association provide
+for another majority, section 179, paragraph 2, AktG stipulates that resolutions of the Annual
+General Meeting regarding the amendment of the Articles of Association require a majority of
+at least three quarters of the share capital represented. Section 17, paragraph 1, of the Articles
+of Association of Infineon Technologies AG provides in principle for resolutions to be passed
+with a simple majority of the votes cast and, when a capital majority is required, with a simple
+majority of the capital unless a higher majority is required by law or in accordance with other
+stipulations contained in the Articles of Association.
+Rules governing the amendment of the Articles of Association
+Pursuant to section 84, paragraph 1, sentence 1, AktG, the maximum term of appointment
+for members of the Management Board is five years. Re-appointment or extension of the
+term of office, in each case for a maximum of five years, is permitted (section 84, paragraph 1,
+sentence 2, AktG). Section 5, paragraph 1, of the Articles of Association and section 84, para-
+graph 2, AktG stipulate that the Supervisory Board may appoint a chairman and a deputy
+chairman of the Management Board. The Supervisory Board may revoke the appointment of
+a member of the Management Board and the Chairman of the Management Board for good
+cause (section 84, paragraph 3, AktG).
+Section 5, paragraph 1, of the Articles of Association stipulates that the Management Board
+of Infineon Technologies AG shall consist of at least two members. The Management Board
+currently comprises three members. The Supervisory Board decides on the exact number of
+members of the Management Board and on their appointment and dismissal in accordance
+with section 5, paragraph 1, of the Articles of Association and section 84, paragraph 1, AktG.
+As Infineon Technologies AG falls within the scope of the German Co-Determination Act (Mit-
+bestimmungsgesetz - "MitbestG"), the appointment or dismissal of members of the Manage-
+ment Board requires a two-thirds majority of the votes of the members of the Supervisory
+Board (section 31, paragraph 2, MitbestG). If such majority is not achieved at the first ballot, the
+appointment may be approved on a recommendation of the Mediation Committee at a second
+ballot by a simple majority of the votes of the members of the Supervisory Board (section 31,
+paragraph 3, MitbestG). If the required majority is still not achieved, a third ballot is held in
+which the Chairman of the Supervisory Board has two votes (section 31, paragraph 4, MitbestG).
+If the Management Board does not have the required number of members, in urgent cases,
+the local court (Amtsgericht) of Munich makes the necessary appointment upon petition of
+a party concerned pursuant to section 85, paragraph 1, AktG.
+of the Management Board
+Rules governing the appointment and dismissal of members
+Employees who hold shares in Infineon Technologies AG exercise their control rights directly
+in accordance with the applicable laws and the Articles of Association, just like any other
+shareholders.
+System of control over voting rights when employees' own shares and
+their control rights are not exercised directly
+No shares conferring special control rights have been issued.
+Shares with special control rights
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+171
+Section 21, paragraph 1, WpHG requires each shareholder whose voting rights reach, exceed
+or, after exceeding, fall below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the voting rights of
+a listed corporation to notify such corporation and the German Federal Financial Supervisory
+Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - "BaFin”) immediately. As of Sep-
+tember 30, 2015, we have not been notified of any direct or indirect shareholdings reaching or
+exceeding 10 percent of the voting rights. The shareholdings notified to us as of September 30,
+2015 are presented in the Notes to the Financial Statements of Infineon Technologies AG
+under the information pursuant to section 160, paragraph 1, No. 8 AktG.
+Shareholdings exceeding 10 percent of the voting rights
+Pursuant to section 67, paragraph 2, AktG, only those persons recorded in the share register
+of Infineon Technologies AG are recognized as shareholders of the Company. In order to be
+recorded in the share register of Infineon Technologies AG, shareholders are required to sub-
+mit to the Company the number of shares held by them and their name or company name,
+their address and, where applicable, their registered office and their date of birth. Pursuant to
+section 67, paragraph 4, AktG Infineon Technologies AG is entitled to request information from
+any party listed in the share register regarding the extent to which shares, to which the entry
+in the share register relates, are actually owned by the registered party and, if it does not own
+the shares, to receive the information necessary for the maintenance of the share register in
+relation to the party for whom the party concerned holds the shares. Section 67, paragraph 2,
+AktG stipulates that the shares concerned do not confer voting rights until such time as the
+information requested has been supplied in the appropriate manner.
+Restrictions on the voting rights of shares may, in particular, arise as the result of the regula-
+tions of the German Stock Corporation Act (Aktiengesetz - "AktG"). For example, pursuant
+to section 136 AktG shareholders are under certain circumstances prohibited from voting and
+according to section 71b AktG Infineon Technologies AG has no voting rights from its own
+shares. Non-compliance with the notification requirements pursuant to section 21, paragraph 1
+or 1a of the German Securities Trading Act (Wertpapierhandelsgesetz – “WpHG") can, according
+to section 28 WPHG, have the effect that certain rights - including the right to vote - may,
+temporarily at least, not exist. We are not aware of any contractual restrictions on voting rights
+or the transfer of shares.
+Restrictions on voting rights or the transfer of shares
+The Company held 6 million of the above-mentioned issued shares as own shares at the end
+of the reporting period (September 30, 2014: 6 million). Own shares held by the Company on
+the date of the Annual General Meeting do not carry a vote and are not entitled to participate
+in profit.
+The share capital of Infineon Technologies AG stood at €2,258,542,962 as of September 30, 2015.
+This sum is divided into 1,129,271,481 non-par registered shares, each of which represents
+a notional portion of the share capital of €2. Each share carries one vote and gives an equal
+right to the profit of the Company based on the profit appropriation resolved by shareholders
+at the Annual General Meeting.
+Structure of the subscribed capital
+of the German Commercial Code (HGB)
+Information pursuant to section 289, paragraph 4,
+and section 315, paragraph 4,
+Corporate Governance
+Combined Management Report - Our 2015 fiscal year
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+170
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+(i) At the beginning of each fiscal year, the target functions with respect to the two key
+performance indicators "free cash flow" and "Return on Capital Employed (ROCE)" are
+defined uniformly for all members of the Management Board. Underpinning the consistent
+approach taken to managing the business, the same target indicators - supplemented
+by the Segment Result - are used as the basis for determining the variable compensation
+components (bonus payments) for Infineon managers and employees. The two key per-
+formance indicators referred to above, which are described in more detail in the chapter
+"Internal Management System", are equally weighted for the purposes of measuring the STI.
+€10.06
+26,000
+Sale
+February 16, 2015
+Transaction location
+Total volume
+Price (per unit)
+Number of units
+Purchase/sale
+Date of transaction
+Member of the Supervisory Board
+Shares in Infineon Technologies AG
+DE0006231004/623 100
+Gruber, Peter
+ISIN/WKN
+Description
+Function
+Last name, first name
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+178
+177
+Frankfurt Stock Exchange (Xetra)
+€56,472.62
+Transaction location
+Total volume of transactions
+€11,768.49
+Purchase
+€7.83
+1,503
+December 01, 2014
+Total volume
+Number of units
+Price (per unit)
+€261,560.00
+Purchase/sale
+Frankfurt Stock Exchange (Xetra)
+Function
+1.
+Declaration of compliance with the German Corporate Governance Code issued for
+the 2015 fiscal year by the Management Board and Supervisory Board of Infineon
+Technologies AG in accordance with section 161 of the German Stock Corporation Act
+The Management Board and Supervisory Board issued the following declaration pursuant to
+section 161 AktG in November 2015:
+Declaration concerning the management of the company
+(Part of the Combined Management Report – unaudited)
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Corporate Governance Report
+A "Performance Share Plan" (PSP) was put into place in the 2015 fiscal year as part of the
+long-term remuneration of executives and selected Infineon employees worldwide. The same
+plan also applies to members of the Management Board, whereby the latter - unlike other
+plan participants - have a contractually secured claim. The principal conditions of the plan
+for members of the Management Board are described in the Compensation Report. Essentially
+the same conditions apply to other PSP participants, with rules differing only with respect to
+the requirement of personal investment in Infineon shares and in the event of early termi-
+nation. Moreover, the cap stipulated for Performance Shares only applies to members of the
+Management Board.
+Infineon's share-based compensation programs are described in note 26 to the Consolidated
+Financial Statements. The full text of the plans may be viewed on the internet.
+of the Management Board
+Share-based compensation programs for employees and members
+Details of Management Board and Supervisory Board compensation in the 2015 fiscal year
+are presented in the comprehensive Compensation Report, which also forms part of the
+Combined Management Report of Infineon Technologies AG.
+Compensation of the Management Board and the Supervisory Board
+@www.infineon.com
+P see page 249 f.
+Frankfurt Stock Exchange (Xetra)
+€257,885.52
+€11.94
+Sale
+June 2, 2015
+Member of the Management Board
+Shares in Infineon Technologies AG
+DE0006231004/623 100
+Mittal, Arunjai
+Transaction location
+Total volume
+Number of units
+Price (per unit)
+Purchase/sale
+Date of transaction
+ISIN/WKN
+Description
+Last name, first name
+2.
+Date of transaction
+€7.83
+Last name, first name
+Function
+Description
+ISIN/WKN
+Date of transaction
+Purchase/sale
+Price (per unit)
+Number of units
+Total volume
+Asam, Dominik
+Member of the Management Board
+Shares in Infineon Technologies AG
+DE0006231004/623 100
+December 01, 2014
+Purchase
+€7.83
+1,379
+€10,794.81
+Date of transaction
+Purchase/sale
+Price (per unit)
+Number of units
+Total volume
+December 01, 2014
+Purchase
+€7.83
+2,957
+€23,144.44
+Date of transaction
+Purchase/sale
+Price (per unit)
+Number of units
+Total volume
+December 01, 2014
+Purchase
+Frankfurt Stock Exchange (Xetra)
+1,375
+€10,764.88
+€85,126.00
+Total volume of transactions
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Corporate Governance Report
+The following securities transactions were notified to the Company during the previous
+fiscal year by persons discharging managerial responsibilities and parties related to them:
+Last name, first name
+Function
+Description
+ISIN/WKN
+Date of transaction
+Purchase/sale
+Price (per unit)
+Number of units
+Total volume
+Date of transaction
+Purchase/sale
+Price (per unit)
+Number of units
+Total volume
+Dr. Ploss, Reinhard
+Chairman of the Management Board
+Shares in Infineon Technologies AG
+DE0006231004/623 100
+November 28, 2014
+Purchase
+€7.88
+6,400
+€50,432.00
+November 28, 2014
+Purchase
+€7.89
+4,400
+€34,694.00
+Transaction location
+Since the submission of the last Declaration of Compliance in November 2014, Infineon
+Technologies AG has, with one exception, complied with all recommendations of the
+German Corporate Governance Code in the version dated June 24, 2014 (“Code”). The one
+exception, stated and explained in the November 2014 declaration, relates to the following:
+Section 5.4.6 of the Code recommends that any performance-related compensation of
+the members of the Supervisory Board should be oriented toward the sustainable growth
+of the enterprise. The similarity in terminology to the requirements contained in the
+German Stock Corporation Act with respect to compensation of members of the Manage-
+ment Board therefore seems to imply that performance-related compensation should also
+be based on a "multi-year assessment” for members of the Supervisory Board.
+21,598
+Both the Management Board and the Supervisory Board have deliberated on this topic on
+several occasions. They concluded in each case that the compensation system currently
+in place for the Supervisory Board is already oriented toward the sustainable growth of
+the enterprise even without a multi-year assessment, since the minimum amount required
+to trigger the compensation payment increases year-on-year, thus setting an incentive for
+improving earnings each year. As a consequence, neither of the boards saw any necessity
+to change the Supervisory Board compensation system, which had been approved by a
+large majority at the Annual General Meeting. The Management Board and the Supervisory
+Board have not changed their assessment of the situation.
+Target
+Current
+Target
+figure
+Current
+situation
+Dresden GmbH
+Infineon Technologies
+Infineon Technologies AG
+2nd leadership level
+1st leadership level
+Management Board/Board of Directors
+Supervisory Board
+The targets to be achieved by June 30, 2017 by the entities concerned are as follows (in each
+case compared to the current situation):
+Pursuant to the "Law on Equal Participation of Women and Men in Leadership Positions in
+the Private and Public Sector", which came into force on May 1, 2015, the composition of the
+Supervisory Board of Infineon Technologies AG is required to include at least 30 percent women
+and at least 30 percent men. The Supervisory Board already complies with these requirements
+(which do not yet formally apply to the Supervisory Board in its current composition). Further-
+more, the Law requires Infineon Technologies AG to set targets for the proportion of women
+on the Management Board and in the two leadership levels below the Management Board.
+Within the Infineon Group, this requirement applies to Infineon Technologies AG and Infineon
+Technologies Dresden GmbH. Both entities are therefore required to set targets for its respec-
+tive Management Board/Board of Directors and the two leadership levels below board level as
+well as for the Supervisory Board.
+Members of the Supervisory Board of Infineon Technologies AG receive both fixed and
+performance-related compensation, the latter only being paid if earnings per share in the
+previous fiscal year exceed a pre-defined amount.
+Information regarding the composition of the Management Board, the Supervisory Board
+and the Supervisory Board's committees can be found in note 35 to the Consolidated Financial
+Statements.
+As of September 30, 2015, the shares in Infineon Technologies AG held by all members of
+the Management Board and Supervisory Board did not exceed 1 percent of the shares issued
+by the Company.
+Shareholdings of Management Board and Supervisory Board
+The Company concluded a consulting agreement with the former CEO, Mr. Bauer, in 2012
+when he stood down from the Management Board. In view of his candidacy for the Supervisory
+Board, the consultancy mandate ended on January 31, 2015.
+Material transactions between the Company and members of the Management Board or
+related parties require the approval of the Supervisory Board. This also applies to consulting
+and other service or work contracts a member of the Supervisory Board enters into with the
+Company. As a precaution, in August 2015 the Supervisory Board approved a contract between
+the Company and the Technische Universität München (the Institute for Technical Electronics
+headed by Prof. Schmitt-Landsiedel) for the performance of research and development work.
+Prof. Schmitt-Landsiedel does not participate in the payments contractually required to be
+made by Infineon. For this reason, there is no conflict of interest. Dr. Sünner was Of Counsel
+with the law firm Allen & Overy from 2011 to the end of 2014. The Company had in the past
+engaged Allen & Overy in individual cases, but never received advice from Dr. Sünner personally
+in conjunction with any of these engagements. In addition, Dr. Sünner did not benefit - either
+directly or indirectly - from the fees paid for any of these engagements. A potential conflict of
+interest did not therefore arise.
+to Mr. Mittal taking on a mandate in the Board of Directors of Global Semiconductor Alliance
+(GSA). In the previous fiscal year, Mr. Mittal received the approval of the Supervisory Board to
+accept a mandate as member of the Board of Directors of the Singapore Economic Development
+Board and took up this position during the year under report.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Corporate Governance Report
+The German Corporate Governance Code requires prior approval to be given by the Supervisory
+Board before members of the Management Board accept mandates on external supervisory
+boards. In the fiscal year under report, the Supervisory Board's Executive Committee consented
+to Dr. Ploss taking on a mandate in the Supervisory Board of "Haus der Zukunft gGmbH" and
+The members of the Management Board and Supervisory Board are required to disclose any
+conflicts of interest to the Supervisory Board without delay. No conflicts of interest arose
+among the members of the Management Board and Supervisory Board in the 2015 fiscal year.
+Avoidance of conflicts of interest
+All committees regularly submit detailed reports on their work to the Supervisory Board.
+Further information about the work of the Supervisory Board and its committees can be found,
+together with details of the people who serve on them, in note 35 to the Consolidated Financial
+Statements and in the report of the Supervisory Board to the Annual General Meeting.
+The Nomination Committee, which consists of the Chairman of the Supervisory Board and two
+further shareholder representatives, proposes to the Supervisory Board suitable candidates
+for recommendation to the Annual General Meeting.
+Furthermore, the Audit Committee is responsible for discussing compliance issues. The Manage-
+ment Board and the Corporate Compliance Officer regularly report to the Audit Committee on
+the structure and work of the compliance organization and on any particular compliance issues.
+The Strategy and Technology Committee, which consists of three shareholder representatives
+and three employee representatives, concerns itself with Infineon's business strategy and
+key technology issues.
+situation
+figure
+statutory 30% quota
+16.7%
+> Variable (performance-related) compensation: The variable compensation comprises
+three components: an annual bonus (short-term incentive), a multiple-year bonus (mid-term
+incentive) and a long-term variable compensation component (long-term incentive).
+> Fixed compensation: The fixed compensation comprises a contractual basic annual salary
+that has no link to performance and is paid in 12 equal monthly installments.
+All members of the Management Board receive as compensation for their service an annual
+income, which - based on a target achievement of 100 percent - comprises approximately
+45 percent fixed compensation and approximately 55 percent variable compensation
+components:
+There have been no changes in the Management Board compensation system in the 2015
+fiscal year compared to the 2014 fiscal year.
+Components of the Management Board compensation system
+The Management Board compensation system - similar to the compensation paid to the
+individual members of the Management Board - is defined and regularly reviewed by the full
+Supervisory Board on the basis of proposals from the Executive Committee. In accordance
+with applicable legal requirements and the recommendations of the DCGK, the compensation
+paid to the members of the Management Board is intended to reflect the typical level and
+structure of management board compensation at comparable companies in Germany and
+elsewhere, as well as Infineon's economic position and future prospects. The duties, responsi-
+bilities and performance of each member of the Management Board are also to be considered,
+as is Infineon's wider pay structure. This includes considering Management Board compen-
+sation in relation to the compensation of senior management and of the workforce as a whole,
+including changes in the level of compensation over time. The stated objective is that the
+compensation structure should be designed in such a way that it promotes sustainable busi-
+ness development, with a cap in place in the event of exceptional developments. Infineon
+aims to set compensation at a level that is competitive both nationally and internationally so
+as to inspire and reward dedication and success in a dynamic environment.
+Compensation system
+Management Board compensation
+This Compensation Report, which forms an integral part of the Management Report, explains
+the principles applied in determining compensation for the Management Board and Super-
+visory Board of Infineon Technologies AG and the level of remuneration paid to the individual
+members of the Management Board and Supervisory Board in accordance with the applicable
+legal requirements and the recommendations of the German Corporate Governance Code in
+the version dated May 5, 2015 (Deutscher Corporate Governance Kodex -"DCGK"). Infineon
+believes that transparent and understandable reporting of Management Board and Supervisory
+Board compensation represents a fundamental element of good corporate governance.
+Compensation report
+Combined Management Report - Our 2015 fiscal year
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+186
+Other matters addressed by the Audit Committee include monitoring the effectiveness of the
+internal control system, the internal audit system and the risk management system. In this
+capacity, it has the authority both to contact employees of the entity directly and to seek
+external assistance. Internal Audit reports annually to the Audit Committee, which can also
+specify an audit plan and key areas to be considered in audits.
+185
+22.2%
+22.2%
+20%
+18.5%
+13.3%
+13.3%
+6%
+0%
+0%
+0%
+0%
+0%
+25%
+Psee page 275 ff.
+The Audit Committee monitors the Company's financial reporting process and discusses and
+examines the Separate Financial Statements and Consolidated Financial Statements prepared
+by the Management Board as well as the quarterly and half-yearly financial reports. It gives
+recommendations with respect to the approval of the Separate Financial Statements and Con-
+solidated Financial Statements by the Supervisory Board based on the independent auditor's
+report, submits recommendations to the Supervisory Board regarding the election of the
+independent auditor, engages the auditor elected at the Annual General Meeting to audit the
+Separate Financial Statements and Consolidated Financial Statements and review the interim
+financial reports, specifies the key areas to be examined in audit activities jointly with the
+auditor and is responsible for determining the auditor's compensation.
+"Law on Equal Participation of Women and Men in Leadership Positions
+in the Private and Public Sector"
+The Executive Committee consists of the Chairman of the Supervisory Board, the Vice-
+Chairman, one shareholder representative and one employee representative. The duties of
+this committee include preparing the decisions to be taken by the full Supervisory Board
+regarding the appointment or dismissal of members of the Management Board and Manage-
+ment Board compensation. The Executive Committee is authorized in its own capacity to
+make decisions with respect to contracts with members of the Management Board, except in
+matters involving remuneration.
+New elections were held in the 2015 fiscal year for both the shareholder representative and
+the employee representative positions on the Supervisory Board. At the Supervisory Board
+meeting held on February 12, 2015, Wolfgang Mayrhuber was confirmed as Chairman and
+Johann Dechant elected as Deputy Chairman of the Supervisory Board. The terms of office of
+all members of the Supervisory Board will expire at the end of the Annual General Meeting
+that resolves on the approval of the acts of its members for the 2019 fiscal year.
+The Supervisory Board of Infineon Technologies AG currently comprises 16 members, with an
+equal number of shareholder and employee representatives, as stipulated in the German
+Co-Determination Act (Mitbestimmungsgesetz). The shareholder representatives are elected
+by the Annual General Meeting, the employee representatives by employee delegates at
+Infineon's German facilities in accordance with the German Co-Determination Act. The normal
+term of office of members of the Supervisory Board is approximately five years.
+Composition of the Supervisory Board
+The duties of the Supervisory Board and its committees are regulated by law, by the Articles
+of Association and by the rules of procedure of the Supervisory Board and its committees.
+In addition, the DCGK contains recommendations pertaining to Supervisory Board work.
+Once a year, the Supervisory Board reviews the efficiency of its work, including its interaction
+with the Management Board. The efficiency review is performed on the basis of a question-
+naire addressing different areas and criteria of the Supervisory Board's work. The results are
+subsequently discussed at a Supervisory Board meeting. In the 2010 fiscal year, an external
+independent consultant was engaged for the first time to conduct a detailed survey of Super-
+visory Board activities. The most recent efficiency review took place in summer 2015, again
+based on a questionnaire. No significant deficits in efficiency were identified.
+The Supervisory Board advises and monitors the Management Board in its management of the
+entity. The Supervisory Board is informed by the Management Board regularly, comprehen-
+sively, and in a timely manner on all matters of relevance and agrees upon Infineon's corporate
+strategy and its implementation with the Management Board. The Supervisory Board discusses
+the quarterly reports and reviews and approves both the Separate Financial Statements and
+the Consolidated Financial Statements of Infineon Technologies AG. Any major decisions made
+by the Management Board, such as Group-wide financial and investment planning or major
+acquisitions and equity investments, divestitures, and financial measures, are subject to its
+approval. Further details are stipulated in the rules of procedure of the Management Board
+and the Supervisory Board. When Supervisory Board votes end in a tie, the Chairman of the
+Supervisory Board has two voting rights if voting is carried out for a second time and again
+results in a tie.
+The short-term incentive (STI) is intended to reward performance over the preceding fiscal
+year reflecting Infineon's recent progress. Assuming a 100 percent target achievement of the
+variable compensation, the STI constitutes approximately 20 percent of target annual income.
+It is set by the Supervisory Board in a two-phase process:
+Work of the Supervisory Board
+Supervisory Board
+According to German stock corporation law, the Management Board has overall responsibility
+for the management of the Company. The Company's Management Board has adopted
+rules of procedure with the consent of the Supervisory Board. These rules stipulate that the
+Company is managed jointly by all members of the Management Board, who should work
+together in a cooperative manner to achieve this end. Collaboration between the Management
+Board and the Supervisory Board is coordinated by the Chief Executive Officer (CEO). The
+CEO maintains regular contact with the Chairman of the Supervisory Board, with whom he
+discusses the key aspects of Infineon's strategy, corporate planning, business performance
+and risk management. At the ordinary meetings of the Supervisory Board, the Management
+Board reports comprehensively and promptly on Infineon's business performance, its economic
+situation and the economic situation of the individual segments, as well as Infineon's financial
+and investment planning. The CEO notifies the Chairman of the Supervisory Board without
+delay regarding any matters that are of material importance for assessing the position and
+development of the Company or for its management.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Corporate Governance Report
+In conjunction with the implementation of the "Law on Equal Participation of Women and Men
+in Leadership Positions in the Private and Public Sector", which came into force on May 1, 2015,
+the Supervisory Board decided on a quota for women on the Management Board of 0 percent,
+which is compatible with applicable legislation until June 30, 2017. At the same time, however,
+the Supervisory Board gave a commitment to increase its efforts to develop and attract women
+with the professional and personal skills needed to take up Management Board positions. The
+Management Board is the Company's executive body. It is obliged, within the framework of
+the law, to serve the Company's interests and thereby pursue the goal of sustainably increasing
+Infineon's value taking into account the interests of all stakeholders. It determines Infineon's
+commercial objectives, strategy and corporate policy and defines how the Group is organized.
+The Management Board currently comprises only men (100 percent), of whom two are in the
+middle age group of between 30 and 50 years of age (66.7 percent) and one (33.3 percent) is in
+the 50+ age group.
+Infineon Technologies AG's Management Board comprises three members. In accordance with
+the DCGK, the Supervisory Board has set an age limit for Management Board membership,
+according to which members of the Management Board should, as a general rule, not be more
+than 67 years old. In accordance with its rules of procedure, the Supervisory Board takes
+account of diversity as well as technical and personal suitability in respect of the composition
+of the Management Board.
+The Investment, Finance and Audit Committee ("Audit Committee”) consists of the Chairman
+of the Supervisory Board, the Vice-Chairman and one further representative each of the share-
+holders and employees. The Chairman of the Investment, Finance, and Audit Committee,
+Dr. Sünner, has - among other qualifications - particular expertise in and extensive experience
+of financial reporting on account of his many years of service as chairman of the audit com-
+mittee of another DAX-listed corporation and accordingly qualifies as an "independent financial
+expert" pursuant to section 100, paragraph 5, of the German Stock Corporation Act.
+Infineon Technologies AG is subject to German stock corporation law, which stipulates a
+two-tier administrative system, with the Management Board responsible for management
+and the Supervisory Board responsible for corporate oversight. We are convinced that this
+separation of the two functions is an important precondition for good corporate governance.
+The Management Board and the Supervisory Board cooperate closely in Infineon's best interest.
+of the Supervisory Board's committees
+and Supervisory Board and of the composition and mode of operation
+Description of the mode of operation of the Management Board
+Infineon shareholders take their decisions at the Annual General Meeting, which is held at
+least once a year. Each share carries one vote. Shareholders can attend the Annual General
+Meeting as long as they are entered in the share register and have duly registered for the
+meeting. The Annual General Meeting decides on all issues assigned to it by law, most notably
+on the formal approval of the conducting of business by the Management Board and the
+Supervisory Board, the profit appropriation, the election of the auditors, corporate agreements
+and amendments to the Articles of Association. Shareholders are entitled to make counter-
+proposals to motions introduced by management and to speak as well as ask questions at the
+Annual General Meeting. They also have the right, subject to certain conditions, to challenge
+resolutions of the Annual General Meeting, to request an extraordinary judicial review and to
+claim damages from corporate bodies of the Company on behalf of the Company when they
+identify incidences of misconduct or serious deficiencies in the Company's management and
+control. We wish to support our shareholders as far as possible in the exercising of their rights
+at the Annual General Meeting. Shareholders can register for our Annual General Meeting
+electronically, participate in voting by means of postal voting or by sending online instructions,
+e.g. to their proxies, and they can follow the general debate via the internet. All documents
+and information relating to the Annual General Meeting are available to any interested parties
+on our website. Our Investor Relations department, moreover, can be contacted throughout
+the
+year, , both by telephone and electronically, to ensure the exchange of information
+between us and our shareholders.
+Shareholders and Annual General Meeting
+Combined Management Report - Our 2015 fiscal year
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+180
+179
+The Company complies with all legal requirements with respect to corporate governance.
+With one exception, which is stated and explained in the Declaration of Compliance, Infineon
+also complies with the recommendations of the German Corporate Governance Code. Further-
+more, Infineon's corporate governance practices in particular underpin the guidelines on
+corporate conduct ("Business Conduct Guidelines") as well as the regulations relating to
+organizational and supervisory duties. Both of these sets of regulations are available to all
+employees worldwide on the Infineon Intranet.
+Relevant disclosures in respect of corporate governance practices
+The new version of the Code, dated May 5, 2015, became effective on June 12, 2015. With
+the exception (described in point 1 of this declaration) of the unchanged recommendation
+contained in section 5.4.6 of the Code, Infineon Technologies AG has also complied with
+the applicable recommendations contained in this version of the Code and will continue
+to do so in the future.
+181
+182
+Management Board
+Concrete objectives for the Supervisory Board composition were specified in 2010 in accor-
+dance with the recommendation in section 5.4.1 DCGK (version: May 2010) and have been
+supplemented from time to time in subsequent years. In view of the changes in the law and
+DCGK recommendations in 2015, the Supervisory Board revised its catalog of objectives in
+August 2015. Accordingly, the most important of these is to ensure that the composition of
+the Supervisory Board enables it to optimally perform the duties prescribed to it by law and
+in the Company's Articles of Association. The Supervisory Board is of the opinion that - in
+addition to the personal suitability and technical competence of the individual members of
+the Supervisory Board and the high degree of independence required of the Supervisory
+Board and its members - diversity of know-how and experience within the Supervisory Board as
+a whole are decisive factors. This also includes the international character of its membership.
+Furthermore, an appropriate age limit and a general rule for a maximum period of service on
+the Supervisory Board should be observed. Taking all of these factors into consideration, the
+following objectives and requirements profile arises:
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+P see pages 275 ff. und 16 f.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+184
+183
+The Mediation Committee, which consists of the Chairman of the Supervisory Board, the
+Vice-Chairman, one shareholder representative and one employee representative, submits
+specific recommendations to the Supervisory Board concerning the appointment of members
+of the Management Board if the first round of the election on the appointment does not result
+in the required majority of two thirds of the members of the Supervisory Board.
+The Supervisory Board rules of procedure provide for the formation of three committees:
+the Mediation Committee, the Executive Committee, and the Investment, Finance, and Audit
+Committee. The Supervisory Board has also established both a Strategy and Technology
+Committee and the Nomination Committee recommended in the DCGK. All Supervisory Board
+committees have an equal number of employee representatives and shareholder represen-
+tatives, apart from the Nomination Committee, which consists exclusively of shareholder
+representatives.
+Supervisory Board committees
+The Supervisory Board also recommends that members who have been elected by the
+employees do what they can, within the scope of their influence, to have the objectives and
+requirements profile taken into account in the nominations made by the relevant bodies on
+the employees' side. Lastly, the Supervisory Board recommends that the objectives should
+be taken into account by any of its members making an application for the appointment of
+a member of the Supervisory Board by the courts.
+The objectives and requirements profile approved by the Supervisory Board is taken into
+account when making nominations to the Annual General Meeting. As part of this process,
+the Supervisory Board also discloses any of the candidate's business or other relationships
+with Infineon, the Company's representative bodies and/or a major shareholder in the Com-
+pany, if an impartial shareholder making an objective decision about the election would
+consider such information to be of relevance. The same applies in respect of the work of the
+Nomination Committee, insofar as this committee performs the preparatory work for the
+Supervisory Board decision.
+The Supervisory Board's objective is that its members do not, as a general rule, serve for
+more than three terms of office (i.e. normally no longer than 15 years).
+> General rule for maximum period of service on the Supervisory Board
+As a general rule, no-one older than 69 years of age should be proposed for membership
+of the Supervisory Board.
+› Age limit
+The composition of the Supervisory Board is in accordance with the objectives as most recently
+defined in August 2015. In addition, the Supervisory Board observes the age limit stipulated
+in its rules of procedure, according to which "as a general rule” no-one older than 69 years
+of age should be proposed for membership of the Supervisory Board. In the opinion of the
+Supervisory Board, endorsed by the vote in favor at the Annual General Meeting, the case of
+Dr. Sünner, who already exceeded this age limit at the time of his appointment, constitutes
+a well-founded and therefore justified exception, notably on the grounds of his wealth of
+experience in taxation, law and compliance. The Supervisory Board currently comprises six
+women (37.5 percent) and ten men (62.5 percent). Four (25 percent) of the members of the
+Supervisory Board are aged between 30 and 50 and 12 (75 percent) are over 50. The composi-
+tion of the Supervisory Board therefore already complies with the requirements of the "Law
+on Equal Participation of Women and Men in Leadership Positions in the Private and Public
+Sector" (which do not yet formally apply to the Supervisory Board in its current composition),
+according to which each gender is required to have a minimum 30 percent representation
+on the Supervisory Board.
+The composition of the Supervisory Board should be of an international nature. However,
+this international character is not to be understood restrictively in the sense of any specific
+(foreign) nationality. The decisive factor is more the intercultural influences and experiences
+and the resulting openness, the corresponding understanding and the ability to judge with
+regard to international topics and correlations. The Supervisory Board's objective is to have
+at least five international representatives among its ranks.
+› Personal suitability
+All members of the Supervisory Board must possess the necessary personality and integrity
+for the due performance of their duties. Members of the Supervisory Board must be loyal
+to the Company at all times and in particular comply strictly with their statutory obligation
+of confidentiality, with which they must be fully conversant. They must have sufficient
+availability and willingness to devote the necessary time and attention to their office.
+Before submitting its recommendations to the Annual General Meeting for the election of
+new members of the Supervisory Board, the Nomination Committee of the Supervisory
+Board therefore obtains assurance from the respective candidates that they are in a position
+to devote the necessary time to their future duties.
+› Technical competence
+› Independence
+Every effort should be made to ensure the maximum independence of the Supervisory Board
+and its members. A member is independent if he or she can reach decisions on matters
+considered by the Supervisory Board free of any possible conflict of interests, i.e. based
+entirely on objective criteria geared to the interests of the Company. Conversely, a member
+of the Supervisory Board is considered not to be independent if he or she has personal or
+business relationships with the Company, its representative bodies, a controlling share-
+holder or an entity related to such a controlling shareholder with whom a serious conflict
+of interests could arise (other than temporarily). No more than two former members of
+the Management Board should be members of the Supervisory Board. Members of the
+Supervisory Board should not exercise board functions or perform advisory tasks for major
+competitors. In the case of employee representatives, the fact of being employed by the
+Company alone is not considered to be a factor that limits their independence. The aim of
+the Supervisory Board is to have at least twelve independent representatives (including at
+least five shareholder representatives).
+When determining the composition of the Supervisory Board, it must be ensured that its
+members as a whole have the necessary technical competence to optimally perform its tasks.
+Furthermore, each individual member of the Supervisory Board must possess a sufficiently
+good understanding of the Company's business activities to serve as a basis for drawing
+objective conclusions in the Company's interests.
+The overall composition of the Supervisory Board should comply with the principles of
+diversity. To the maximum degree possible, the composition of the Supervisory Board
+should therefore take into account the diversity found in an open and innovative global
+company such as Infineon. At the same time, however, no-one should be proposed or
+dropped as a candidate for the Supervisory Board simply because he or she possesses or
+lacks a certain diversity factor.
+Diversity also includes gender diversity. As a listed company subject to co-determination
+stipulations, by law the Supervisory Board must be made up of at least 30 percent women
+and at least 30 percent men.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Corporate Governance Report
+› International character
+› Diversity
+Another important aspect of integrating International Rectifier is to combine all development activities
+relating to GaN-based power semiconductors. International Rectifier is a global leader in applying
+GaN layers onto standard silicon wafers. This is a key area of technological expertise paving the way to
+GaN-based components which are market-proven and competitive.
+Sustainability is one of the key factors driving our success. Ultimately, the demand for solutions that
+increase energy and resource efficiency is essential for our business. For this very reason, alongside the
+"systematic integration" of International Rectifier, we work tirelessly on improving the sustainability
+of our businesses and operations.
+Obviously, "systematic integration" also means striving for, and actually achieving, a higher enterprise
+value for Infineon as a result of the acquisition. We originally set out to raise International Rectifier's
+margin contribution to at least match Infineon's target of 15 percent for the Segment Result Margin over
+the economic cycle by the 2017 fiscal year. This goal has now been achieved much earlier than planned.
+Over the course of the 2015 fiscal year we continuously increased the margin contribution and already
+achieved our goal in the fourth quarter.
+The acquisition of International Rectifier helped us strengthen our position in key regions. Our foothold
+in Silicon Valley, where the pace of the digital revolution is ultimately dictated, has become much
+stronger. The number of employees working for Infineon in the USA has risen from around 550 to around
+3,700, who now represent roughly 10 percent of Infineon's total workforce. Our stronger presence will
+allow us to participate in the innovations coming out of Silicon Valley and even be in a position to shape
+them with our technological expertise.
+The regional distribution of our business has also shifted considerably, with China being now by far our
+most important sales market. The percentage of revenue generated in China has risen from 20 percent
+in the 2014 fiscal year to 23 percent in 2015, whereas our home market Germany - which last year also
+accounted for 20 percent of Infineon's revenue - now only accounts for 16 percent. Nevertheless,
+Germany remains an important center for innovation in automotive and industrial electronics that will
+continue to play a major role in the development of new products and solutions going forward.
+Managing sustainably
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Letter to shareholders
+I would like to take this opportunity once again to welcome the about 4,200 new employees who have
+joined us from International Rectifier. You are now all part of the “Infineon family". We are already
+working together as one team and looking forward to a lively exchange of views and mutual learning.
+Together, we have achieved a lot over the past year, improving both revenue and Segment Result and
+making good progress with our strategic "Product to System" approach. Moreover, together we have
+successfully managed the biggest acquisition in our corporate history. I would like to draw particular
+attention to those Infineon employees, who have taken a great deal of time and effort to welcome and
+integrate our new colleagues from International Rectifier. The Management Board extends its whole-
+hearted thanks to all of you. We look forward to reaping the rewards of these strategic endeavors in
+the coming years. In this respect, we know we can continue to rely on the motivation, dedication and
+skills of our loyal workforce.
+We see the objective of sustainability as leaving future generations a world worth living in - a truly great
+responsibility. Similar to achieving of economic targets, sustainability is absolutely key to the way
+we operate. To take just one example: Our products and innovations enable savings of approximately
+36.5 million tons of CO2 emissions during their useful lives in end-user products - a net reduction of
+approximately 35 million tons more than the CO₂ emissions generated during the manufacture of those
+products. In recognition of our achievements, in the 2015 fiscal year we were listed in the prestigious
+Dow Jones Sustainability Index for the sixth year in succession.
+Striving continuously to increase our profitability is also a vital aspect of sustainability for us. Only
+through profitability we are able to retain the financial headroom needed to become even more com-
+petitive and continue offering products that make our lives easier, safer and greener.
+Recognition of our employees' commitment
+Expectations for the 2016 fiscal year
+What lies ahead of us in the 2016 fiscal year? The usual seasonal slowdown and continuing uncertainty
+about the growth expectations of the Chinese economy are likely to affect business at the beginning
+of the new fiscal year. Nevertheless, based on an assumed exchange rate of US$1.10 to the euro - we
+expect year-on-year revenue growth in the current fiscal year of 13 percent, plus or minus 2 percentage
+points. We will focus in particular on further increasing profitability. Due to the measures decided
+and, to a large extent, already implemented for integrating International Rectifier, Infineon's Segment
+Result Margin is no longer expected to be diluted by the acquisition in the now running 2016 fiscal
+year. Accordingly, we expect a Segment Result Margin of approximately 16 percent at the mid-point of
+the forecast revenue range.
+"Systematic integration" also means remaining fully committed to our 300-millimeter manufacturing
+technology. In the medium term, this will include transferring some of International Rectifier's products
+to our 300-millimeter manufacturing site in Dresden (Germany). It will, of course, take a number of
+years to optimize the manufacturing landscape, but an initial step – for example transferring thin wafer
+processing from Singapore to Infineon locations – has been swiftly implemented.
+13
+Effective October 1, 2015, International Rectifier has been fully absorbed within the three segments,
+Automotive, Industrial Power Control, and Power Management & Multimarket.
+Dr. Reinhard Ploss
+Over time, of course, we will implement many other product ideas by combining our strengths. Putting
+integration into practice is the best way of convincing customers and employees alike that we are on
+the right track. Motivated by early success stories arising from joint efforts, we continue to systematically
+realize synergies.
+In recent years, we have focused systematically on growth markets that are driven by sustainable
+modern-day social, economic and ecological trends. We have attained leading market positions in our
+target markets - including, for instance, in the automotive semiconductor market, where our market
+share has now passed the 10 percent mark for the first time. Our strategic "Product to System"
+approach is helping us generate economies of scope on the back of our broad range of technological
+and product expertise, creating more added value for our customers and improving our margins
+systematically. We are the "system leader" for automotive semiconductors: No other manufacturer
+offers such a balanced portfolio of sensors, microcontrollers and power semiconductors. No company
+comes close to achieving as broad a coverage of essential functions as Infineon. Moreover, we are a
+leading player in terms of trend-setting applications designed to reduce CO2 emissions as well as those
+used in driver assistance systems. Therefore our motto: we make cars cleaner, safer and smarter.
+We sincerely hope you will continue to accompany us as these developments unfold.
+In the field of power semiconductors we have further extended our lead as the world's number one
+supplier. With a market share of 19 percent, our revenue is now nearly three times that of our closest
+competitor. One of the key success factors is our extensive portfolio of products and technologies,
+which enables us to address a greater range of applications than most competitors. Another factor is
+our manufacturing expertise: Infineon is the only manufacturer using silicon wafers with a diameter of
+300 millimeters, rather than the more common 200-millimeter silicon wafers, to manufacture power
+semiconductors, which allows for significantly more chips per wafer. This manufacturing technology
+will bring us crucial cost advantages in the future, which we will use to achieve the necessary pro-
+ductivity improvements in the long term. We are also market leader in the functional integration and
+digitalization of power management, enabling us to further reduce both conversion losses and system
+size, which in turn allows cutting system costs. We also expect further significant advances in developing
+next-generation semiconductor materials for power components - silicon carbide (SiC) and gallium
+nitride (GaN). Based on development results to date and our existing portfolio of patents, we are
+confident of being ideally positioned for any disruptive change in this area and, equally important,
+of playing an active role in shaping that change.
+Chief Executive Officer
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Letter to shareholders
+11
+Our plan to bolster our market access in certain regions, such as China and the USA, is also bearing
+fruit. We are generating additional economies of scope by combining semiconductor components from
+Infineon with the wide range of International Rectifier's packaging solutions, enabling us to exactly
+meet market demands.
+Data protection is a growing challenge in the internet era. We are leader
+for hardware-based security solutions, which create a kind of data vault
+and can be used in a wide range of applications, including chip-based
+payment cards, electronic ID, healthcare cards and mobile payment
+systems. Our know-how in this field goes well beyond traditional security
+controllers. If needed, we can provide our customers with optimally
+designed software and complete security solutions in collaboration with
+our partners - the purest form of "Product to System"
+Systematic integration
+We acquired International Rectifier with the goal to systematically com-
+bine the strengths of the two groups. Since closing the transaction on
+January 13, 2015, we have already come a long way towards achieving
+that goal. Based on the concept of integration “from the outside in",
+our first step was to merge the sales structures of the two businesses,
+a milestone achieved by the end of March. Providing one face to the
+customer was a vital step for ensuring that business could continue to
+run smoothly. We aligned product portfolios and roadmaps systemati-
+cally and realized that overlaps were less than expected. Consequently
+the two companies complement each other even more ideally than
+originally expected.
+112
+12
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Management Board and Supervisory Board
+From the outset, great attention was paid to “cultural integration", encouraging the various teams to grow
+together as quickly as possible and to retain key individuals. We have been very successful in this
+respect: After only a few months, joint teams from Infineon and International Rectifier were in a position
+to offer customers new, tailor-made solutions. One good example is that of power supplies for server
+processors, whereby power transistors designed by Infineon are now controlled by a controller IC
+developed by International Rectifier.
+Our products are helping improve the quality of people's lives in general.
+Infineon's solutions to improve energy efficiency are helping reduce
+emissions caused by the generation, transmission and consumption of
+electric power. Our mobility solutions help prevent accidents or limit
+their impact, increase driving comfort significantly and, of course, cut
+emissions. Our security solutions enable secure communication and
+secure data exchange in an increasingly connected world. Our semicon-
+ductor solutions enable us to link the analog with the digital world.
+Our aspiration to contribute towards better living standards is set out
+in our new mission statement: "Part of your life. Part of tomorrow".
+The acquisition of International Rectifier has complemented and
+strengthened Infineon in many respects. Consequently, after adopting
+the theme "Systematic growth" for the 2014 Annual Report, we have
+prepared this year's report under the motto of "Systematic integration".
+Snicerely,
+Rihaal
+202
+ор
+Sales, Marketing, Strategy Development and M&A
+Studies in electrical engineering at Shivaji University, Kohlapur, India (Dipl.-Ing.);
+Member of the Management Board since January 2012
+» We have deepened our system understanding through strategic
+acquisitions and partnerships. As a result, we can supply our
+customers even faster with products tailored to their requirements.<<
+16
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Management Board and Supervisory Board
+Report of the Supervisory Board
+to the Annual General Meeting
+Member of the Management Board, Regions,
+Ladies
+and Gentlemen,
+The 2015 fiscal year was dominated by the acquisition of International Rectifier. Following
+approval of the acquisition by the antitrust authorities and in particular by the shareholders
+of International Rectifier, the transaction first announced in August 2014 was finally closed
+in January 2015. The acquisition was an important step for Infineon, as the combination of the
+two enterprises has now given rise to a powerful entity. The Infineon Group benefits from an
+expanded product portfolio and a broader regional structure, particularly regarding customers
+in the USA and Asia. The combination also gives Infineon additional system know-how in the
+management of electrical energy. Infineon's expertise with power semiconductors and how they
+are controlled has been enriched and its position as world market leader in this field extended.
+The integration process has gone well and is now more or less completed. The consolidated
+figures for the 2015 fiscal year show that we are making excellent progress. On behalf of the
+Supervisory Board, I once again take this opportunity to extend a warm welcome to all staff from
+International Rectifier and, equally, to thank everyone involved for the work performed to date.
+Main activities of the Supervisory Board
+During the year under report, the Supervisory Board conscientiously performed all duties
+incumbent upon it in accordance with the law, the Company's statutes, and its own terms of
+reference. It both advised and monitored the Management Board based on the detailed infor-
+mation provided by the Management Board at Supervisory Board and committee meetings
+on business developments, in particular the market situation, significant transactions, key
+financial performance indicators and performance trends. In the course of the ensuing delib-
+erations, not only general strategies, but also relevant specific measures were agreed upon by
+the two boards. The Supervisory Board was always given ample opportunity to thoroughly
+examine any reports and resolutions proposed by the Management Board. In this context, it
+undertook measures to assure itself that the governance of Infineon's corporate affairs was
+lawful, compliant and appropriate.
+The Supervisory Board was provided with written quarterly reports on Infineon's business
+performance, key financial data, risks and opportunities, significant issues, major areas of
+litigation and other important topics. Between quarterly reports, the Management Board also
+informed the Supervisory Board in a timely manner of current developments in the form of
+monthly reports.
+The 2015 fiscal year turned out to be better for Infineon than we had expected. A fact we can be espe-
+cially proud of is that with the purchase of International Rectifier on January 13, 2015 we successfully
+closed the largest acquisition in the Company's history. Since then we have made such excellent
+progress in integrating the two enterprises that we have already achieved our goal of bringing the
+business of International Rectifier to the Group target of a Segment Result Margin of 15 percent in the
+fourth quarter of the 2015 fiscal year. Our success in this respect is also clearly shown in our financial
+key performance indicators for the whole Group: Revenue up by 34 percent and Segment Result up
+by 45 percent. The integration of International Rectifier diluted the Segment Result Margin to a lesser
+extent than initially anticipated. For the full fiscal year under report we managed not only to outperform
+the Segment Result Margin target of about 14 percent set at the beginning of the fiscal year - which
+did not include International Rectifier -, but also to achieve our over-the-cycle target of 15 percent
+Segment Result Margin for the whole Group. Admittedly, this was assisted to some extent by tailwind
+from a strong US dollar. The Infineon share also outperformed relevant benchmark indices such as the
+DAX and the Philadelphia Semiconductor Index (SOX). The Management Board and Supervisory Board
+will therefore propose at the Annual General Meeting to be held on February 18, 2016 to raise the
+dividend from 18 cents to 20 cents per share.
+as
+Arunjai Mittal
+>> We have expanded our leading market position and achieved the
+financial goals we set when we acquired International Rectifier
+ahead of time. Infineon has impressively demonstrated how we are
+successfully continuing on our growth path.«
+Mechanical engineer (Dipl.-Ing.), Master of Business Administration (MBA);
+Member of the Management Board since January 2011
+14
+4
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Management Board and Supervisory Board
+The Management Board
+From left to right: Arunjai Mittal, Dr. Reinhard Ploss, Dominik Asam
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The Management Board
+15
+Dr. Reinhard Ploss
+Chief Executive Officer (CEO), Labor Director
+Doctorate in chemical engineering (Dr.-Ing.);
+Member of the Management Board since June 2007
+>> Our semiconductors are the key to a better future. We are addressing
+the right markets and expanding our lead through systematic
+integration: A strengthened portfolio and a wider range of system
+solutions will significantly contribute to our customers' success.<<
+Dominik Asam
+Chief Financial Officer (CFO)
+Dr. Reinhard Ploss
+Chief Executive Officer
+Dear shareholders and business partners,
+dear Infineon colleagues,
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Letter to shareholders
+28 Successful 2015 fiscal year
+32 Group strategy
+52
+THE SEGMENTS
+54 Automotive
+Neubiberg, November 2015
+62 Power Management & Multimarket
+66 Chip Card & Security
+RESEARCH & DEVELOPMENT
+70
+80
+OPERATIONS
+88
+FINANCES AND STRATEGY
+INTERNAL MANAGEMENT SYSTEM
+SUSTAINABILITY AT INFINEON
+108
+OUR EMPLOYEES
+116
+NOTABLE EVENTS 2015
+118
+THE INFINEON SHARE
+122
+AWARDS
+124
+INFINEON WORLDWIDE
+126
+9
+92
+Content
+Our Group
+• Combined
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+ABOUT THIS REPORT
+7
+Business ethics: In order to meet our own high business ethics standards and simultaneously
+interact with our stakeholders as a sustainable and reliable partner, we need to be aware of
+risks both inside and outside the organization. Infineon Business Conduct Guidelines reflect
+the principles to be observed when conducting business and serve as an important basis for
+our daily operations. They apply to all employees worldwide – in dealing with colleagues as
+well as with customers, shareholders, business partners and the general public.
+Employees and business partners have the opportunity to report any breaches to the Infineon
+Management, the Human Resources department and/or the Compliance department using
+various channels available within the organization. They may also make use of an anonymous
+whistleblower hotline and/or contact our external ombudsman.
+As part of the Compliance Management System, the extent of risks is assessed whenever
+incidences of corruption are identified and appropriate measures put in place.
+Infineon's Corporate Compliance Officer reports directly to the Chief Financial Officer (CFO).
+The Corporate Compliance Officer coordinates the Compliance Management System, develops
+the Infineon compliance program based on a risk-oriented approach, draws up and revises
+guidelines, advises employees, receives complaints and tip-offs, and leads investigations
+aimed at clarifying any compliance-related cases.
+As a participant of the UN Global Compact Initiative, Infineon made a voluntary commitment
+to abide by the principles included in it and reports about the implemented measures in its
+"Communication on Progress".
+Further information on this material topic is provided in the section "Business ethics" in the
+chapter "Sustainability at Infineon" as well as in the chapter "Corporate Governance Report".
+Labor relations: We are convinced that effective human resources management is key to our
+business success and therefore to achieving our growth and profitability targets, given that
+peak performance is only feasible in the long run with satisfied and successful employees. The
+three pillars "Leadership excellence", "Promoting talent" and "Our workforce" combine all the
+activities we undertake on a daily basis to promote the performance and realize the potential
+of our employees in the best possible way.
+In our Business Conduct Guidelines, we set out our commitment to respect internationally
+valid human rights and work-related standards, including the protection of the personal
+dignity and privacy of every individual.
+Our occupational safety and health management system has been certified in accordance with
+the OHSAS 18001 standard at all of our main manufacturing sites as well as at our corporate
+headquarters. The system is designed to ensure that the required measures are taken to mini-
+mize any risks identified in the working environment that could endanger our employees.
+Further information on this material topic is provided in the section "Responsibility for
+our employees" within the chapter "Sustainability at Infineon" as well as in the chapter
+"Our employees”.
+GRI G4-19, G4-20, G4-21
+P see page 93 f.
+P see page 174 ff.
+Management Report
+P see page 96 f.
+P see page 108 ff.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Content
+Content
+10
+10
+14
+16
+24
+26
+Management Board and Supervisory Board
+LETTER TO SHAREHOLDERS
+THE MANAGEMENT BOARD
+REPORT OF THE SUPERVISORY BOARD TO THE ANNUAL GENERAL MEETING
+8
+o Our 2015 fiscal year
+58 Industrial Power Control
+144
+CONSOLIDATED STATEMENT OF CASH FLOWS
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+282
+282
+283
+284
+Further Information
+RESPONSIBILITY STATEMENT BY THE MANAGEMENT BOARD
+AUDITOR'S REPORT
+FINANCIAL DATA 2011-2015
+286
+LIST OF GRAPHICS
+287
+289
+296
+FINANCIAL GLOSSARY
+TECHNOLOGY GLOSSARY
+MEMBERSHIPS AND PARTNERSHIPS
+297
+GRI G4 CONTENT INDEX
+301
+FINANCIAL CALENDAR
+128
+IMPRINT
+10
+10
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Management Board and Supervisory Board
+210
+208
+301
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+161
+165
+167
+169
+170
+GROUP PERFORMANCE
+128 Review of results of operations
+136 Review of financial condition
+139 Review of liquidity
+ASSOCIATED MATERIAL RISKS AND OPPORTUNITIES
+144 Outlook
+149 Risk and opportunity report
+TREASURY AND CAPITAL REQUIREMENTS
+REPORT ON EXPECTED DEVELOPMENTS, TOGETHER WITH
+INFINEON'S FINANCIAL CONDITION AS OF THE DATE OF THIS REPORT
+204
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+OVERALL STATEMENT OF THE MANAGEMENT BOARD WITH RESPECT TO
+203
+CONSOLIDATED STATEMENT OF OPERATIONS
+Financial Statements
+206
+179 Declaration concerning the management of the company
+186 Compensation Report
+section 315, paragraph 4, of the German Commercial Code (HGB)
+174 Corporate Governance Report
+170 Information pursuant to section 289, paragraph 4, and
+SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
+CORPORATE GOVERNANCE
+INFINEON TECHNOLOGIES AG
+• Consolidated
+128,333
+598,462
+431,666
+277,280
+670,094
+196,407
+Long Term Incentive (LTI)
+177,921
+Total variable compensation
+196,407
+Performance Share Plan 2
+242,620
+177,921
+175,000
+242,620
+431,666
+598,462
+128,333
+177,921
+128,333
+177,921
+175,000
+Total compensation
+384,999
+128,333
+228,277 247,426 153,225 172,806 153,225 172,806 534,727
+1,822,637 1,250,759 1,294,694 942,805 1,294,694 942,805 4,412,025 3,136,369
+2,933,546 2,231,668 2,086,062 1,668,732 2,074,139 1,654,065 7,093,747 5,554,465
+A fair market value of €5.31 (2014: €5.20) per performance share was determined for the 2015
+fiscal year, taking account - among other things - of the 250 percent cap of the LTI allocation
+amount.
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the plan requirements.
+expired
+128,333
+Stock
+options
+Stock
+options
+outstanding
+at the
+Stock
+options
+outstanding
+at the
+beginning
+of the
+fiscal year
+Virtual
+performance
+shares
+outstanding
+at the end
+of the
+fiscal year
+of the
+fiscal year
+Virtual performance shares
+newly granted at the
+beginning of the fiscal year
+Virtual
+performance
+shares
+outstanding
+at the
+beginning
+Stock Option Plan 2010
+Performance Share Plan
+593,038
+The following table shows the number of performance shares awarded to members of the
+Management Board in the 2015 fiscal year. In addition, the table contains information relating
+to the Stock Option Plan 2010, on the basis of which stock options were allocated to members
+of the Management Board for the final time in the 2013 fiscal year. No stock options were
+exercised and no stock options expired in the 2014 or 2015 fiscal years.
+As described in the section "Management Board compensation", the contractually agreed
+LTI is granted to members of the Management Board in the form of "performance shares".
+The average price of the Infineon share relevant for the number of performance shares granted
+for the 2015 fiscal year was €8.49 (2014: €6.62).
+Share-based compensation
+The Company also maintains accident insurance policies for members of the board.
+In accordance with their service contracts, members of the Management Board are entitled to
+a chauffeur-driven company car, which may also be used privately. Operating and maintenance
+costs for the company car and chauffeur are borne by the Company. Taxes arising on the fringe
+benefit related to private usage are borne by the members of the Management Board.
+Fringe benefits
+P see page 249
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+190
+Similarly, they did not receive any benefits from third parties in the 2015 and 2014 fiscal years,
+whether promised or actually paid, for their board activities at Infineon.
+Members of the Management Board did not receive any loans from Infineon, either in the 2015
+or 2014 fiscal years.
+2 The figures for the active members of the Management Board in the 2015 fiscal year are based on a fair market value per performance share amounting to €5.31 (2014: €5.20),
+which was calculated using a Monte-Carlo simulation model taking account of the value-reducing cap.
+Regarding the calculation of the fair market value we refer to note 26 to the Consolidated
+Financial Statements.
+128,333
+187
+2015-2017 tranche
+2014
+2015
+2014
+2015
+Arunjai Mittal
+Member of the
+Management Board
+Chief Financial Officer
+Chief Executive Officer
+Dominik Asam
+Dr. Reinhard Ploss
+Corporate Governance
+Compensation report
+Fringe benefits
+2015
+Basic annual salary
+in €
+Total compensation to members of the Management Board pursuant to DRS 17 and benefits
+to the individual members of the Management Board - also presented in accordance with
+DRS 17 - are shown in the following table:
+Total compensation
+Management Board compensation in the 2015 fiscal year in accordance with
+German Accounting Standard 17 (DRS 17)
+Additionally, the Supervisory Board has the option - based on its own best judgment - to grant
+a special bonus, among other things for special achievements of the Management Board or
+its individual members. This bonus is capped, however, at a maximum of 30 percent of the
+fixed compensation of the member of the Management Board.
+Prior to the introduction of the Performance Share Plan, the Company maintained a stock
+option plan as an LTI, which was resolved at the 2010 Annual General Meeting. Subject to
+compliance with the terms of the Stock Option Plan 2010 – particularly the attainment of the
+absolute and percentage performance targets - the stock options allocated to members of the
+Management Board on the basis of this plan may still be exercised until December 14, 2019.
+The Supervisory Board is required to define suitable alternative LTI instruments of commen-
+surate value if it is impossible or not desired by the Supervisory Board to offer an LTI on the
+basis of the Performance Share Plan.
+189
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+If the member of the Management Board leaves office during the first two years of the holding
+period applicable to the performance shares of a particular LTI tranche, those performance
+shares are forfeited unless the reason for leaving office is that the member of the Management
+Board has reached the contractually agreed age limit. The holding period for the own-invest-
+ment shares expires when the member of the Management Board leaves office; at that stage
+the member of the Management Board concerned can freely dispose of the shares. If the
+member of the Management Board leaves office at a later date - except if the member resigns
+from office or terminates the contractual arrangements of his/her own volition or if the contract
+is terminated for good cause - the LTI tranche (including the own-investment) remains in
+place unchanged. The member of the Management Board is then treated in all respects as if
+he/she were still in office; there is no pro rata reduction due to leaving office early.
+end of the
+fiscal year
+Fixed compensation
+Total
+2014
+2015
+2014-2016 tranche
+2013-2015 tranche
+2012-2014 tranche
+Mid Term Incentive (MTI)1
+Multi-year variable compensation
+385,000 2,010,280 1,295,000
+589,220
+385,000
+589,220
+525,000
+831,840
+Single-year variable compensation (STI)
+Variable compensation
+Total fixed compensation
+2,315,000
+103,096
+2,418,096
+685,000 2,575,000
+26,260 106,722
+711,260 2,681,722
+750,000
+29,445
+779,445
+685,000
+40,927
+725,927
+750,000
+41,368
+791,368
+35,909
+980,909
+1,110,909
+35,909
+945,000
+1,075,000
+2014
+128,333
+in the
+fiscal year
+Compensation granted to members of the Management Board in accordance with the DCGK
+(total compensation and compensation components) as well as the minimum and maximum
+values that can be achieved are shown in the following table:
+at the
+end of the
+fiscal year
+385,000
+589,220
+385,000
+589,220
+525,000
+831,840
+compensation (STI)
+Single-year variable
+Multi-year variable
+Variable compensation
+750,000
+29,445
+779,445
+685,000
+40,927
+725,927
+750,000
+41,368
+791,368
+945,000
+35,909
+980,909
+1,110,909
+Total fixed compensation
+35,909
+Fringe benefits
+685,000
+26,260
+711,260
+1,075,000
+compensation
+2012-2014 tranche
+691,049
+159,627
+1,561,936
+994,240
+241,183
+2,014,868
+718,872
+192,780
+1,637,579
+858,872 994,240
+149,601 272,721
+1,989,382 2,058,329
+Total compensation (DCGK) 2,714,845
+219,796
+Pension expense
+1,384,140
+Mid Term Incentive (MTI)
+Total variable compensation
+Long Term Incentive (LTI)
+405,020
+405,020
+552,300
+2013-2015 tranche
+306,049
+333,872
+333,872
+Stock Option Plan 2010
+Performance Share Plan
+Basic annual salary
+Fixed compensation
+2014
+788,806
+833,225
+612,500
+76,613
+172,806
+153,225
+612,500
+76,613
+76,613
+272,721 192,780 272,721
+1,897,314 1,707,513 1,140,702 3,206,589
+172,806
+680,000
+850,000
+340,000
+680,000
+308,000
+308,000
+340,000
+850,000
+153,225
+2,142,500
+833,225
+788,806
+2015
+2014
+Member of the
+Management Board
+Arunjai Mittal
+2015
+2014
+2015
+Chief Financial Officer
+Chief Executive Officer
+Dominik Asam
+Dr. Reinhard Ploss
+in €
+The total compensation allocated to the individual members of the Management Board
+for the 2015 fiscal year in accordance with DCGK - analyzed by component - is shown in the
+following table:
+241,183
+76,613
+2,142,500
+241,183
+1,853,853 1,659,693 1,097,241 3,163,128
+159,627
+241,183
+272,721
+194
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Commitments to members of the Management Board
+196
+Corporate Governance
+Compensation report
+502,008
+10,202,820
+733,700
+11,120,628
+450,000
+411,000
+200,000
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+2014
+2015
+Total
+159,627
+3,079,244
+205,500
+2014
+241,183
+3,322,550
+205,000
+Combined Management Report - Our 2015 fiscal year
+Early termination of service contract
+The service contracts of members of the Management Board include a change of control
+clause, which stipulates the terms that apply when the activities of a member of the Manage-
+ment Board are terminated in the event of a significant change in Infineon's ownership
+structure. A change of control for the purposes of this clause occurs when a third party, indi-
+vidually or together with another party, acquires at least 30 percent of the voting rights in
+Infineon Technologies AG as defined in section 30 of the German Securities Acquisition and
+Takeover Act (Wertpapiererwerbs- und Übernahmegesetz -"WpÜG”). Members of the Manage-
+ment Board have the right to resign and terminate their contracts within 12 months of the
+announcement of such a change of control and any who choose to do so are entitled to con-
+tinued payment of their annual remuneration up to the end of the originally agreed duration
+of their contract, up to a maximum of 36 months. If Infineon Technologies AG removes a
+member of the Management Board or terminates his or her contract within 12 months of the
+announcement of a change of control, the members of the Management Board concerned
+are entitled to continued payment of the annual remuneration to the end of the originally
+agreed duration of their contract, subject to a minimum period of 24 months and a maximum
+period of 36 months.
+(ii) At the end of the fiscal year, the actual levels of target achievement for free cash flow and
+ROCE, and, hence the amount of the STI, are determined by the Supervisory Board.
+An STI is paid only if, on the basis of the approved financial statements, the levels of target
+achievement reach at least the 50 percent threshold for both performance indicators (free
+cash flow, ROCE). If one of the two target thresholds is not achieved, no annual bonus is paid
+for the relevant fiscal year. If the thresholds are achieved, the arithmetic mean of the two target
+achievements is calculated, and is used as the percentage rate to determine the actual STI
+amount. A cap of 250 percent applies, meaning that the maximum amount that can be paid is
+two and a half times the target STI (= 100 percent), regardless of the actual achievement level.
+The Supervisory Board may, in addition, increase or reduce the amount to be paid in each
+case by up to 50 percent, as it sees fit, based on the performance of the Management Board as
+a whole, Infineon's position and any exceptional factors. A lower limit applies in this case such
+that the amount to be paid cannot be less than the amount that would be due given 50 percent
+target achievement. The upper limit for an upwards adjustment is the cap of 250 percent.
+If the term of office on the Board begins or ends during a fiscal year, the entitlement to STI
+is calculated on a pro-rata monthly basis (one twelfth for each month started). Members
+of the Management Board are not entitled to receive an STI bonus for the fiscal year in which
+they resign from office or terminate their contract of their own volition or if their contract is
+terminated for good cause.
+The mid-term incentive (MTI) is intended to reward sustained performance by the Manage-
+ment Board reflecting Infineon's medium-term progress. In combination with the long-term
+incentive, the MTI ensures compliance with the stock corporation law requirement that the
+structure of compensation is "oriented toward sustainable growth of the enterprise". Assuming
+a 100 percent target achievement of the variable compensation, the MTI constitutes approxi-
+mately 20 percent of target annual income.
+A new MTI tranche commences every fiscal year. Each tranche has a term of three years and is
+paid in cash at the end of the term. The amount of the payment is determined on the basis of
+actual ROCE and free cash flow figures during each three-year period. For these purposes, the
+target values for ROCE and free cash flow for each individual year of an MTI tranche correspond
+to the STI targets set each year in advance. The level of target achievement for both the ROCE
+target and the free cash flow target must reach a threshold of 50 percent in each year of the
+relevant three-year period, otherwise the level of target achievement for the purposes of the
+MTI is set to zero for the year concerned. If the thresholds are exceeded, the level of target
+achievement determined for the STI in the relevant fiscal year also applies for the purposes of
+the MTI. The MTI to be paid at the end of the three-year period is determined by calculating
+the arithmetic mean of the three annual target achievement levels. Unlike the STI, the MTI is
+paid as calculated even if the mean level of target achievement for the three-year period is
+below the 50 percent threshold. A cap of 200 percent applies, meaning that the maximum
+amount that can be paid is two times the target MTI (= 100 percent), regardless of the actual
+achievement level.
+The Supervisory Board may increase or reduce the amount to be paid under the MTI in each
+case by up to 50 percent, as it sees fit, based on the performance of the Management Board
+as a whole, Infineon's situation and any exceptional factors. When exercising its judgment in
+this respect, the Supervisory Board also takes into account the level of achievement of the
+three-year target for revenue growth and Segment Result that is set each year by the Super-
+visory Board exclusively for this purpose. Unlike the STI, there is no lower limit for the amount
+by which the Supervisory Board can adjust the MTI; for the upper limit, however, the cap
+applies (200 percent).
+Corporate Governance
+Compensation report
+188
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+If the term of office commences during a fiscal year, the MTI tranche is determined on a pro-rata
+basis (1/36 for each month of a full MTI tranche started). Upon leaving Infineon, regulations
+ensure that the member of the Management Board can only receive an MTI payment for the
+actual number of MTI tranches during his/her term of office. MTI tranches already started are
+forfeited if a mandate or service contract of a member of the Management Board comes to
+an end before the due date, for instance if a member resigns from office or terminates the con-
+tractual arrangements of his/her own volition or if the contract is terminated for good cause.
+The long-term incentive (LTI) is intended to reward long-term and, similar to the MTI, sustained
+performance on the part of members of the Management Board and, additionally, to ensure
+that their interests are aligned with the interest of the Company's shareholders regarding a
+positive share price development. Assuming a 100 percent target achievement of the variable
+compensation, the LTI constitutes approximately 15 percent of target annual income.
+With effect from the 2014 fiscal year, the LTI is awarded in the form of a Performance Share Plan.
+As well as being relevant for members of the Management Board, the new LTI also applies –
+with minor differences attributable to specific circumstances - to Infineon managers and
+selected Infineon employees worldwide.
+The (virtual) performance shares are allocated - initially on a provisional basis - on October 1
+of each fiscal year for the fiscal year beginning on that date. In this context, performance shares
+were issued on October 1, 2014 for the fiscal year beginning on that date. The performance
+shares are allocated on the basis of the contractually agreed "LTI allocation amount" in euros.
+The number of performance shares is determined by dividing the LTI allocation amount by the
+average price of the Infineon share (Xetra closing price) during the nine months prior to the
+allocation date. The prerequisite for the definitive allocation of the - at that stage still virtual -
+performance shares is that the relevant member of the Management Board invests 25 percent
+of his or her individual LTI allocation amount in Infineon shares and that the holding period of
+four years applicable both for the member's own-investment and for the performance shares
+has come to an end. Moreover, 50 percent of the performance shares are performance-related;
+they are only allocated definitively if the Infineon share outperforms the Philadelphia Semi-
+conductor Index (SOX) between the date of the performance shares' provisional allocation
+and the end of the holding period. If the conditions for definitive allocation of performance
+shares - either of all or of only those that are not performance-related - are met at the end
+of the holding period, the member of the Management Board acquires a claim against the
+Company for the transfer of the corresponding number of (real) Infineon shares; performance
+shares, which do not achieve the target, are forfeited. The value of the performance shares
+definitively granted to the member of the Management Board per LTI tranche at the end of
+the holding period may not exceed 250 percent of the relevant LTI allocation amount; the
+performance shares above this amount are forfeited (cap).
+The review of the individual target annual incomes of the members of the Management Board
+by an independent compensation expert in the 2014 fiscal year resulted in a rise in the com-
+pensation of members of the Management Board effective October 1, 2014. The compensation
+structure itself remained unchanged (see information provided in the 2014 Annual Report).
+Increase in Management Board compensation
+In accordance with section 4.2.2 DCGK, the Supervisory Board engaged an external, independent
+compensation expert - most recently in the 2014 fiscal year - to review the appropriateness
+of the Management Board compensation system in place since October 1, 2010. In this context,
+the target annual incomes of each individual member of the Management Board were sub-
+jected to detailed scrutiny. The next review is scheduled to take place in the 2016 fiscal year.
+Review of Management Board compensation; changes to individual service contracts
+Review of Management Board compensation system and individual contracts
+Mr. Bauer did not receive any service fees in the 2014 or 2015 fiscal years relating to the
+consultancy agreement concluded on November 26, 2012, by him and the Company after
+prior approval by the Supervisory Board. The agreement, which provided only for the reim-
+bursement of expenses, was terminated effective January 31, 2015.
+Payments to former members of the Management Board in the 2015 fiscal year
+Former members of the Management Board received total payments of €1,124,622 (primarily
+pension benefits) in the 2015 fiscal year (2014: €1,103,977). As of September 30, 2015, accrued
+pension liabilities for former members of the Management Board amounted to €60,212,071
+(2014: €59,502,832).
+The Management Board service contracts otherwise contain no promises of severance pay
+for situations in which contracts are terminated early.
+225,000
+340,000
+2015
+192,780
+determined
+Benefit
+amounts
+Pension
+entitlements
+(annual) as of
+beginning
+of pension
+Member of the
+Management Board
+Fiscal Year
+in €
+Pension entitlements
+Alongside the annual retirement entitlements and related benefit amounts, the following
+table shows the present values of pension entitlements earned to date and the service cost
+in accordance with IFRS. In accordance with IFRS, the service cost for the current fiscal year is
+determined at the beginning of the fiscal year concerned.
+Present value
+The amounts credited to the pension entitlements accounts of Mr. Asam and Mr. Mittal - in
+line with the plan rules applied to Infineon employees - are paid out on or after reaching the
+age of 67, provided the service contract has also ended, or, on request, at an earlier point in
+time if the service contract ends on or after reaching the age of 60. If the beneficiaries elect
+that their pension be paid out in monthly installments, the pension amount is adjusted
+automatically each year in accordance with the Infineon pension plan.
+195
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+In addition to a one-time, contractually vested initial component of €540,000 paid as compen-
+sation for the loss of vested retirement pension entitlements in connection with the termina-
+tion agreement with his previous employer, Mr. Asam will receive from the Company for each
+fiscal year of his membership on the Management Board a pension contribution amounting to
+between 25 and 40 percent, as determined by the Supervisory Board, of the relevant agreed
+basic annual salary, i.e. fixed compensation. As in the previous year, the pension contribution
+for Mr. Asam for the 2015 fiscal year has been set at 30 percent of his basic annual salary,
+which amounts to €225,000. The pension entitlements arising from the defined contributions
+made on behalf of Mr. Asam became vested with effect from December 31, 2013.
+The plan rules applicable for Mr. Asam and Mr. Mittal differ in terms of the initial defined
+component, the annual transfer to the pension account and the vesting period.
+If the entitlements of members of the Management Board (i) have not yet legally vested or (ii)
+have legally vested, but are not protected by the state pension insurance scheme (Pensions-
+sicherungsverein), the Company maintains pension reinsurance policies in favor of, and
+pledged to, the members of the Management Board concerned.
+The members of the Management Board who were in their positions prior to the introduction
+of the new compensation system in 2010 are contractually entitled to a defined benefit pension
+payment. In the 2015 fiscal year, this now only relates to Dr. Ploss, who has an entitlement
+to an annual retirement benefit, currently standing at €205,000 and which increases by €5,000
+for each full year of service on the Board, up to a maximum amount of €210,000. This entitle-
+ment is already vested, both contractually and under the applicable statutory provisions. The
+pension entitlement is required to be reviewed every three years from the start of payment
+of the pension in accordance with the German Company Pension Act (Betriebsrentengesetz).
+The Supervisory Board may decide to make an amendment as it sees fit, taking account of
+the needs of the recipient and the financial condition of the Company. If Dr. Ploss's mandate
+comes to an end, payment of the pension entitlement begins at the earliest at the age of 60.
+In accordance with the compensation system in place since 2010, Mr. Asam and Mr. Mittal -
+both of whom took up office after the new system had been approved - have both received
+a defined contribution pension commitment (rather than a defined benefit pension commit-
+ment based on the number of years of service), which is essentially identical to the Infineon
+pension plan applicable to all employees. The Company has accordingly set up a personal
+pension account (basic account) for each beneficiary and makes annual pension contributions
+to it. The Company adds annual interest to the balance in the basic account using the highest
+statutory interest rates valid for the insurance industry (guaranteed interest rates) until dis-
+bursement of the pension begins and may also award surplus credits. 95 percent of any income
+earned over and above the guaranteed interest rate is credited to the pension account, either
+at the date on which disbursement of the pension begins or, at the latest, when the beneficiary
+reaches the age of 60. The balance of the basic account when disbursement of the pension
+begins (due to age, invalidity or death) - increased by an adjusting amount in the event of
+invalidity or death - constitutes the retirement benefit entitlement and is paid out to the member
+of the Management Board or his or her surviving dependents in twelve annual installments,
+or, if so requested by the member of the Management Board, in eight annual installments, as
+a lump sum or as life-long pension.
+Allowances and pension entitlements in the 2015 fiscal year
+upon termination of employment
+Mr. Mittal already has a pension entitlement from his previous employment with Infineon that
+became vested under the applicable statutory provisions in September 2006. The contract
+appointing him to the Board specifically states that the amounts made available to cover his
+vested pension entitlements represent a continuation of this vested entitlement (and are,
+therefore, not subject to any separate vesting arrangements). The Company makes a fixed
+annual pension contribution on behalf of Mr. Mittal for each full fiscal year of service on the
+Board, equivalent to 30 percent of the relevant agreed basic annual salary; the Supervisory
+Board is not required to decide each time on the amount to be contributed. The pension
+contribution for the 2015 fiscal year amounted to €225,000.
+period
+for the
+relevant
+fiscal year
+of pension
+and benefit
+entitlement
+1,836,096
+205,500
+2014
+272,721
+2,163,812
+225,000
+2015
+Dominik Asam
+149,601
+5,287,480
+200,000
+2014
+(Chief Executive Officer)
+219,796
+5,634,266
+205,000
+2015
+Dr. Reinhard Ploss
+Service cost
+(earned in the
+current year)
+Arunjai Mittal
+Exercisable
+stock
+options
+outstanding
+308,000
+340,000
+33,232
+172,806
+33,232
+2014
+197,925
+229,167
+229,167
+62,088
+Total
+153,225
+33,232
+2015
+Arunjai Mittal
+141,089
+350,952
+350,952
+33,232
+172,806
+28,856
+33,232
+2015
+2014
+100,702
+Special bonuses
+191
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Compensation report
+year to the Members of the Management Board are provided in note 26 to the Consolidated
+Financial Statements.
+Further details regarding the Performance Shares granted on October 1, 2015 for the 2016 fiscal
+P❘ see page 249
+462,777
+1,013,333 1,013,333
+114,046
+114,046
+114,046
+729,821
+120,000
+121,403
+229,167
+229,167
+1,013,333 1,013,333
+214,748
+534,727
+593,038
+2014
+217,610
+350,952
+2015
+Dr. Reinhard Ploss
+in €
+in €
+Number
+Number
+Number
+Number
+47,582
+Number
+Member of the
+Management Board
+Number
+Number
+Fiscal year
+compen-
+sation
+based
+for share-
+Total
+expense
+Fair Value
+grant date
+42,990
+228,277
+90,572
+350,952
+62,088
+153,225
+28,856
+33,232
+2015
+Dominik Asam
+200,285
+433,214
+433,214
+47,582
+247,426
+47,582
+2014
+(CEO)
+314,286
+120,000
+433,214
+433,214
+The Supervisory Board did not award any special bonuses to members of the Management
+Board during the 2015 fiscal year.
+Other awards and benefits
+The Company entered into a restitution agreement in the 2009 fiscal year with each of the
+active members of the Management Board at that time. Dr. Ploss is the only current member
+of the Management Board affected by such an agreement. These agreements provide for the
+Company to cover, to the extent permitted by law, all costs and expenses incurred by members
+of the Management Board in the performance of their duties for the Company in connection
+with legal, governmental, regulatory and parliamentary proceedings and investigations as
+well as arbitration proceedings, in which the member of the Management Board is involved
+in conjunction with his/her activities on behalf of the Company. However, the agreements
+specifically exclude any restitution of costs if the proceedings concern an action or omission
+that constitutes a culpable breach of the duty of care of the member of the Management
+Board pursuant to section 93, paragraph 2, of the German Stock Corporation Act ("AktG”).
+No payments were made by the Company during the 2015 fiscal year under these restitution
+arrangements.
+Dominik Asam
+2015
+In line with the DCGK recommendations, the pension expense meaning the service cost
+pursuant to IAS 19 constitutes the allocation amount (see previous table), even though it is
+not strictly speaking - an allocation.
+In accordance with the DCGK, share-based payments are deemed to be allocated on the basis
+of the relevant time and value for German tax law purposes. Accordingly, the members of
+the Management Board were not deemed to have been allocated share-based payments in
+either the 2015 or the 2014 fiscal year.
+In line with the DCGK recommendations, the fixed compensation and the STI are required
+to be disclosed as the allocation amount for the fiscal year concerned. In the case of the MTI,
+the DCGK recommends that this is disclosed as flowing to members of the Management Board
+in the fiscal year, in which the plan term of the relevant MTI tranche ends. In this sense, in
+addition to the fixed compensation granted for 2015 and the STI, the allocation amount
+for the 2013-2015 MTI tranche also flowed to the members of the Management Board for the
+2015 fiscal year.
+Since compensation granted to members of the Management Board for the fiscal year does
+not always coincide with amounts disbursed in a particular fiscal year, a separate table is
+presented - in accordance with the relevant DCGK recommendation - showing the amounts
+flowing to members of the Management Board for the 2015 fiscal year (the "allocation amount"
+("Zufluss")).
+Allocation amount in accordance with DCGK
+1 The figures of the active members of the Management Board in the 2015 fiscal year are based on a fair market value per
+performance share amounting to €5.31 (2014: €5.20), which was calculated using a Monte-Carlo simulation model taking
+account of the value-reducing cap.
+Chief Financial Officer
+4,403,205
+2,217,936
+2,518,982
+219,796
+219,796
+912,500
+3,072,500
+114,138
+114,138
+247,426
+1,087,426
+149,601
+219,796
+1,444,843
+2014 2015 (min.) 2015 (max.)
+2015
+Arunjai Mittal
+779,445
+29,445
+29,445
+779,445
+750,000
+750,000
+685,000
+26,260
+711,260
+750,000
+29,445
+779,445
+41,368
+791,368
+41,368
+791,368
+725,927
+40,927
+750,000
+750,000
+685,000
+750,000
+41,368
+791,368
+2014 2015 (min.) 2015 (max.)
+Member of the Management Board
+193
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Compensation report
+1,188,277
+308,000
+228,277
+1,200,000
+2015 (min.)
+2014
+Dr. Reinhard Ploss
+Chief Executive Officer
+2015
+Total fixed compensation
+Fringe benefits
+Basic annual salary
+Fixed compensation
+2015 (max.)
+in €
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+192
+P see page 194 ff.
+Unlike in the disclosures in accordance with DRS 17, the STI is required to be disclosed
+pursuant to the DCGK at the target value (i.e. the value in the event of 100 percent target
+achievement). The MTI is required to be disclosed - in a deviation from DRS 17 - at the target
+value for an "average probability scenario" at the grant date. For these purposes, Infineon
+assumes 100 percent target achievement. In addition, the pension expense, i.e. the service
+cost pursuant to IAS 19 (see "Commitments to the Management Board upon termination of
+employment" in this chapter), is also required to be included in the amount of total compen-
+sation disclosed in accordance with the DCGK.
+The following table shows the value of compensation granted for the 2014 and 2015 fiscal years,
+including fringe benefits, as well as the minimum and maximum values that can be achieved
+for the 2015 fiscal year.
+Compensation granted in accordance with DCGK
+The DCGK recommends that the individual compensation components of each member of the
+Management Board be disclosed in accordance with specified criteria. It also recommends
+that disclosure is based on the model tables - in part diverging from DRS 17 - provided in the
+appendix to the Code.
+Management Board compensation in the 2015 fiscal year in accordance with
+the German Corporate Governance Code
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+1,075,000
+35,909
+1,110,909
+945,000
+35,909
+980,909
+480,000
+420,000
+Total compensation (DCGK)
+Pension expense
+Total variable compensation
+Performance Share Plan¹
+Long Term Incentive (LTI)
+2015-2017 tranche
+2014-2016 tranche
+Mid Term Incentive (MTI)
+Multi-year variable compensation
+420,000
+480,000
+Single-year variable compensation (STI)
+Variable compensation
+35,909
+1,110,909
+35,909
+1,110,909
+1,075,000
+1,075,000
+960,000
+The Supervisory Board has the right, at the end of the holding period, to make a cash settle-
+ment to the member of the Management Board rather than actually transfer Infineon shares.
+The shares are transferred to a securities custodian account attributable to the member of the
+Management Board; thereafter he/she can, as a general rule, freely dispose of them. The same
+also applies to Infineon shares acquired in conjunction with the own-investment requirement
+at the end of the holding period.
+535
+Consolidated Statement of Financial Position
+as of September 30, 2015 and 2014
+€ in millions
+Notes
+2015
+2014
+ASSETS:
+Cash and cash equivalents
+Financial investments
+Trade receivables
+Inventories
+Income tax receivable
+Other current assets
+673
+1,058
+11
+1,340
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+204
+460
+24
+634
+(27)
+(130)
+(27)
+(130)
+100
+12
+1,360
+(37)
+(1)
+62
+55
+35
+(75)
+669
+460
+669
+43
+2014
+12
+581
+33
+35
+Non-current income tax receivable
+9
+3
+Deferred tax assets
+9
+604
+378
+Other non-current assets
+17
+155
+141
+Total non-current assets
+4,626
+2,504
+Total assets
+16
+Investments accounted for using the equity method
+250
+1,738
+13
+1,129
+707
+9
+2
+7
+14
+229
+742
+221
+4,115
+3,934
+Property, plant and equipment
+15
+2,093
+1,700
+Goodwill and other intangible assets
+18
+Total current assets
+8,741
+2015
+Shareholders of Infineon Technologies AG
+9
+102
+(31)
+Income from continuing operations
+622
+488
+Income from discontinued operations, net of income taxes
+4
+12
+47
+634
+535
+Net income
+Attributable to:
+Non-controlling interests
+2
+632
+Income tax
+519
+520
+Income from continuing operations before income taxes
+7
+(58)
+(102)
+Operating income
+555
+525
+Financial income
+8
+535
+10
+Financial expenses
+8
+(49)
+(19)
+Gain from investments accounted for using the equity method
+16
+4
+3
+10
+Notes
+Basic earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:
+10
+0.48
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Statement of Comprehensive Income
+203
+Consolidated Statement of Comprehensive Income
+for the year ended September 30, 2015 and 2014
+€ in millions
+Net income
+Other comprehensive income
+Items that will not be reclassified to profit or loss:
+Actuarial losses on pension plans and similar commitments
+Total items that will not be reclassified to profit or loss
+Items that may be reclassified subsequently to profit or loss:
+Currency translation effects
+Net change in fair value of hedging instruments
+Net change in fair value of available-for-sale financial assets
+Total items that may be reclassified subsequently to profit or loss
+Other comprehensive income (loss) for the year, net of tax
+Total comprehensive income for the year, net of tax
+Attributable to:
+Non-controlling interests
+0.56
+10
+Diluted earnings per share (in euro)
+0.04
+0.55
+0.44
+Basic earnings per share (in euro) from discontinued operations
+10
+0.01
+0.04
+Basic earnings per share (in euro)
+10
+Basic earnings per share (in euro) from continuing operations
+0.56
+Diluted earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:
+Diluted earnings per share (in euro) from continuing operations
+10
+0.55
+0.44
+Diluted earnings per share (in euro) from discontinued operations
+10
+0.01
+0.48
+6,438
+€ in millions
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+9
+(102)
+31
+Net interest result
+8
+42
+9
+Gains on disposals of property, plant and equipment
+(7)
+(2)
+Dividends received from associated companies
+Impairment charges
+Other non-cash result
+Change in trade receivables
+Change in inventories
+16
+1
+Income tax
+514
+760
+15, 18
+6,438
+206
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Consolidated Statement of Cash Flows
+for the year ended September 30, 2015 and 2014
+€ in millions
+Net income
+1
+Minus: loss (income) from discontinued operations, net of income taxes
+Notes
+2015
+2014
+27
+634
+535
+(12)
+(47)
+Adjustments to reconcile net income to net cash provided by operating activities:
+Depreciation and amortization
+8,741
+15, 18
+3
+10
+Interest paid
+8
+(14)
+(9)
+Income tax paid
+9
+(93)
+(52)
+Net cash provided by operating activities from continuing operations
+Net cash used in operating activities from discontinued operations
+957
+988
+(140)
+(7)
+Net cash provided by operating activities
+817
+981
+(29)
+74
+་གླུ 8 ཋ
+8
+(2)
+12
+(65)
+(58)
+13
+(133)
+(89)
+Change in trade payables
+31
+19
+Change in provisions
+20
+(48)
+Change in other assets and liabilities
+(95)
+99
+Interest received
+8
+50
+Total liabilities and equity
+4,158
+4,665
+Other current liabilities
+21
+225
+261
+Total current liabilities
+Long-term debt
+Pension plans and similar commitments
+Deferred tax liabilities
+Long-term provisions
+Other non-current liabilities
+Total non-current liabilities
+Total liabilities
+Shareholders' equity:
+Ordinary share capital
+Additional paid-in capital
+Accumulated deficit
+Other reserves
+69
+123
+9
+Income tax payable
+205
+Consolidated Statement of Financial Position
+Notes
+2015
+2014
+LIABILITIES AND EQUITY:
+Short-term debt and current maturities of long-term debt
+22
+Own shares
+33
+Trade payables
+19
+802
+648
+Short-term provisions
+20
+402
+590
+35
+1,585
+1,603
+29
+2,255
+5,213
+5,414
+(2,897)
+(3,502)
+126
+64
+(37)
+2,259
+(37)
+(40)
+Equity attributable to shareholders of Infineon Technologies AG
+4,664
+4,154
+Non-controlling interests
+1
+4
+Total equity
+Put options on own shares
+Other operating expenses
+24
+2,280
+22
+22
+1,760
+151
+426
+379
+9
+147
+14
+5
+72
+70
+23
+86
+72
+2,491
+677
+4,076
+20
+26
+Shareholders of Infineon Technologies AG
+7
+2015
+50,000
+19,500
+15,000
+16,000
+100,500
+2014
+Peter Gruber
+50,000
+15,000
+28
+94,500
+Gerhard Hobbach
+2015
+50,000
+19,500
+7,500
+15,000
+42,750
+3,750
+10,000
+12,000
+68,333
+(since February 12, 2015)
+2014
+Reinhard Gottinger
+2015
+14,000
+20,833
+6,250
+4,000
+39,208
+(since April 1, 2014
+until February 12, 2015)
+2014
+25,000
+8,125
+16,000
+100,500
+2014
+19,500
+12,000
+81,500
+2014
+50,000
+7,500
+14,000
+50,000
+71,500
+2015
+33,333
+13,000
+10,000
+10,000
+66,333
+(since February 12, 2015)
+Dr. Susanne Lachenmann
+2015
+Prof. Dr. Renate Köcher
+98,500
+50,000
+7,500
+15,000
+20,000
+92,500
+Hans-Ulrich Holdenried
+2015
+50,000
+19,500
+15,000
+20,000
+104,500
+2014
+50,000
+7,500
+15,000
+26,000
+13,000
+33,333
+2015
+Annette Engelfried
+Supervisory Board
+Fixed
+compen-
+sation
+Variable
+compen-
+sation
+Allowance
+for specific
+functions
+Meeting
+attendance
+Total
+Member of the
+fees
+Peter Bauer
+2015
+33,333
+13,000
+8,000
+54,333
+(since February 12, 2015)
+compen-
+sation
+Fiscal year
+In €
+Supervisory Board compensation
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Corporate Governance
+Compensation report
+197
+Supervisory Board compensation
+Compensation structure
+The Supervisory Board compensation system was subjected to a thorough review in the 2010
+fiscal year and came into force with (retrospective) effect from October 1, 2010, in line with a
+proposal put forward by the Management Board and Supervisory Board to the Annual General
+Meeting on February 17, 2011.
+The compensation due to the Supervisory Board in each fiscal year (total compensation)
+is governed by section 11 of the Company's Articles of Association and comprises three
+components:
+> Fixed compensation (basic remuneration) of €50,000. This amount applies to each member
+of the Supervisory Board and is payable within one month of the end of the fiscal year;
+› A variable compensation component amounting to €1,500 for every €0.01 by which earnings
+per share exceed a minimum threshold of €0.30. This minimum threshold is increased by
+€0.03 every year, with the first increase taking effect for the fiscal year beginning October 1,
+2011. The minimum amount is therefore €0.42 for the 2015 fiscal year. The variable compen-
+sation component is determined in each case on the basis of the basic (undiluted) earnings
+per share from continuing operations, determined in accordance with the pertinent financial
+reporting regulations. The variable compensation component is limited to €50,000 per fiscal
+year. It also applies to each member of the Supervisory Board and falls due for payment
+once the Annual General Meeting following the fiscal year to which the compensation relates
+has ended;
+> An allowance recognizing the additional work involved in performing certain functions
+within the Supervisory Board: The Chairman of the Supervisory Board receives an allowance
+of €50,000, each Vice-chairman receives an allowance of €37,500, the Chairman of the Invest-
+ment, Finance and Audit Committee and the Chairwoman of the Strategy and Technology
+Committee each receive an allowance of €25,000 and each member of a Supervisory Board
+committee receives an allowance of €15,000 - with the exception of the Nomination Com-
+mittee and the Mediation Committee. The additional allowance is payable only if the body
+to which the Supervisory Board or committee member belongs has convened or passed
+resolutions in the fiscal year concerned. A member of the Supervisory Board performing more
+than one of the functions indicated receives only the highest single additional allowance
+payable to a member performing the functions concerned. The allowance is paid to the
+relevant holder of office within one month of the end of the fiscal year.
+In the event that a member, during a fiscal year, joins (or leaves) the Supervisory Board or
+one of its committees, or takes on a Supervisory Board function for which an allowance is
+paid, the relevant compensation components are disbursed on a pro-rata basis (payment of
+one twelfth of the relevant annual compensation component for each (started) month of
+membership or exercise of function).
+As part of the total compensation, the Company additionally grants each member of the
+Supervisory Board a meeting attendance fee of €2,000 per meeting of the Supervisory Board
+or one of its committees that is attended in person. The meeting attendance fee is paid only
+once in cases in which more than one meeting is held on a given day.
+Members of the Supervisory Board, moreover, are reimbursed for all expenses incurred in
+connection with the performance of their Supervisory Board duties and for any value-added
+tax payable by them in this connection. The Company also pays any value-added tax incurred
+on the total remuneration (including meeting attendance fees) of members of the Super-
+visory Board.
+198
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our 2015 fiscal year
+Compensation of the Supervisory Board for the 2015 fiscal year
+The total compensation (including meeting attendance fees) paid to the individual members
+of the Supervisory Board in the 2015 fiscal year comprises the following (these figures do not
+include value-added tax at 19 percent):
+2014
+2014
+Wigand Cramer
+20,833
+2015
+33,333
+13,000
+8,000
+54,333
+(since February 12, 2015)
+2014
+Dr. Herbert Diess
+Alfred Eibl
+(until March 31, 2014)
+2014
+25,000
+3,750
+7,500
+10,000
+46,250
+2015
+2014
+(since February 12, 2015)
+85,333
+8,125
+6,250
+10,000
+45,208
+(until February 12, 2015)
+2014
+50,000
+7,500
+15,000
+30,000
+102,500
+Johann Dechant
+2015
+33,333
+13,000
+25,000
+14,000
+2015
+Wolfgang Mayrhuber
+22,000
+50,000
+Members of the Supervisory Board did not receive any loans from Infineon in either the 2015
+or 2014 fiscal years.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+199
+Corporate Governance
+Compensation report
+Other matters (2015 fiscal year)
+The Company signed a contract on August 25, 2015 with the Technische Universität München
+relating to the provision of research and development services, to be performed primarily
+within the remit of the Chair of Professor Schmitt-Landsiedel. The Supervisory Board therefore
+approved the contract as a precautionary measure on August 4, 2015. No amount was paid
+in accordance with this contract to the Technische Universität München in the 2015 fiscal year.
+Neubiberg, November 20, 2015
+1 Based on earnings per share (undiluted) from continuing operations of €0.55 in 2015 and €0.44 in 2014.
+Management Board
+Dominik Asam
+Arunjai Mittal
+200
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Consolidated
+Financial
+Statements
+Dr. Reinhard Ploss
+202
+1,196,000
+248,000 1,517,830
+26,000
+108,500
+Diana Vitale
+2015
+33,333
+13,000
+8,000
+286,000
+54,333
+2014
+Total
+2015
+2014
+745,830
+600,000
+290,875
+90,000
+233,125
+220,000
+(since February 12, 2015)
+CONSOLIDATED STATEMENT OF OPERATIONS
+203
+204
+Revenue
+Cost of goods sold
+Gross profit
+Research and development expenses
+Selling, general and administrative expenses
+Other operating income
+5,795
+2014
+4,320
+(2,673)
+2,080
+1,647
+(717)
+(550)
+(778)
+(496)
+(3,715)
+2015
+Notes
+€ in millions
+206
+208
+210
+CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+CONSOLIDATED STATEMENT OF CASH FLOWS
+2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+201
+Consolidated
+Financial Statements
+202
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Consolidated Statement of Operations
+for the year ended September 30, 2015 and 2014
+25,000
+7,500
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+2014
+Gerd Schmidt
+2015
+20,833
+8,125
+15,625
+10,000
+54,583
+79,500
+(until February 12, 2015)
+50,000
+7,500
+37,500
+28,000
+123,000
+Prof. Dr. Doris
+2015
+2014
+22,000
+7,500
+50,000
+50,000
+19,500
+50,000
+28,000
+147,500
+2014
+50,000
+7,500
+50,000
+34,000
+141,500
+Dr. Manfred Puffer
+2015
+50,000
+19,500
+14,000
+83,500
+50,000
+19,500
+2014
+(since February 12, 2015)
+22,000
+94,500
+2015
+33,333
+13,000
+8,000
+54,333
+2014
+Dr. Eckart Sünner
+2015
+50,000
+19,500
+25,000
+18,000
+25,000
+15,000
+7,500
+Kerstin Schulzendorf
+2014
+16,000
+110,500
+Schmitt-Landsiedel
+2014
+50,000
+7,500
+50,000
+18,000
+100,500
+25,000
+112,500
+2015
+50,000
+19,500
+15,000
+16,000
+Jürgen Scholz
+100,500
+(202)
+605
+Total comprehensive income (loss)
+for the period, net of tax
+Dividends
+(27)
+2,255
+632
+1,127,739,230
+Issuance of ordinary shares:
+Exercise of stock options
+5,414
+Other comprehensive income (loss)
+for the period, net of tax
+(3,502)
+24
+1,532,251
+4
+9
+6
+Other changes in equity
+(14)
+Balance as of September 30, 2015
+1,129,271,481
+Net income
+2,259
+Share-based compensation
+Put options on own shares
+Balance as of October 1, 2014
+(130)
+5,414
+5,213
+Share-based compensation
+1,081,083,034
+2,162
+5,549
+(3,907)
+535
+405
+(129)
+484,260
+1
+46,171,936
+92
+7
+6
+Put options on own shares
+3
+Other changes in equity
+(22)
+Balance as of September 30, 2014
+1,127,739,230
+2,255
+(3,502)
+(2,897)
+6
+currency
+(40)
+(37)
+35
+3
+26
+(18)
+4
+(22)
+(37)
+(37)
+535
+(40)
+99
+1
+99
+1
+(129)
+460
+(129)
+460
+Exercise of stock options
+Exercise of conversion rights
+(75)
+6
+Foreign
+3,776
+Non-controlling
+interests
+translation
+adjustment
+Other reserves
+Securities
+Hedges
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+209
+Consolidated Statement of Changes in Equity
+Own shares
+Put options
+on own shares
+Total equity
+attributable to
+shareholders
+Total equity
+of Infineon
+Technologies AG
+3
+(8)
+(37)
+12
+12
+43
+43
+3,776
+535
+(75)
+14
+Issuance of ordinary shares:
+Consolidated Statement of Cash Flows
+Other comprehensive income (loss)
+for the period, net of tax
+(567)
+Proceeds from sales of property, plant and equipment and other assets
+57
+4
+Net cash used in investing activities from continuing operations
+Net cash used in investing activities from discontinued operations
+Net cash used in investing activities
+(2,593)
+(272)
+(1)
+(2,593)
+(273)
+(646)
+Net change in short-term debt
+Proceeds from issuance of long-term debt
+Repurchase of subordinated convertible bonds
+Repayments of long-term debt
+Change in cash deposited as collateral
+Proceeds from issuance of ordinary shares
+22
+2
+28
+(1)
+22
+Net change in related party financial receivables and payables
+2,398
+15
+(101)
+€ in millions
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes
+2015
+2014
+Purchases of financial investments
+Proceeds from sales of financial investments
+Purchases of other equity investments
+11
+(1,478)
+(1,238)
+Purchases of property, plant and equipment
+11
+1,637
+(14)
+Acquisitions of businesses, net of cash acquired
+3
+(1,869)
+(7)
+Purchases of intangible assets and other assets
+18
+(139)
+4,154
+1,496
+Total comprehensive income (loss)
+for the period, net of tax
+Dividends
+4
+(831)
+Cash and cash equivalents at end of period
+(413)
+529
+28
+2
+1,058
+527
+673
+207
+208
+Cash and cash equivalents at beginning of period
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Statement of Changes in Equity
+for the year ended September 30, 2015 and 2014
+€ in millions, except for number of shares
+Note
+Ordinary shares issued
+Additional
+paid-in capital
+Accumulated
+deficit
+Shares
+Amount
+Balance as of October 1, 2013
+Net income
+Consolidated Financial Statements
+22
+Effect of foreign exchange rate changes on cash and cash equivalents
+(179)
+(29)
+(35)
+7
+24
+11
+1
+Cash outflows due to changes of non-controlling interests
+3
+(15)
+Proceeds from the issuance of put options on own shares
+Net change in cash and cash equivalents
+24
+Dividend payments
+24
+(202)
+(129)
+Net cash provided by (used in) financing activities from continuing operations
+1,363
+(179)
+Net cash used in financing activities from discontinued operations
+Net cash provided by (used in) financing activities
+1,363
+3
+4
+1,058
+26
+Inventories
+Assets classified as held for sale
+Property, plant and equipment
+Goodwill
+Intangible assets (except goodwill):
+with definite useful life
+with indefinite useful life
+Other assets (current and non-current):
+Other financial assets:
+Loans and receivables
+Available-for-sale
+Measured at fair value through profit or loss
+Trade receivables
+Designated hedging instruments
+Measurement principle
+Nominal amount
+Fair value/amortized cost
+Fair value/amortized cost
+Lower of acquisition or production cost and net realizable value
+Lower of carrying amount and fair value less costs to sell
+(Amortized) Acquisition or production cost
+Impairment-only approach
+(Amortized) Acquisition or production cost
+Impairment-only approach
+Fair value/amortized cost
+Fair value directly through equity
+Fair value through profit or loss
+Remaining other assets
+Fair value directly through equity
+(Amortized) Cost
+Financial investments
+Assets
+2015
+2014
+134.1300
+138.9300
+136.4560
+139.0405
+4.9410
+4.1518
+4.2186
+4.3830
+1.5960
+Cash and cash equivalents
+1.6189
+1.7025
+1.1170
+1.2732
+1.1432
+1.3539
+214
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Recognition and measurement principles
+The following table summarizes the principal measurement bases used in the preparation of the Consolidated
+Financial Statements:
+Balance sheet item
+1.5429
+Equity and liabilities
+Trade payables
+Debt
+Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
+in an active market. At Infineon the balance sheet items "Cash and cash equivalents”, “financial investments",
+"trade receivables" and "current and non-current other assets" all contain financial assets which are classified in
+the category "loans and receivables".
+Loans and receivables are measured on initial recognition at their fair value plus incidental acquisition costs.
+Subsequently, they are measured at amortized cost using the effective interest method. Loans and receivables
+are tested for impairment. They are considered to be impaired when there is objective evidence that Infineon will
+not receive all amounts contractually due at the relevant due date. Objective evidence that indicates that impair-
+ment should be recorded would include, for example, known financial difficulties or the insolvency of a debtor.
+The impairment is recorded as an expense in profit or loss (in a separate allowance account). When a payment
+default becomes certain, such loans and receivables are considered to be uncollectible and derecognized along
+with the previously recognized allowance.
+Available-for-sale financial assets
+Available-for-sale financial assets are non-derivative financial assets that are either designated as available for sale,
+or are not allocated to any of the other categories (see above).
+Upon acquisition, available-for-sale financial assets are measured at fair value taking into account transaction
+costs. Subsequently they are measured at their fair value at the end of the relevant reporting period. Transaction
+costs relating to the acquisition of available-for-sale financial assets with a definite term and fixed or determinable
+payments are capitalized and recognized in the Consolidated Statement of Operations using the effective interest
+method. Changes in the fair value of available-for-sale financial assets are recognized directly in equity. If the fair
+value is permanently or significantly lower than the amortized cost, then an impairment loss is recognized through
+profit or loss.
+For available-for-sale financial assets, a significant or prolonged decline in the fair value of the financial asset
+below its acquisition cost is considered as an indicator that the assets are impaired. If any such evidence exists, the
+cumulative loss that had been recognized directly in equity - measured as the difference between the acquisition
+cost and the current fair value, less any impairment loss previously recognized in profit or loss - is removed from
+equity with affecting income.
+When financial assets classified as available-for-sale are sold, the accumulated fair value adjustments previously
+recognized in equity are reclassified to profit or loss.
+215
+216
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Loans and receivables
+Financial assets or liabilities measured at fair value through profit or loss
+Derivative financial instruments are categorized as held for trading and measured at fair value through profit or loss
+unless they are designated as hedging instruments and hedge accounting is applied. All fair value gains and losses
+are recognized through profit or loss. Changes in the fair value of undesignated derivative financial instruments
+that relate to operating activities are recorded as part of cost of goods sold, those of undesignated derivative financial
+instruments relating to financing activities are recorded in financial income or financial expense.
+All financial instruments in this category are measured at the value at the trading date. Derivative financial
+instruments with a positive fair value at the end of the reporting period are reported as "Other current assets"
+and those with a negative fair value at the end of the reporting period are reported as “Other current liabilities”.
+Infineon had no derivative financial instruments with a remaining term of more than 12 months in place as of
+September 30, 2015 and 2014.
+Designated hedging instruments (cash flow hedges)
+Certain derivative financial instruments are used to hedge foreign currency risks or risks of commodity price
+changes (such as gold prices) for expected and highly probable future transactions in order to minimize the
+associated risk (cash flow hedges).
+Derivative financial instruments are measured at their fair value and included in "Other current assets" or
+"Other current liabilities".
+The effective portion of changes in the fair value of derivative financial instruments that are designated as cash
+flow hedges and are part of hedging relationships that meet the criteria for hedge accounting is recognized directly
+in equity. "Effective" is the degree to which changes in the fair value or cash flows of the hedged items that are
+attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument. The
+gain or loss relating to the ineffective portion is recognized in profit or loss. Amounts accumulated in equity are
+recycled in profit or loss in the periods in which the underlying hedged item affects profit or loss.
+When a hedging instrument expires or is sold, or when a hedging relationship no longer meets the criteria for hedge
+accounting, any cumulative gain or loss existing at that time remains in equity until the underlying transaction
+actually occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was
+reported in equity is immediately transferred to profit or loss.
+Other financial liabilities
+Upon acquisition other financial liabilities are measured at fair value after deduction of transaction costs.
+In subsequent periods they are measured at amortized cost using the effective interest method. The liability is
+derecognized when the contractual obligation is discharged, cancelled or expired.
+Put options on own shares
+Put options issued by the Company on its own shares are reported as "Obligation to acquire own shares" within
+other current liabilities provided settlement must occur by the delivery of a fixed number of shares in return for
+a fixed payment specified in advance. The obligation is recognized at the date of issue of the put option, measured
+at the present value of the amount expected to settle the option. A corresponding amount is recognized as a
+reduction of equity, reported within equity as "Put options on own shares". The option premium received on the
+issue of the put options is recognized as additional paid-in capital. The liabilities are recognized on an accrual
+basis, with the accrued interest recorded as an interest expense. The liability is extinguished when the put options
+are exercised, at which point the corresponding amounts are reclassified within equity from "Put options on own
+shares" to "Own shares". If the put option lapses, the amounts previously recognized as a reduction of equity and
+as a liability are derecognized.
+At Infineon financial assets or liabilities measured at fair value through profit or loss comprise almost entirely of
+derivatives used to hedge currency risks for which hedge accounting is not applied.
+Infineon classifies financial liabilities into the following categories: "Financial liabilities measured at fair value
+through profit and loss" and "Other financial liabilities”. Furthermore, "Designated hedging instruments (cash flow
+hedges)" belong to financial liabilities.
+Infineon classifies financial assets into the following categories: "Loans and receivables", "Available-for-sale financial
+assets" and "Financial assets measured at fair value through profit and loss". "Designated hedging instruments
+(cash flow hedges)" also belong to financial assets. Financial instruments of the category "Assets held-to-maturity"
+were not recorded at Infineon.
+Financial assets are derecognized when the rights to receive payments from the investments have expired or
+have been transferred and Infineon has transferred all risks and rewards associated with ownership. Financial
+liabilities are derecognized when they are extinguished, that is when the contractual obligation is discharged,
+cancelled or expired.
+Provisions
+Pensions
+Fair value/amortized cost
+Fair value/amortized cost
+Projected unit credit method
+Expected settlement amount
+Other provisions
+Other liabilities (current and non-current):
+Other financial liabilities:
+Measured at fair value through profit or loss
+Designated hedging instruments
+Other financial liabilities
+Remaining other liabilities
+Put options on own shares
+Own shares
+Fair value through profit or loss
+Fair value directly through equity
+Fair value/amortized cost
+Fair value/amortized cost
+Present value of nominal amount at date of issue
+Acquisition cost
+Cash and cash equivalents
+Cash and cash equivalents represent cash and all financial resources with a maturity at acquisition date of
+three months or less, and are measured at their nominal amount.
+Financial instruments
+A financial instrument is a contract that gives rise to a financial asset of one entity and at the same time a financial
+liability and/or equity instrument of another entity. Financial instruments containing both equity and liability
+elements (for example convertible bonds which give the holder the right to convert the bond into shares of the
+company), are required to be evaluated in accordance with IAS 32, "Financial Instruments: Presentation" and,
+where necessary, split into their equity and liability components.
+Financial instruments are initially recognized at their fair value. Transaction costs directly attributable to the
+acquisition or issuance of financial instruments are only included in the carrying amount if the financial instruments
+are not measured at fair value through profit or loss.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Regular purchases and sales of financial assets are recognized on the basis of the settlement date. The settlement
+date is the date on which an asset is delivered to or by Infineon.
+September 30, 2014
+September 30, 2015
+4,158
+Closing rate
+6
+6
+40
+40
+40
+(14)
+(5)
+(19)
+4,664
+1
+4,665
+13
+210
+Consolidated Financial Statements
+Notes to the Consolidated
+Financial Statements
+The Infineon Group ("Infineon”) comprising Infineon Technologies AG ("the Company") and its subsidiaries design,
+develop, manufacture and market a broad range of semiconductors and system solutions, collectively: semicon-
+ductors. The focus of activities is on automotive electronics, industrial electronics, information and communications
+infrastructure as well as hardware-based security. The product range includes standard, application-specific and
+customer-specific components as well as system solutions for power, digital, analog, high frequency and mixed-
+signal applications. More than half of Infineon's revenue is generated by power semiconductors, the remaining
+revenue is attributable to high frequency components, sensors, driver components as well as microcontrollers
+for automotive, industrial and security applications. Research and development sites, manufacturing facilities,
+investments and customers are located mainly in Europe, Asia and North America.
+Infineon Technologies AG is a listed company under German law and ultimate parent company of the Infineon Group.
+The principal office of the Company is Am Campeon 1 – 12, 85579 Neubiberg (Germany). The Company is registered
+in the Commercial Register of the District Court of Munich under the number HRB 126492.
+1 Basis of the Consolidated Financial Statements
+The Consolidated Financial Statements prepared by Infineon Technologies AG as ultimate parent company for the
+year ended September 30, 2015 have been prepared in accordance with International Financial Reporting Standards
+("IFRS") and related interpretations effective as of September 30, 2015 as issued by the International Accounting
+Standards Board ("IASB") to the extent to which the IFRS and Interpretations have been adopted by the European
+Union ("EU"). The Consolidated Financial Statements also comply with the supplementary requirements set forth
+in section 315a, paragraph 1, of the German Commercial Code ("Handelsgesetzbuch" or "HGB").
+The fiscal year end for both Infineon and the Company is September 30 of each year.
+The above-mentioned standards were complied with in full, on this basis the Consolidated Financial Statements
+convey a true and fair view of the financial position, cash flows and results of operations of Infineon.
+The Consolidated Financial Statements comprise the Consolidated Statement of Operations, Consolidated
+Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of
+Cash Flows, Consolidated Statement of Changes in Equity and the Notes to the Consolidated Financial Statements.
+The Consolidated Statement of Operations is presented using the cost of sales method.
+Infineon's accounting policies are described in more detail in note 2. The accounting and valuation policies used,
+as well as the explanatory comments and disclosures made in the IFRS Consolidated Financial Statements for
+the 2015 fiscal year are generally based on those used in the Consolidated Financial Statements for the year ended
+September 30, 2014.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+(202)
+(202)
+669
+Annual average exchange rate
+3
+35
+(37)
+(40)
+4,154
+4
+4,158
+632
+2
+634
+100
+(4)
+(34)
+100
+(4)
+(34)
+126
+(1)
+1
+(37)
+35
+35
+667
+2
+All amounts herein are presented in euros ("€") except where otherwise stated.
+Deviations between amounts presented are possible due to rounding. Negative amounts are presented in parentheses.
+13
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+A list of subsidiaries of Infineon Technologies AG is provided in note 35.
+Investments accounted for using the equity method
+Investments in associated companies and joint ventures (as defined below) are accounted for using the equity method
+(collectively: "Investments Accounted for Using the Equity Method").
+Associated companies and joint ventures
+An "associated company" is an entity over which Infineon has significant influence. Significant influence is the
+power to participate in the financial and operating policy decisions of the investee but is not control or joint control
+of those policies.
+A "joint venture" is a joint agreement whereby the parties that have joint control of the arrangement have rights to
+the net assets of the arrangement.
+A list of the associated companies of Infineon Technologies AG is provided in note 35.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+213
+Equity method
+Goodwill arising from the acquisition of an associated company or joint venture is included in the carrying amount
+of the investment (net of accumulated impairment losses). Impairment losses in excess of the carrying amount of
+the investment in the entity are charged against other assets held related to the investment, such as intercompany
+loans or other receivables. If the carrying amount of the investment and of other assets related to the investment
+is written down to zero, it must be determined whether there are additional losses to be recognized, to the extent
+that Infineon has an obligation to fund such losses.
+The balance sheet effects of intragroup transactions as well as gains and losses arising from intragroup business
+relationships are eliminated on consolidation.
+Gains and losses on transactions with entities in which Infineon has an investment accounted for using the equity
+method are eliminated in proportion to Infineon's interest in the entity.
+Other equity investments, where Infineon has an ownership interest of less than 20 percent and does not have
+significant influence, are recorded at acquisition cost less any necessary write-downs for impairment if a fair value
+cannot be reliably determined.
+Functional currency, reporting currency and foreign currency translation
+The currency of the primary economic environment in which an entity operates and normally generates and expends
+cash is considered to be the functional currency of that entity. The functional currency of Infineon Technologies AG
+is the euro. The Consolidated Financial Statements have been prepared with the euro as reporting currency.
+Foreign currency transactions are translated into the functional currency of the relevant entity using the exchange
+rates prevailing at the transaction date. Monetary assets and liabilities which are not denominated in the functional
+currency of the reporting entity are translated at the closing exchange rate prevailing at the end of the relevant
+reporting period. Exchange rate gains and losses from the currency translation are recognized in the Consolidated
+Statement of Operations as part of the operating result.
+The assets and liabilities of foreign subsidiaries with functional currencies other than the euro are translated
+into euros using period-end exchange rates. Income and expenses of these entities are translated using the
+average exchange rate for the period under report. All cumulative differences arising from the currency translation
+of the equity in foreign subsidiaries arising from changes to exchange rates are recognized directly in equity in
+"Other reserves".
+The exchange rates of the primary currencies (€1 in foreign currency units) used in the preparation of the
+accompanying Consolidated Financial Statements, in alphabetical order, are as follows:
+€1 in units of foreign currency
+Japanese yen
+Malaysian ringgit
+Singapore dollar
+The Company's Management Board approved the Consolidated Financial Statements for submission to the
+Company's Supervisory Board on November 20, 2015.
+US dollar
+Other equity investments
+The financial statements of entities included in the Consolidated Financial Statements are prepared using uniform
+valuation and accounting policies.
+Based on the cost of investment at the date of acquisition of an interest in an associated company or joint venture,
+the carrying amount of the investment is increased or decreased at each subsequent reporting date for the share
+of profits or losses, dividends paid and other changes in equity of the associated company or joint venture, to the
+extent that they relate to Infineon's share of the investment.
+› Amendments to the transitional provisions of IFRS 10, IFRS 11 and IFRS 12 (effective date: January 1, 2014).
+These changes did not have a significant impact on the Consolidated Financial Statements.
+211
+Financial reporting rules applied for the first time
+An entity is included in the Consolidated Financial Statements from the date on which Infineon acquires control.
+Upon first-time consolidation of an entity, the acquired assets and liabilities are measured on the basis of their fair
+value at the acquisition date. Any excess of consideration paid (purchase price) over the share of the fair value of
+acquired assets, liabilities and contingent liabilities is recognized as goodwill. Any excess of Infineon's share of the
+fair value of items acquired over consideration paid is recognized as a gain.
+The IASB has issued the following Standards or amendments to Standards, which are required to be applied in
+the Consolidated Financial Statements for the year ended September 30, 2015:
+› Amendment to IAS 28 "Investments in associates and joint ventures" (effective date: January 1, 2014).
+These changes had no significant impact on the Consolidated Financial Statements.
+› Amendments to IAS 32 "Financial Instruments: Presentation - Offsetting Financial Assets and Financial
+Liabilities" (effective date: January 1, 2014). These changes had no significant impact on the Consolidated
+Financial Statements.
+› Amendments to IAS 36 "Disclosure of recoverable amount for non-financial assets” (effective date:
+January 1, 2014). These changes had no significant impact on the Consolidated Financial Statements.
+> IFRS 10 "Consolidated Financial Statements", IFRS 11 "Joint Arrangements", IFRS 12 "Disclosure of Interests
+in Other Entities”, IAS 27 "Separate Financial Statements" (effective date: January 1, 2014). IFRS 10 contains
+a new and broader definition of "control". A parent company has control when it has the decision-making power
+over the potential subsidiary based on voting rights or other rights, participates in positive as well as negative
+variable returns of the subsidiary and through its decision-making power can influence these returns. IFRS 11
+differentiates between Joint Operations and Joint Ventures. The accounting consequences of which are line-
+by-line accounting (joint operation) or equity accounting (joint venture). The disclosures of interests in other
+entities are the subject of IFRS 12. As a result of the introduction of the new standards IFRS 10-12, IAS 27 was
+amended accordingly. The application of IFRS 10, IFRS 11, IFRS 12 and IAS 27 had no significant impact on the
+Consolidated Financial Statements.
+Financial reporting rules issued not yet adopted
+The following new or amended Standards have been issued by the IASB and will generally be relevant to Infineon
+from today's perspective. They have not been applied in the Consolidated Financial Statements as of September 30,
+2015 since they are not yet mandatory or, alternatively, have not yet been endorsed by the EU. The new or amended
+Standards are applicable for fiscal years beginning on or after their respective effective date. As a general rule, they
+are not adopted before their effective date, even if this is permitted for certain standards:
+› Amendments to IAS 1 "Disclosure Initiative" (effective date: January 1, 2016). Infineon is currently analyzing the
+impact on the Consolidated Financial Statements.
+> IFRS 9 "Financial Instruments” (effective date: January 1, 2018). Infineon is currently analyzing the impact on
+the Consolidated Financial Statements.
+› Amendments to IAS 16 and IAS 38 "Clarification of Acceptable Methods of Depreciation and Amortization"
+(effective date: January 1, 2016). These changes will not have a significant impact on the Consolidated Financial
+Statements.
+Control exists when Infineon is subjected to variable returns arising from its engagement with the subsidiary or
+has a right to such, and has the ability to influence these returns as a result of its power over the subsidiary.
+Power means that Infineon has existing rights that give Infineon the current ability to direct the relevant activities
+(the activities that significantly affect the investee's returns).
+> IFRS 15 "Revenue from contracts with customers" (effective date: January 1, 2018). Infineon is currently
+analyzing the impact on the Consolidated Financial Statements.
+212
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The Consolidated Financial Statements presented here include the financial statements of Infineon Technologies AG
+and its direct and indirect subsidiaries on a consolidated basis. A subsidiary is defined as an entity which, directly or
+indirectly, is controlled by Infineon Technologies AG.
+Consolidated Financial Statements
+› Annual IFRS improvement cycle 2010-2012 (effective date: February 1, 2015). Infineon is currently analyzing
+the impact on the Consolidated Financial Statements.
+› Amendments to IFRS 10 and IAS 28 "Sale or contribution of assets between an investor and its associate or
+joint venture" (effective date January 1, 2016 but indefinite postponement has been proposed) Infineon is
+currently analyzing the impact on the Consolidated Financial Statements.
+› Annual IFRS improvement cycle 2011-2013 (effective date: January 1, 2015). Infineon is currently analyzing
+the impact on the Consolidated Financial Statements.
+> Annual IFRS improvement cycle 2012-2014 (effective date: January 1, 2016). Infineon is currently analyzing
+the impact on the Consolidated Financial Statements.
+2 Summary of Significant Accounting Policies
+Basis of consolidation
+Share-based compensation
+Grants for investments include both tax-free investment grants and taxable grants for investments in property,
+plant and equipment. Grants are recognized when it is reasonably assured that Infineon will comply with the
+conditions attached to the grant, and it is reasonably assured that the grant will be received. Tax-free investment
+grants are deferred and recognized over the remaining useful life of the subsidized asset. Taxable grants are
+deducted from the purchase and production cost of the related asset and thereby reduce depreciation and amorti-
+zation expense in future periods.
+Grants
+Grants that are related to expenses are presented as a reduction of the related expense in the Consolidated
+Statement of Operations (see note 5).
+Capitalized development costs are reviewed for impairment annually as long as amortization over the expected
+useful life has not begun and, additionally, when evidence for a potential impairment exists. In particular, a decline
+in expected revenue or higher costs is evidence for a potential impairment.
+All assumptions and estimates are based on the circumstances and assessments as of the balance sheet date, and
+taking into account knowledge gained up to the approval by the Management Board of the Consolidated Financial
+Statements on November 20, 2015.
+Costs of research activities undertaken in order to gain new scientific or technical knowledge are expensed
+as incurred.
+Research and development costs
+Other returns are permitted only for quality-related reasons in the normal course of business within the applicable
+warranty period. Infineon records provisions for warranty costs as a charge to cost of goods sold based on historical
+experience as well as information available about other warranty costs.
+Infineon has compensation plans in place in which equity instruments such as stock options or so-called perfor-
+mance shares are granted to members of the Management Board, senior managers and selected employees. In
+accordance with IFRS 2 "Share-based Payment", these compensation plans qualify as equity-settled share-based
+compensation and are accounted for accordingly. The fair value on the date of grant of the equity instruments
+granted is determined by an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model) and recognized as expense on a straight-line basis over the vesting period during which Infineon
+receives consideration from the Management Board or employee in the form of work performed, and, with respect
+to the stock options, the achievement of the respective targets (outperformance of the Philadelphia Semiconductor
+Index (SOX) over a predetermined period) is expected. The expense is charged to costs by function as part of the
+operating result and credited directly to equity (additional paid-in capital). The amount recognized as expense is
+adjusted in order to reflect either the actual number of equity instruments that can ultimately be exercised by the
+Management Board and employees, or the number allocated to the Management Board and employees.
+In some cases, rebate programs are offered to specific customers or distributors whereby the customer or distributor
+is granted a rebate upon achievement of a defined sales volume. Such rebates are taken into account for revenue
+recognition purposes.
+Costs for development activities, the results of which lead to a plan or design for the production of new or sub-
+stantially improved products or process improvements, are capitalized if the development costs can be measured
+reliably, the product or process is technically and commercially feasible, future economic benefits are probable
+and Infineon intends, and has sufficient resources, to complete development and use or sell the asset. The costs
+capitalized include the cost of materials, direct labor and directly attributable general overhead expense that
+serves to prepare the asset for use. Such capitalized costs are presented as internally generated intangible assets
+within "Goodwill and other intangible assets" (see note 18). Development costs, which do not fulfill the criteria
+for capitalization, are expensed as incurred. Capitalized development costs are stated at cost less accumulated
+amortization and impairment charges. After the completion of the development phase and following the ramp-up
+of production, internally generated intangible assets are generally amortized as part of cost of goods sold over
+a period of three to five years.
+The proceeds received net of any directly attributable transaction costs are recognized in ordinary share capital and
+additional paid-in capital when the stock options are exercised. Performance shares do not result in any cash inflows.
+> recognition and valuation of provisions (see "Provisions" and notes 20 and 32) and
+Estimates and assumptions
+The preparation of financial statements in accordance with IFRS requires management to make estimates and
+assumptions that have an impact on the presented amounts and the associated disclosures.
+Estimates and assumptions undergo regular review and must be adjusted where appropriate. They can vary from
+period to period and have a material effect on the financial condition, liquidity position and results of operations
+of Infineon.
+Although these estimates and assumptions are applied by management to the best of its knowledge based on
+current events and circumstances, actual events may result in deviations from these estimates.
+Areas containing estimates and assumptions and that are consequently most likely to be affected when actual
+results vary from estimates are:
+> valuation of inventory (see "Inventories" and note 13),
+> recoverability of trade receivables (see note 12),
+> recoverability of non-financial assets especially goodwill (see "Recoverability of intangible assets and other
+long-lived assets" and note 18),
+> recognition and recoverability of deferred tax assets (see "Current and deferred income taxes" and note 9),
+> valuation of pension plans (see "Pensions and similar obligations" and note 29).
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+In addition, distributors can, subject to certain conditions, exchange inventory for the same or other products,
+(stock rotation) or request scrap allowances. Stock rotation credit notes are accrued based on expected stock
+rotation in accordance with the contractual agreement. Distributor scrap allowances are accrued based on the
+contractual agreement and, upon submission of a valid claim, are granted up to a certain maximum based on turn-
+over in a given period. Historically, actual returns under such return provisions have been not material. Infineon
+monitors such product returns on an ongoing basis.
+3 Acquisitions
+All items of income and expense relating to defined benefit plans, with the exception of the net interest result,
+are recognized on a net basis in the functional areas within the operating result. The net interest result arising
+from the multiplication of the net pension obligation (pension obligation less plan assets) by the discount rate is
+reported as financial expense. Actuarial gains and losses resulting from experience adjustments for defined benefit
+pension obligations and plan assets and from changes in actuarial assumptions are recognized directly in equity
+and presented in the Consolidated Statement of Comprehensive Income in the period in which they arise. Past
+service costs are recognized immediately in profit or loss.
+222
+Consolidated Financial Statements
+Provisions
+Provisions are recognized for present legal and constructive obligations arising from past events that are likely to
+result in a future outflow of resources, the amount of which can be reliably estimated.
+With regard to legal proceedings and litigation, for example the Qimonda insolvency, Infineon regularly assesses
+the probability of an unfavorable outcome. Infineon records provisions and liabilities, including provisions for
+significant legal costs, for those obligations and risks relating to legal disputes which it assesses at the relevant
+reporting date are likely to occur. That is where, from Infineon's perspective at the date of assessment, there is
+compelling evidence which indicates an obligation or risk, and the obligation or risk can be quantified with reason-
+able accuracy at the time of assessment. As soon as additional information is available the affected estimates are
+reviewed and, where necessary, provisions for these proceedings are revised.
+Provisions are measured at their expected settlement amount in accordance with IAS 37 "Provisions, Contingent
+Liabilities and Contingent Assets" or, where applicable, also in accordance with IAS 19 "Employee Benefits". The
+amount recognized for a provision is the best estimate of the expenditure required to settle the present obligation.
+Estimates of outcomes and financial effects are dependent upon the judgment of management, supplemented
+by experience gained from similar transactions and, where appropriate, the assessment of independent experts.
+The evidence considered also includes events after the reporting period and up to the date of preparation of the
+Consolidated Financial Statements. If the circumstances to be assessed encompass a large number of possible out-
+comes, the obligation is estimated by weighting all possible outcomes by their associated probabilities (expected
+value method). Where there is a continuous range of possible outcomes and each point in that range is as likely as
+any other, the average is used.
+Where cash flows are expected to arise after the next twelve months and the interest effect is considered material,
+provisions are stated at the present value of expected cash outflows. For the purposes of the present value calculation,
+Infineon uses a pre-tax interest rate that reflects current market interest rate expectations and the risks specific to
+the liability. In estimating the future outflow of economic benefits Infineon also includes inflation assumptions if
+applicable. Provisions for onerous contracts are measured at the lower of the expected cost of fulfilment or termi-
+nation of the contract. Additions to provisions are generally recognized in profit or loss.
+There is no offsetting with positive profit or loss effects. Claims for reimbursements from third parties are not offset
+against provisions, instead they are capitalized separately if their realization is virtually certain.
+If the obligation decreases as a result of a change in the estimate, the provision is reversed proportionately and the
+resulting income recognized in the same functional area of the Consolidated Statement of Operations in which the
+original charge was recognized.
+Contingent liabilities
+224
+Contingent liabilities are either possible obligations whose actual existence is dependent on the occurrence of
+one or more uncertain future events not wholly within the control of Infineon. Or they are present obligations that
+will probably not result in the outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position, instead they are disclosed and
+described in the Notes to the Consolidated Financial Statements (see notes 32 and 33).
+Own shares held are measured at acquisition cost, including directly attributable transaction costs, and reported
+as a reduction of equity. In the case of own shares acquired by way of issuing put options on own shares, acquisition
+cost corresponds to the present value of the exercise value of the put options discounted back to issuance date.
+When own shares are cancelled at a subsequent date, Infineon's share capital is reduced by the appropriate pro rata
+amount of the shares to total share capital. Additional paid-in capital is reduced by the remaining difference to the
+acquisition cost.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+223
+Segment reporting
+The Management Board of Infineon Technologies AG, in its role as Infineon's chief operating decision maker,
+allocates resources and assesses the profitability of the operating segments. Segments and regions are identified
+and key performance figures selected in accordance with internal management and reporting systems (management
+approach). Underlying data used for this purpose are derived from the Consolidated Financial Statements drawn
+up in accordance with IFRS.
+Infineon's business is structured in four operating segments, namely Automotive, Industrial Power Control,
+Power Management & Multimarket and Chip Card & Security.
+The remaining activities of operations that have been sold are aggregated into "Other Operating Segments". Results
+and specific Group functions not allocated to the operating segments are recorded in "Corporate and Eliminations”.
+Revenue recognition
+Infineon generates revenues from the sale of semiconductor products and related system solutions. Infineon's
+semiconductor products include a wide variety of chips and components used in electronic applications ranging
+from automotive electronics and industrial applications to chip cards. Infineon's products are also used in a wide
+variety of microelectronic applications, such as computer systems, telecommunications systems and consumer
+goods. Revenue is allocated to the individual segments on the basis of differences in product type and applications.
+In addition, Infineon generates a small portion of its revenue from licensing its intellectual property rights to
+third parties, as well as development arrangements.
+Revenues are measured on the basis of the fair value of the consideration receivable.
+Revenues from product sales are recognized when the significant risks and rewards of ownership of the goods are
+transferred to the buyer and it is sufficiently probable that the economic benefits associated with the sale will
+flow to Infineon. The amount of revenues recognized is based on the fair value of the consideration received or
+receivable taking into account returns, settlement discounts and bonuses.
+In principle Infineon recognizes revenue on sales to distributors by using the “sell in" method, that is when a
+product is sold to the distributor. In accordance with established business practice in the semiconductor industry,
+under certain circumstances distributors can apply for price protection and ship and debit credit notes. Price
+protection allows a distributor to request a credit note for unsold products held in inventory if Infineon reduced
+the standard list price of these products. In addition, in certain cases the distributor may request a ship and debit
+credit note for retrospective price adjustments. The authorization of these credits remains fully within the control
+of Infineon. Infineon calculates the provision for price protection and ship and debit in the period in which the
+related revenue is recorded. The ship and debit provision is determined based on rolling trends in the difference
+between the contract price and the standard list price to the distributor. The price protection provision is based on
+actual list prices and distributor inventory on hand. The availability of detailed distributor inventory data, the
+transparency of pricing for standard products and the long distributor pricing history enable Infineon to reliably
+estimate provisions for price protection and ship & debit credit notes at the end of the reporting period.
+Own shares
+International Rectifier Corporation
+Owing to the size and complexity of the acquisition, the analysis and valuation of the assets and liabilities acquired
+is not fully completed as at the date of publication of these Consolidated Financial Statements. Accordingly,
+the balances reported in these Consolidated Financial Statements as at September 30, 2015 should be considered
+preliminary.
+With this acquisition Infineon improves its competitive position. The Company benefits from the combination with
+a larger product portfolio and a broader regional presence, in particular with small and medium-sized companies in
+the USA and Asia. Through the integration, Infineon increases its power semiconductor and packaging technology
+expertise on the one hand, and on the other hand obtains additional system know-how in the field of power supply
+to electrical devices and motors. Additionally, knowledge of compound semiconductors, in particular Gallium
+Nitride, is pooled through the acquisition. Economies of scale arising in research and development as well as pro-
+duction strengthen the competitiveness of the company.
+556
+88
+266
+22
+379
+701
+11
+20
+2,043
+98
+20
+27
+(preliminary)
+183
+16
+348
+1,695
+729
+2,424
+2,425
+(556)
+1,869
+Discount rates are determined on the basis of market yields at the end of the reporting period on high-grade,
+fixed interest corporate bonds from issuers carrying a very high credit rating that are denominated in the currency
+in which the benefits will be paid and that have remaining maturities approximating the terms of the related
+pension liability.
+According to a preliminary valuation, goodwill arising from the acquisition totals €729 million which is not
+deductible for tax purposes. This goodwill from the acquisition of International Rectifier is primarily attributable
+to synergies and cost benefits arising from economies of scale.
+Costs arising directly from the acquisition of International Rectifier (such as legal fees and bank commission),
+which form part of acquisition-related amortization and other expenses, amount to €10 million in total and are
+recognized entirely in selling, general and administrative expenses.
+The gross carrying amount of the trade receivables acquired amount to €88 million at the acquisition date and
+correspond to their fair value.
+4
+The acquisition of 100 percent of the shares and associated voting rights of International Rectifier Corporation
+("International Rectifier") based in El Segundo, California (USA) announced on August 20, 2014 was closed by
+Infineon on January 13, 2015.
+1 Including €5 million foreign currency effect.
+Acquired cash and cash equivalents
+The consideration transferred (purchase price) of the acquired company amounts to US$3,026 million. The purchase
+price allocation, based on the fair value of the assets, liabilities and contingent liabilities at the acquisition date,
+results in the recognition of intangible assets such as technologies, customer relationships and brands, and goodwill.
+225
+226
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+The following table presents the preliminary allocation of the purchase price to assets and liabilities at the date
+of the acquisition:
+€ in millions
+Cash and cash equivalents
+Trade receivables
+Inventories
+Other current assets
+Property, plant and equipment
+Intangible assets
+Net cash outflow for the acquisition
+Deferred tax assets
+Total assets
+Trade payables
+Short-term provisions
+Other current liabilities
+Deferred tax liabilities
+Long-term provisions
+Other non-current liabilities
+Total liabilities
+Net assets acquired
+Goodwill
+Purchase price
+Paid in cash and cash equivalents during the 2015 fiscal year¹
+Other non-current assets
+All other plans that do not fall under the definition of a defined contribution plan are accounted for as defined
+benefit plans. These relate to the commitments of the Company to pay vested rights and current benefits to
+eligible present and former employees and their dependants. The obligations also relate to retirement pensions.
+The liability recognized in respect of defined benefit pension plans is the present value of the defined benefit
+obligation (DBO) at the end of the reporting period less the fair value of the plan assets, together with adjustments
+for past service costs. The present value of the DBO and resulting pension cost are determined in accordance with
+IAS 19 "Employee Benefits” annually for each separate plan by independent, qualified actuaries using the projected-
+unit-credit method. For the calculation, actuarial procedures are applied for which it is necessary to make specific
+assumptions. The most important of these are the discount rate, future expected increases in salaries and pensions,
+and mortality rates.
+2014
+Infineon provides benefits to most of its employees for the period after they have retired, either directly or as a
+result of payments to private and public institutions. The benefits provided differ according to the legal, economic
+and tax circumstances prevailing in the respective country and are mostly dependent on the length of service and
+the salary of the employee concerned. The occupational pension plans include both defined contribution and
+defined benefit plans.
+Impairment losses are recognized with non-scheduled depreciation. Corresponding reversals are made when the
+reasons for previous impairments no longer exist, provided that the reversal does not cause the carrying amount to
+exceed amortized acquisition or construction cost.
+When assets are sold, decommissioned or scrapped, the difference between the net proceeds and the carrying
+amount of the assets is recognized as a gain or loss in other operating income or expense.
+Infineon does not make use of the option to revalue property, plant and equipment as described in IAS 16 "Property,
+Plant and Equipment".
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+219
+Investment properties
+Infineon does not own any investment properties and therefore does not apply IAS 40 "Investment Properties".
+Leases
+Infineon is a lessee of property, plant and equipment. In the case of operating lease contracts, the lease costs
+are spread on a straight-line basis over the term of the lease arrangement. All leases where Infineon as lessee meets
+certain requirements which indicate beneficial ownership are accounted for as finance leases pursuant to IAS 17
+"Leases". This is the case when substantially all of the risks and rewards of ownership of the asset are transferred to
+Infineon as lessee.
+Recoverability of intangible assets and other long-lived assets
+Goodwill
+Goodwill is an intangible asset that represents the future economic benefits arising from assets acquired in a
+business combination that cannot be individually identified and separately recognized. Goodwill is the excess of
+the consideration paid for an interest in a business over the net fair value of acquired, separately identifiable assets,
+liabilities and contingent liabilities as at the date of acquisition. Goodwill arising from acquisitions of businesses
+is reported in the line item “Goodwill and other intangible assets" in the Consolidated Statement of Financial
+Position. Separately identifiable intangible assets acquired in a business combination are recognized and reported
+separately from goodwill.
+1-10
+Goodwill acquired in a business combination is allocated to the cash-generating units (CGUS) or groups of CGUS
+that will benefit from the synergies generated by the business combination. A CGU represents the smallest
+identifiable group of assets that generates cash inflows from continuing activities and that is as independent as
+possible from other assets or asset groups. In the year under report Infineon has allocated the goodwill arising
+from the acquisition of International Rectifier to the reporting segments identified as groups of CGUs that will
+benefit from the synergies arising from the business combination in accordance with IAS 36.
+Infineon determines the recoverable amount of a particular entity to which goodwill has been allocated on the
+basis of its value in use. The value in use is measured by estimating the present value of future cash flows that will
+be generated by the continuing operations of the entity discounted using an appropriate discount rate.
+Cash flows, including the underlying parameters such as revenue growth and gross margin, are projected based on
+past experience, current operating results and the five-year strategic business plan approved in the fiscal year just
+ended. The plan is calculated bottom-up based on certain central assumptions applied consistently throughout
+Infineon. Cash flows for periods beyond the planning horizon are estimated using a terminal value. Terminal
+growth rates used do not take into account investments to increase capacity for which no cash outflow has taken
+place, and are derived from publicly available market studies from market research institutes and do not exceed
+the historical long-term average growth rate for the sector in which the relevant segment operates.
+220
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+The discount rate is based on the after-tax weighted average cost of capital (WACC) for the entity in question.
+The Capital Asset Pricing Model (CAPM) is used to calculate the cost of equity. The relevant pre-tax WACC used to
+discount future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax cash flows and the
+after-tax WACC using a typical tax rate for each reporting segment. The risk-free interest rate is derived using the
+Svensson method taking into account risk premiums, and the beta factor and debt ratio are derived from a group of
+companies comparable to the operating segment. The discount rate derived in this way reflects the current market
+rate of return as well as the specific risks attached to the respective segment.
+The following table shows the allocation of the carrying amount of goodwill to the segments, as well as the valuation
+parameters used.
+Book value of
+allocated goodwill
+pre-tax WACC¹
+after-tax WACC¹
+terminal growth rate¹
+€ in millions
+Acquired goodwill is only amortized if there is evidence of impairment. Its value is tested at the operating segment
+level for possible impairment annually as at June 30 and, additionally, whenever there are events or changes
+in circumstances that indicate that the carrying amount may not be recoverable. The recoverable amount is the
+higher of the fair value less costs to sell and the value in use. If the carrying amount of the respective operating
+segment including allocated goodwill exceeds the recoverable amount of this entity, the goodwill is impaired
+accordingly. Such impairments cannot be reversed in a subsequent period.
+in %
+10-25
+3-10
+Other plant and office equipment
+Inventories
+Inventories encompass assets to be consumed in the production process or in the rendering of services (raw materials
+and supplies), that are in the production process at the balance sheet date (work in progress), or held for sale in
+the ordinary course of business (finished and purchased goods).
+Inventories are measured at the lower of acquisition or fully absorbed production cost - calculated using the
+weighted-average method - and net realizable value. Net realizable value corresponds to realizable sale proceeds
+under normal business conditions less estimated costs to complete and sell. Production cost comprises costs of
+material, production wages and an appropriate portion of attributable overheads, including attributable deprecia-
+tion and amortization on property, plant and equipment and intangible assets. Overhead mark-ups are determined
+on the basis of normal capacity utilization levels.
+Write-downs to net realizable value are recorded on inventories using a consistent approach throughout Infineon
+and are determined at product level for technically obsolete and slow-moving inventories on the basis of the
+amount of revenues expected to be generated by the relevant product.
+Current and deferred income taxes
+The current income tax expense is calculated in accordance with taxation provisions in force at the end of the
+reporting period.
+Deferred taxes are calculated on temporary differences between the tax base and the book value of assets and
+liabilities, and on tax losses available for carry-forward. By contrast, no deferred tax is recognized on goodwill
+arising in connection with business combinations. Similarly, deferred taxes are not recognized on the initial
+recognition of an asset or liability in connection with a transaction that is not a business combination and which,
+at the time of the transaction, affects neither the pre-tax income according to IFRS nor taxable profit.
+Details of unrecognized contingent liabilities relating to International Rectifier's legal disputes (in particular
+environmental risks) can be found in note 32 "Legal risks – litigation and government inquiries – other”.
+Deferred tax assets in respect of deductible temporary differences and tax loss carry-forwards which exceed
+deferred tax liabilities in respect of taxable temporary differences, are only recognized to the extent that it is
+probable that the relevant Group entity can generate sufficient taxable profit to realize the corresponding benefit.
+Infineon reviews deferred tax assets for impairment at every reporting date. The assessment requires management
+to make assumptions about future taxable profits as well as other positive and negative influencing factors.
+Deferred tax assets and liabilities are netted to the extent they relate to the same tax authority and to the same
+taxpayer or a group of different taxpayers who are jointly assessed for income tax purposes.
+Income taxes are recognized in the Consolidated Statement of Operations, with the exception of income taxes
+relating to items recognized directly in equity or in Other Comprehensive Income.
+For uncertain tax positions additional tax provisions are recorded or, in case of tax losses carried forward, respective
+deferred tax assets are reduced accordingly. The assessment of uncertain tax positions is based on best estimate.
+Discontinued operations
+Years
+Discontinued operations are reported when a component of an entity is either classified as held for sale or has
+already been disposed of. The component of an entity must be either (a) a separate major line of business or
+geographical area of operations, (b) part of a single coordinated plan to dispose a separate major line of business
+or geographical area of operations or (c) a subsidiary acquired exclusively with the intention to resale.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Discontinued operations are presented separately in the Consolidated Statement of Operations and Consolidated
+Statement of Cash Flows and the line item “Income/loss from discontinued operations, net of income taxes"
+includes the results of operating activities as well as gains and losses on the disposal of discontinued operations.
+Assets and liabilities held for sale
+Assets held for sale can be non-current assets or groups of assets (for example assets of a subsidiary held for sale
+or assets related to discontinued operations), the carrying amounts of which will be realized primarily by way
+of a highly probable divestment transaction within the next twelve months or an already executed divestment
+transaction, and not through continued use. Assets held for sale are reported in the Statement of Financial Position
+as a separate line item within current assets. Liabilities that will be disposed of in a transaction together with
+the assets held for sale are reported separately in the liabilities and equity section of the Statement of Financial
+Position, within current liabilities, as "Liabilities held for sale".
+Non-current assets classified as held for sale are no longer depreciated on a scheduled basis. Instead, they are
+measured at the lower of carrying amount or fair value less costs to sell at the end of the reporting period.
+Property, plant and equipment
+Property, plant and equipment are measured at amortized acquisition or construction cost, and its value is reduced
+by scheduled depreciation and considering any impairment.
+The cost of acquisition comprises the acquisition price plus incidental acquisition costs, and subsequent acquisition
+costs, less any reduction received on the acquisition price. The cost of self-constructed equipment comprises direct
+costs as well as appropriate allocations of the necessary material and manufacturing overheads.
+Where an obligation exists to decommission or dismantle an asset or restore a site to its former condition at the
+end of its useful life, the present value of the related future payments is capitalized along with the cost of acquisi-
+tion or construction at the point of purchase or completion, and is depreciated over the estimated useful life of
+the underlying asset. A liability is recognized for the same amount, the carrying amount of which is compounded
+in future periods.
+If the construction phase of property, plant or equipment extends over more than 12 months, the interest
+incurred on related borrowed capital up to the date of completion is capitalized as part of the cost of acquisition or
+construction in accordance with the requirements of IAS 23 "Borrowing Costs". No interest was capitalized in the
+2015 and 2014 fiscal years.
+Scheduled depreciation on property, plant and equipment is recorded using the straight-line method. Land,
+property rights and construction in progress are not depreciated on a scheduled basis. Scheduled depreciation on
+property, plant and equipment is based on the following useful lives, as applied consistently throughout Infineon:
+Buildings
+Technical equipment and machinery
+218
+In the case of defined contribution plans, Infineon pays pre-determined amounts based on statutory or contractual
+regulations to an independent fund or to public or private pension insurance companies. Once the contributions
+are paid, Infineon has no further performance obligation. The contributions are recognized as expense in the year
+in which they fall due and are included in costs by function within the operating result. Liabilities are recorded for
+payments due to the various defined contribution plans. Prepaid contributions are recognized as an asset to the
+extent that a cash refund or a reduction of future payments is possible.
+in %
+CGU within segment
+803
+25
+1 Valuation parameters as of June 30, 2015 and 2014.
+In addition, by applying different parameters that Infineon considers to be possible but not probable, sensitivity
+analyses are performed on the calculation of the gross margin and segment margin, the WACC and terminal growth
+rate. In this way, Infineon takes account of the inherently uncertain nature of estimates and carries out impairment
+tests on goodwill based on scenarios that are less favorable than those considered most likely. Changes considered
+to be possible to the parameters identified would have had no effect on the value of goodwill.
+As a result of the impairment tests and the resulting sensitivity analyses carried out, Infineon concluded that none of
+the operating segments gave rise to an impairment of goodwill in the year under report. As at the reporting date,
+there were no triggering events that indicate that the recoverable amount of an entity to which goodwill had been
+allocated could have fallen below the book value.
+Other intangible assets
+Other intangible assets consist primarily of purchased intangible assets, such as licenses, technology and customer
+relationships (including order backlog), which are measured at acquisition cost, as well as capitalized development
+costs. These intangible assets have definite useful lives and are valued at their amortized acquisition or production
+costs with amortization recorded using the straight-line method over their expected economic life.
+Scheduled amortization of intangible assets is based on the following useful lives, applied consistently throughout
+the Group:
+Capitalized development costs
+Customer relationships
+Technologies
+Licenses and similar rights
+Total
+Other intangible assets
+3-5
+1-12
+4-12
+3-5
+2-8
+Infineon did not hold any other intangible assets with indefinite useful lives in either the 2015 or 2014 fiscal years.
+Refer also to the section "Research and development costs".
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+221
+Other non-current assets
+Infineon reviews non-current assets, including property, plant and equipment, for possible impairment whenever
+events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The
+recoverability of assets held is measured by comparing the carrying amount of the asset with its recoverable amount.
+The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and its value in use.
+The value in use is generally calculated based on discounted future cash flows of the CGU to which the asset is
+allocated. Considerable management judgment is necessary to estimate future cash flows.
+If such assets are considered to be impaired, the impairment recognized is measured as the amount by which
+the carrying value of the assets exceeds their recoverable amount. An impairment loss recognized in prior periods
+for an asset other than goodwill is reversed insofar as, since the last impairment, a change in the underlying
+assumptions has occurred which leads to a lower impairment requirement. The maximum possible reversal of
+an impairment loss is that which would lead to the carrying amount that would have been determined (net of
+scheduled depreciation and amortization) if no impairment loss had been recognized for that asset in prior years.
+Pensions and similar obligations
+Years
+in %
+2
+Corporate
+2015
+2014
+2015
+2015
+2014
+2015
+2014
+Industrial Power Control
+51
+4
+13.9
+13.1
+2
+10.3
+1
+1
+Power Management
+& Multimarket
+750
+19
+15.0
+12.4
+11.0
+10.2
+1
+1
+10.3
+Deferred tax assets and liabilities are measured using applicable tax rates and laws that have been enacted by the
+end of the reporting period or are about to be enacted, and are to be applied when the related deferred tax asset is
+realized or the deferred tax liability is settled.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+217
+Investment funds
+1,296
+122
+62
+64
+1,340
+1,360
+2015
+2014
+751
+584
+2
+4
+753
+588
+(11)
+(7)
+1,156
+2014
+2015
+Allowance for doubtful accounts at end of the fiscal year
+Revenue and profit contribution of International Rectifier
+227
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+12 Trade Receivables
+Trade receivables due within one year at September 30, 2015 and 2014 consist of the following:
+€ in millions
+Trade receivables, third parties
+742
+Trade receivables, related parties
+Allowance for doubtful accounts
+Trade receivables, net
+Changes in the allowance for doubtful accounts for the 2015 and 2014 fiscal years were as follows:
+€ in millions
+Allowance for doubtful accounts at beginning of the fiscal year
+Usage of allowance, net
+Current year's allowance, net of reversals
+Trade receivables, gross
+581
+2015
+2014
+554
+16
+7
+With respect to trade receivables that are not overdue and not impaired at the end of the reporting period, there
+are no indications that customers, based on their past credit history and current creditworthiness assessments,
+are not able to meet their obligations.
+Receivables with a maturity of more than one year are presented as other non-current assets (see note 17).
+13 Inventories
+Inventories at September 30, 2015 and 2014 consist of the following:
+577
+€ in millions
+Work in progress
+Finished goods and merchandise
+Total
+2015
+2014
+98
+76
+Raw materials and supplies
+6
+16
+718
+7
+8
+-
+(1)
+4
+11
+7
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Third party trade receivables that are outstanding but not impaired at the reporting date comprise the following:
+€ in millions
+Carrying
+amount
+Thereof
+neither
+impaired nor
+past due
+Of which not impaired
+but past due
+Past due
+0-30 days
+Past due
+> 31 days
+Third party trade receivables, net of allowances as of September 30, 2015
+Third party trade receivables, net of allowances as of September 30, 2014
+740
+The amount of revenue and the net result from International Rectifier, which has been significantly affected by
+charges for acquisition-related amortization and other costs (see also note 34 Segment Reporting), and which has
+been taken into account in the Consolidated Statement of Operations for the reporting period since the acquisition
+date is as follows:
+€ in millions
+Revenue
+Loss after tax
+For the compliance with the requirements attached to the grants and subsidies received and potential repayment
+requirements in case of nonfulfillment, see note 33.
+In the 2015 and 2014 fiscal years taxable investment grants were deducted from the acquisition or construction cost
+of property, plant and equipment and intangible fixed assets with no material effect.
+105
+101
+1
+2
+66
+6 Cost of materials and purchased services as well as personnel expense
+59
+40
+2014
+2015
+Total
+Selling, general and administrative expenses
+Research and development expenses
+Cost of goods sold
+38
+Included in the Consolidated Statement of Operations in:
+The Consolidated Statement of Operations (continuing and discontinued operations) includes the following
+amounts of expense for purchased services, materials and personnel.
+€ in millions
+1,820
+2,469
+891
+1,206
+929
+1,263
+2014
+Expenses for purchased services and materials comprised the following in the 2015 and 2014 fiscal years:
+2015
+Social insurance levies, pensions and similar obligations
+Wages and salaries
+€ in millions
+Personnel expenses comprised the following in the 2015 and 2014 fiscal years:
+Total (continuing and discontinued operations)
+Cost of purchased services
+Cost of raw materials, supplies and purchased goods
+Total (continuing and discontinued operations)
+€ in millions
+Infineon has received economic development funding from various governmental institutions, including grants for
+the construction of manufacturing facilities, for research and development activities and employee development.
+Grants and subsidies taken into consideration in profit or loss in the Consolidated Financial Statements during the
+2015 and 2014 fiscal years are as follows:
+5 Grants and subsidies
+Certain provisions relating to Qimonda's insolvency were required to be adjusted in the 2015 fiscal year as a
+result of new developments, these led to income after tax of €12 million. The partial settlement agreed with the
+administrator on September 11, 2014 and effected on October 9, 2014 had no effect on earnings from discontinued
+operations in the 2015 fiscal year. (For the gain on sale of patents purchased from Qimonda see note 7.)
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+228
+› €135 million in "Net cash used in operating activities from discontinued operations” for the termination by
+mutual consent of the proceedings under insolvency law, the settlement of further out-of-court claims, as well as
+all other claims made by the administrator to the extent that these do not relate to the proceedings in connection
+with the alleged activation of a shell company, the liability for impairment of capital, and the residual liability of
+Qimonda Dresden.
+> €21 million in "Net cash used in investing activities from continuing operations" for the acquisition of the
+Qimonda patents, and
+> €104 million in "Net cash used in operating activities from continuing operations" for the settlement of the dispute
+over the continuation of useage rights of the Qimonda patents,
+The partial settlement payment of €260 million made to the Qimonda administrator on the settlement date is
+disclosed in the Consolidated Statement of Cash Flows for the 2015 fiscal year as follows:
+The remaining risks and provisions relating to Qimonda's insolvency are described in detail in note 32 "Legal risks -
+Proceedings in relation to Qimonda".
+The Company agreed a partial settlement with the administrator on September 11, 2014 which was effected on
+October 9, 2014 (see note 32 "Legal risks - proceedings in relation to Qimonda"). On this day the Company paid
+€260 million to the administrator as partial settlement.
+Qimonda - discontinued operations
+4 Disposals and discontinued operations
+On April 30, 2015 Infineon acquired the remaining 33.6 percent share in LS Power Semitech Co., Ltd. (LSPS), Korea,
+from LS Industrial Systems Co., Ltd. (LSIS), Korea. The purchase price of the share amounted to €15 million. As a
+result of the acquisition, non-controlling interests reduced by €5 million and additional paid-in capital by €10 million
+(see note 24).
+LS Power Semitech Co., Ltd.
+International Rectifier's business units have been completely integrated into the existing segments Automotive,
+Industrial Power Control and Power Management & Multimarket. By far the largest share has been allocated to the
+Power Management & Multimarket segment.
+If International Rectifier had been consolidated since October 1, 2014, Infineon would have recorded revenues
+of €6,072 million and a profit after tax of €610 million in the Consolidated Statement of Operations during the
+2015 fiscal year.
+682
+(133)
+On January 23, 2009, Qimonda AG (“Qimonda”), a majority-owned company, filed an application at the Munich
+Local Court to commence insolvency proceedings. On April 1, 2009, the insolvency proceedings were opened.
+Insolvency proceedings were also opened for further domestic and foreign subsidiaries of Qimonda. Some of
+these proceedings have already been completed. The results of these proceedings are reported as discontinued
+operations in Infineon's Consolidated Statement of Operations and Consolidated Statement of Cash Flows, to the
+extent that the underlying events occurred before the commencement of insolvency proceedings. To the extent
+that the events occurred after the commencement of insolvency proceedings, their results are reported as part of
+continuing operations.
+Sale of the Wireline Communications business - discontinued operations
+On November 6, 2009 the Wireline Communications business was sold to various companies which are affiliates
+of Golden Gate Private Equity Inc. (Lantiq). In the 2014 fiscal year €10 million of subsequent income arose as a result
+of the release of a provision in connection with the sale.
+Sale of the Wireless mobile phone business - discontinued operations
+229
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+47
+12
+8
+10
+Wireline Communications' share of discontinued operations, net of income taxes
+Wireless mobile phone business' share of discontinued operations, net of income taxes
+Income (loss) from discontinued operations, net of income taxes
+29
+12
+Qimonda's share of discontinued operations, net of income taxes
+2014
+2015
+€ in millions
+The results of Qimonda, the Wireline Communications business and the Wireless mobile phone business presented
+in the Consolidated Statements of Operations as "loss/income from discontinued operations, net of tax" for the
+2015 and 2014 fiscal years consist of the following:
+Gain/loss from discontinued operations, net of income taxes
+Following the sale, Infineon continues to carry out activities contracted by IMC, which are reported as continuing
+operations under "Other Operating Segments" for segment reporting purposes.
+On August 30, 2010, Infineon entered into a contract for the sale of the mobile phone business of the Wireless
+Solutions segment ("Wireless mobile phone business") for a consideration of US$1.4 billion with Intel Corporation
+("Intel"). Businesses with analog and digital TV tuners and satellite radio receivers and with radio frequency
+power transistors for amplifiers in cellular base stations are the only areas of the Wireless Solutions segment that
+remained with Infineon. The sale was completed on January 31, 2011. All assets, patents, other intellectual property
+and selected liabilities allocated to the Wireless mobile phone business were separately transferred. The Wireless
+mobile phone business is being continued by the purchaser under the name "Intel Mobile Communications" ("IMC").
+In the 2014 fiscal year adjustments to the pre-tax gain on the sale due to the release of provisions along with
+subsequent income relating to the Wireless mobile phone business amounted to €8 million.
+649
+414
+382
+217
+€ in millions
+Cost
+October 1, Additions
+2013
+Acqui-
+sitions
+Disposals
+Reclassi-
+fication
+Transfers
+Changes in property, plant and equipment 2014
+through
+September
+30, 2014
+business
+combi-
+nations
+Land, land rights
+and buildings
+Foreign
+currency
+effects
+860
+1 For the year ended September 30, 2015, amounts shown under "Acquisitions through business combination" relate to assets acquired in connection with
+the acquisition of International Rectifier (see note 3).
+57
+8
+1,175
+Payments on account and
+construction in progress
+272
+217
+25
+9,712
+(4)
+Total
+8,799
+646
+379
+(169)
+2
+314
+(198)
+7
+(1)
+9
+construction in progress
+212
+160
+1
+(101)
+272
+Total
+Payments on account and
+8,360
+15
+(161)
+18
+8,799
+Impairments consist with €15 million primarily of leasehold improvements (other plant and office equipment)
+and technical systems (technical equipment and machinery) in connection with the termination of manufacturing
+operations at Techview in Singapore.
+Depreciation on property, plant and equipment is presented in the Consolidated Statement of Operations mainly
+in cost of goods sold.
+As in the previous year, impairments are recognized as other operating expense in the Consolidated Statement
+of Operations. Property, plant and equipment amounting to €13 million was pledged as of September 30, 2015
+(prior year: €8 million).
+567
+1,123
+1
+4
+3
+875
+Technical equipment
+and machinery
+6,169
+344
+13
+(102)
+91
+14
+6,529
+Other plant and
+office equipment
+1,119
+56
+1
+(58)
+14
+2015
+(57)
+73
+45
+31
+34
+12
+9
+1
+41
+53
+1
+41
+229
+221
+235
+236
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+34
+15 Property, plant and equipment
+50
+2014
+1,129
+707
+The amount of inventories recognized as expense in the 2015 and 2014 fiscal years largely corresponds to the cost
+of goods sold for each fiscal year.
+Inventories at September 30, 2015 and 2014 are stated net of write-downs of €117 million and €79 million,
+respectively.
+14 Other current assets
+Other current assets at September 30, 2015 and 2014, consist of the following:
+€ in millions
+98
+VAT and other receivables from tax authorities
+Grants receivables
+Third party financial and other receivables
+Derivative financial instruments
+Related party financial and other receivables
+Other
+Total
+2015
+Prepaid expenses
+A summary of changes in property, plant and equipment for the years ended September 30, 2015 and 2014
+is as follows:
+Changes in property, plant and equipment 2015
+€ in millions
+(2)
+11
+7
+1,003
+Technical equipment
+and machinery
+6,529
+82
+326
+(106)
+173
+40
+7,220
+Other plant and
+office equipment
+1,123
+258
+30
+30
+875
+Cost
+October 1,
+2014
+Additions
+Acqui-
+Disposals
+sitions
+Reclassi-
+fication
+Transfers
+through
+Foreign
+currency
+effects
+September
+30, 2015
+business
+combi-
+nations'
+Land, land rights
+and buildings
+14
+Securities
+2014
+1,273
+175
+(175)
+304
+(304)
+Netting
+Total
+(1,078)
+(761)
+604
+Valuation allowance
+1,631
+(451)
+1,669
+Total deferred taxes
+(11)
+143
+(28)
+(180)
+139
+(147)
+(5)
+(172)
+321
+373
+2014
+2015
+Deferred taxes, net as of the end of the fiscal year
+Foreign currency translation
+378
+Deferred taxes recognized in equity
+Deferred tax arising from business acquisitions
+Deferred taxes, net as of the beginning of the fiscal year
+Financial investments
+The change of the net amount of deferred tax assets and liabilities can be broken down as follows:
+The increase of deferred tax liabilities mainly results from business acquisitions.
+Infineon assessed its deferred tax assets and the need for a valuation allowance. Based on the results of this
+assessment of deferred tax assets, considering all positive and negative factors and information relating to the
+foreseeable future, Infineon recognized deferred tax assets, after netting, of €604 million and €378 million as of
+September 30, 2015 and 2014, respectively.
+In Germany Infineon Technologies AG had corporation tax loss carry-forwards of €2.3 billion and municipal trade tax
+loss carry-forwards of €3.4 billion as of September 30, 2015. In other jurisdictions tax loss carry-forwards amounted
+to €127 million and unused tax credits and excess foreign tax credits of €307 million. Such tax loss carry-forwards,
+and tax credits and excess foreign tax credits are generally limited to use by the particular entity that generated
+the loss or credit, provided that they have not expired under current law. Of the tax loss carry-forwards in other
+jurisdictions, €98 million expire within nineteen years, thereof €5 million in the next five years, as a result of the
+respective legal requirements.
+Deferred tax benefit attributable to continuing operations
+Other
+279
+307
+Deferred
+September 30, 2014
+Deferred
+Deferred
+tax liabilities
+tax assets
+Deferred
+September 30, 2015
+tax assets
+€ in millions
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+232
+Due to better sustained results of operations deferred tax assets increased in the 2015 fiscal year.
+(31)
+102
+(3)
+Deferred tax assets and liabilities as of September 30, 2015 and 2014 comprise the following:
+tax liabilities
+Intangible assets
+Property, plant and equipment
+Unused tax credits and excess foreign tax credits
+939
+846
+Tax loss carry-forwards
+(111)
+151
+(125)
+237
+Provisions and pension obligations
+(8)
+110
+(43)
+131
+(50)
+9
+(255)
+9
+253
+(6)
+45
+3
+0.55
+Earnings per share (in euro) from continuing operations
+Basic and diluted earnings per share¹ (in euro):
+1,123.0
+1,125.3
+0.7
+2.7
+0.44
+11.6
+1,116.7
+(6.0)
+1,128.6
+(6.0)
+1,122.6
+Weighted-average number of shares outstanding - diluted
+- Effect of stock options and performance shares
+- Effect of potential conversion of convertible bond
+Weighted-average number of shares outstanding - basic
+Adjustments for:
+- Adjustment for own shares
+1,110.7
+- Ordinary share capital
+Earnings per share (in euro) from discontinued operations, net of income taxes
+0.04
+Fixed-term bank deposits and money market funds
+€ in millions
+Financial investments at September 30, 2015 and 2014 comprise the following (for further information see also
+notes 30 and 31):
+Financial investments comprise fixed-term deposits with banks, money market funds, investment funds and
+securities. While fixed-term deposits with banks with an original term of more than three months and money
+market funds qualify as “loans and receivables” pursuant to IAS 39 "Financial Instruments: Recognition and
+Measurement", investment funds and securities are categorized as available-for-sale financial assets (for valuation
+see note 2).
+11 Financial investments
+> In the 2015 and 2014 fiscal year 1.3 million and 9.1 million, respectively, put options written on own shares were
+not taken into account since their exercise price was lower than the average share price during the reporting
+period. As at September 30, 2015 there were no put options on own shares outstanding (see note 24).
+> In the 2015 and 2014 fiscal years 9.8 million and 12.1 million, respectively, of stock options and performance
+shares issued to members of the Management Board and employees were not taken into account either because
+their exercise price was higher than the average share price during the reporting period, or the performance
+hurdle was not reached.
+0.01
+The average number of potentially dilutive instruments that did not have a dilutive impact and were not taken into
+account in the calculation of diluted earnings per share included:
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+234
+233
+1 The calculation of earnings per share is based on unrounded figures.
+0.48
+0.56
+Earnings per share - basic and diluted
+Consolidated Financial Statements
+Weighted-average number of shares outstanding (in millions):
+47
+12
+10
+(1)
+(31)
+102
+2014
+2015
+Income taxes recognized directly in equity
+Income taxes
+4
+Income taxes from continuing operations
+Income taxes from discontinued operations
+Including the items recognized directly in equity and the expense/benefit from continuing and discontinued
+operations, the income tax expense/benefit consisted of the following:
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Infineon did not provide for additional income taxes or foreign withholding taxes on the cumulative retained
+earnings of foreign subsidiaries as of September 30, 2015 and 2014, to the extent that these earnings are intended
+to be indefinitely reinvested in those operations. It is not practicable to estimate the amount of unrecognized
+deferred tax liabilities for these undistributed foreign earnings.
+373
+457
+4
+(1)
+€ in millions
+6
+105
+(15)
+thereof from discontinued operations
+491
+620
+thereof from continuing operations
+538
+632
+Earnings attributable to shareholders of Infineon Technologies AG - diluted
+3
+535
+632
+Earnings attributable to shareholders of Infineon Technologies AG - basic
+Adjustment for interest expense on convertible bond
+2014
+2015
+€ in millions (unless otherwise stated)
+Basic and diluted earnings per share are calculated as follows:
+Basic earnings per share are calculated by dividing earnings by the weighted average number of shares outstanding
+during the reporting period. The calculation of the diluted earnings per share is based on the assumption that all
+potentially dilutive instruments are converted into ordinary shares, resulting in a corresponding increase in the
+number of shares on the one hand and a corresponding reduction in the charge on earnings for these instruments,
+such as interest expense, on the other.
+10 Earnings per share
+4
+(3)
+Actual income taxes
+Other
+Other
+Expenses (income) in connection with legal disputes
+Fine from the chip card antitrust proceedings
+Losses on disposals of assets
+Expenses in connection with rental income
+Expenses for restructuring and similar measures
+and assets classified as held for sale (see note 15 and 18)
+Total
+Impairments of intangible assets, property, plant and equipment assets
+Other operating expenses comprised the following in the 2015 and 2014 fiscal years:
+Total
+Other
+Gain from revaluation of the former shareholding in LSPS
+Other income from customers
+Income from other equity investments
+Gains on disposals of assets
+€ in millions
+Gain from sale of patents purchased from Qimonda
+2015
+9
+31
+2014
+2015
+26
+28
+6
+6
+2014
+4
+1
+2
+1
+3
+2
+9
+10
+1
+Rental income
+€ in millions
+Other operating income comprised the following in the 2015 and 2014 fiscal years:
+Total
+Therein: USA
+Americas
+Japan
+Therein: China
+Asia-Pacific (without Japan)
+Therein: Germany
+2015
+Europe
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+230
+1,490
+1,939
+217
+269
+The average number of employees by geographic region is as follows for the 2015 and 2014 fiscal years:
+2014
+14,168
+12,959
+Other operating income and expense
+7
+The increase of the number of employees in the 2015 fiscal year was mainly due to the acquisition of
+International Rectifier.
+28,610
+33,971
+533
+1,753
+533
+2,898
+129
+167
+1,708
+1,890
+14,989
+16,738
+8,766
+9,258
+3
+13
+8
+9
+Expected income tax expense
+2014
+2015
+€ in millions
+A reconciliation of income taxes from continuing operations for the fiscal years ended September 30, 2015 and 2014,
+using as a basis the German combined statutory tax rate of 29 percent for the 2015 and 2014 fiscal years is as follows:
+The German combined statutory tax rate for Infineon Technologies AG is 29 percent for the 2015 and 2014 fiscal
+years. This comprised a corporate tax rate of 15 percent, plus a solidarity surcharge of 5.5 percent thereon and
+a municipal trade tax rate of 13 percent.
+(31)
+(151)
+102
+253
+(76)
+(151)
+2014
+2015
+Income tax
+Deferred tax benefit
+45
+(151)
+Change in available tax credits
+13
+Effects due to changes in tax rate
+112
+309
+Change in valuation allowance on deferred tax assets
+(2)
+(41)
+Prior year taxes
+(30)
+(18)
+Non-deductible expenses and tax-exempt income, net
+(1)
+(23)
+Effects from the difference between local and functional currency (Malaysia)
+25
+22
+Tax rate differential
+19
+Current tax expense
+1,670
+€ in millions
+9 Income tax
+Total
+Valuation changes and gains on sales of financial investments
+Interest income
+€ in millions
+Financial income comprised the following in the 2015 and 2014 fiscal years:
+8 Financial income and expenses
+In the 2015 fiscal year €8 million of impairments of intangible assets, property, plant and equipment assets and
+assets classified as held for sale was allocated to the Industrial Power Control segment, €3 million (2014: €1 million)
+to the Automotive segment and €1 million to the Power Management & Multimarket segment. €19 million (2014:
+€2 million) was allocated to Corporate and Eliminations.
+Financial expenses comprised the following in the 2015 and 2014 fiscal years:
+102
+21
+1
+(24)
+83
+1
+4
+10
+58
+€ in millions
+Interest expenses
+Other financial expenses
+Total
+Interest expenses for the 2015 fiscal year include among other things €7 million related to the amortization of trans-
+action costs in connection with the bridge financing of €800 million for the acquisition of International Rectifier, which
+was repaid on March 12, 2015 with the proceeds from the issuance of two senior, unsecured bonds (see note 22).
+19
+49
+1
+19
+48
+2014
+2015
+10
+10
+4
+10
+6
+2014
+2015
+231
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Income tax from continuing operations for the fiscal years ended September 30, 2015 and 2014, is as follows:
+€ in millions
+Obligations to employees
+35
+23
+57
+(144)
+(1)
+5
+(17)
+(131)
+262
+(32)
+(32)
+342
+(53)
+(1)
+(52)
+202
+260
+(159)
+(1)
+(12)
+8
+(29)
+(125)
+25
+803
+30, 2014
+September
+30, 2015
+September
+Carrying amounts
+(3)
+241
+(1)
+14
+(232)
+(8)
+(123)
+(1)
+10
+(25)
+(109)
+21
+25
+30, 2013
+September
+30, 2014
+September
+Carrying amounts
+September
+30, 2014
+Foreign
+currency
+effects
+Impair-
+ment
+Disposals
+Amorti-
+zation
+October 1,
+2013
+Amortization and impairment
+250
+1,738
+(392)
+(3)
+(13)
+13
+(133)
+(256)
+(4)
+(33)
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+currency
+effects
+Customer relationships
+92
+245
+development costs
+Capitalized
+21
+for consideration
+Goodwill acquired
+nations
+combi-
+business
+Additions
+Additions
+internally
+developed
+2013
+October 1,
+30, 2014
+September
+Foreign
+currency
+effects
+from additions
+Transfers
+Disposals
+Purchased
+Cost
+€ in millions
+Changes in goodwill and other intangible assets 2014
+1 For the year ended September 30, 2015, amounts shown under "Acquisitions through business combination" relate to assets acquired in connection with
+the acquisition of International Rectifier (see note 3).
+2,130
+89
+(13)
+1
+30, 2015
+Technologies
+136
+ment
+September
+Foreign
+Impair-
+Disposals
+Amorti-
+zation
+2014
+October 1,
+Amortization and impairment
+The impairment to internally developed intangible assets of €12 million relates to the impairment of capitalized
+development projects owing to low expected contributions to earnings from these projects.
+No intangible assets were transferred to a third party as security or pledged as of September 30, 2015 and 2014.
+Reference is made to note 2, section "Recoverability of intangible assets and other long-lived assets" with respect
+to the procedures and assumptions used for the annual impairment test for goodwill as well as the goodwill
+allocated to the individual CGUS.
+506
+1
+(10)
+9
+12
+92
+402
+154
+1
+327
+25
+(10)
+9
+8
+4
+Total
+Other intangible assets
+Licenses and similar rights
+18
+10
+סי יייס
+2014
+2015
+243
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Other
+Total
+Related parties - financial and other payables
+Obligation to acquire own shares
+Fine from the chip card antitrust proceedings (see note 32)
+Accrued interest
+Derivative financial instruments with negative fair values
+Deferred grants and subsidies
+Deferred income
+Liabilities related to Qimonda (see note 32)
+VAT and other taxes payables
+Advanced payments
+Payroll and similar obligations to employees
+€ in millions
+Other current liabilities at September 30, 2015 and 2014 consist of the following:
+21 Other current liabilities
+Of the total provisions as of September 30, 2015 and 2014, a cash outflow of €402 million and €590 million, respec-
+tively, is expected to occur within one year. With the exception of the service anniversary awards of €22 million
+and €17 million as of September 30, 2015 and 2014, respectively, the cash outflow for the majority of the remaining
+€50 million and €53 million as of September 30, 2015 and 2014, respectively, is expected within two to seven years.
+Other provisions comprise provisions for onerous contracts, litigations (other than provisions relating to Qimonda),
+asset retirement obligations, delay on contracts, restructuring and miscellaneous other liabilities.
+Provisions for warranties mainly represent the estimated future cost of fulfilling contractual requirements
+associated with products sold.
+Obligations to employees include, among others, costs of variable compensation, outstanding vacation and
+flextime, service anniversary awards, other personnel costs and social security costs.
+1 The usage of provisions related to Qimonda contains an amount of €14 million that was reclassified to other current liabilities in the 2015 fiscal year
+(see note 21).
+72
+70
+Thereof long-term
+402
+590
+135
+Thereof short-term
+73
+18
+8
+35
+25
+Current maturities of long-term debt, weighted average interest rate: 3.48% (2014: 3.04%)
+Loans payable to banks, weighted average interest rate: 4.35%
+Short-term debt and current maturities of long-term debt
+2014
+2015
+€ in millions
+Debt at September 30, 2015 and 2014 consists of the following:
+22 Debt
+The obligation to acquire own shares in connection with Infineon's capital returns amounts to €40 million as of
+September 30, 2014 and corresponds to the discounted exercise value of outstanding put options on Infineon
+Technologies AG shares as at issue date plus interest up to the end of the reporting period. No remaining put
+options were outstanding as of September 30, 2015 (see note 24).
+261
+225
+7
+4
+1
+1
+40
+83
+8
+3
+9
+11
+11
+13
+13
+3
+14
+9
+14
+16
+(1)
+474
+(476)
+20 Provisions
+Trade payables with a maturity of more than one year are reported in other non-current liabilities (see note 23).
+648
+802
+12
+9
+636
+793
+2014
+2015
+Trade payables
+Trade payables, related parties
+Trade payables, third parties
+€ in millions
+Trade payables at September 30, 2015 and 2014 consist of the following:
+19 Trade payables
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+242
+170
+250
+(256)
+13
+23
+23
+(131)
+136
+202
+(125)
+Short-term and long-term provisions at September 30, 2015 consist of the following:
+(48)
+€ in millions
+Additions
+338
+660
+Total provisions
+55
+(6)
+(14)
+34
+41
+Other
+41
+(14)
+(257)
+312
+Provisions related to Qimonda (see note 32)¹
+56
+(24)
+(16)
+21
+75
+Warranties
+322
+(4)
+(189)
+283
+232
+Septem-
+ber 30, 2015
+2014
+Reversals
+Usage
+October 1,
+33
+1,430
+506
+Reclassi-
+fication
+Transfers
+Impair-
+ments
+Foreign
+currency
+effects
+September
+30, 2015
+(649)
+(34)
+2
+1
+(5,421)
+(510)
+96
+(1)
+(1,029)
+(83)
+57
+40
+3
+(7,099)
+(627)
+158
+Depreciation and impairment
+October 1,
+2013
+Deprecia- Disposals
+tion
+I
+Carrying amount
+September
+Notes to the Consolidated Financial Statements
+30, 2015
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Disposals
+Non-current assets
+7
+67
+71
+Current assets
+2014
+2015
+2014
+2015
+Cryptomathic
+Bipolar
+€ in millions
+The summarized financial information for associated companies accounted for using the equity method
+(not adjusted for the percentage ownership held by Infineon), for the years ended September 30, 2015 and 2014
+is as follows:
+The Company acquired its 25 percent share in Cryptomathic Holding ApS ("Cryptomathic") in May 2002. Crypto-
+mathic, through its subsidiary Cryptomathic A/S, develops and sells software and consultancy services in the
+field of digital security. As a result of a share buy-back, Infineon's share increased to 34 percent. On April 20, 2015,
+Infineon completed the sale of its investment (34 percent) in Cryptomathic for €4 million. The sale of the invest-
+ment accounted for using the equity method gave rise to a negligible pre-tax gain (€0 million). The proportional
+share of Cryptomathic's net income is recorded based on interim financial statements with a three month time lag.
+Summarized financial information
+Cryptomathic Holding ApS
+Effective September 30, 2007, and based on an agreement with Siemens AG ("Siemens") dated September 28, 2007,
+the Company contributed all assets and liabilities of its high power bipolar business (including licenses, patents,
+and frontend and backend production assets) to a newly formed legal entity called Infineon Technologies Bipolar
+GmbH & Co. KG ("Bipolar”) located in Warstein (Germany). Siemens subsequently acquired a 40 percent interest in
+Bipolar. The agreement entered into by the companies grants Siemens certain contractual participating rights which
+inhibit Infineon from exercising control over Bipolar. Accordingly, Infineon accounts for its interest in strategically
+important Bipolar using the equity method. Bipolar's fiscal year ends on September 30.
+Infineon Technologies Bipolar GmbH & Co. KG
+16 Investments accounted for using the equity method
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+238
+237
+1,600
+1,700
+(7,099)
+(15)
+Depreciation and impairment
+October 1,
+2014
+Deprecia-
+tion
+11
+September
+(9)
+(620)
+(28)
+1
+(1)
+(1)
+(649)
+226
+240
+(5,122)
+(381)
+100
+(4)
+(1)
+(13)
+(5,421)
+1,108
+1,047
+(1,018)
+(72)
+58
+4
+(1)
+(1,029)
+94
+101
+(6,760)
+(481)
+159
+272
+30, 2013
+30, 2014
+30, 2014
+Foreign
+currency
+effects
+(4)
+(693)
+310
+226
+(6)
+(25)
+(5,867)
+1,353
+1,108
+1
+(4)
+(1,059)
+116
+94
+(3)
+314
+272
+(18)
+18
+(33)
+(7,619)
+2,093
+1,700
+Carrying amount
+September
+September
+Reclassi-
+fication
+Transfers
+Impair-
+ments
+September
+30, 2014
+100
+10
+15
+30, 2015
+September
+Foreign
+currency
+effects
+business
+Transfers
+Disposals
+Purchased
+additions
+from
+internally
+developed
+2014
+Additions
+October 1, Additions
+Cost
+Goodwill acquired
+€ in millions
+Changes in goodwill and other intangible assets 2015
+The following table presents the composition of intangible assets for the years ended September 30, 2015 and 2014.
+Amortization of intangible assets is mainly presented in cost of goods sold or selling, general and administrative
+expenses. Impairments of intangible assets are presented as other operating expense.
+18 Goodwill and other intangible assets
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+240
+"Cash deposited as collateral" as of September 30, 2015 and September 30, 2014 consists of a rental deposit in
+connection with the Campeon head office of €75 million (see note 33).
+141
+155
+7
+7
+16
+1
+5
+combi-
+6
+nations¹
+25
+Total
+18
+1
+17
+Other intangible assets
+201
+2
+(5)
+18
+32
+154
+Licenses and similar rights
+294
+16
+278
+Technologies
+395
+21
+374
+Customer relationships
+419
+(8)
+100
+327
+development costs
+Capitalized
+803
+49
+729
+for consideration
+Current liabilities
+5
+10
+Other
+Dividends received
+Net income (loss)
+Net interest result
+4
+3
+Depreciation and amortization
+10
+83
+85
+1
+3
+4
+Therein: total comprehensive income (loss) for the year, net of tax
+Revenue
+(2)
+(1)
+Therein: other comprehensive income (loss) for the year, net of tax
+5
+53
+55
+Equity
+5
+11
+Net debt
+10
+12
+Non-current liabilities
+2
+14
+Carrying amount of Investments accounted for using the equity method
+18
+Share of equity
+51
+21
+23
+26
+75
+76
+2014
+2015
+239
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Total
+Other
+Securities
+Long-term receivables
+Other equity investments
+Assets related to the funding of employee benefits
+Prepaid expenses
+Cash deposited as collateral
+€ in millions
+Other non-current assets at September 30, 2015 and 2014 consist of the following:
+17 Other non-current assets
+The investment in Bipolar is allocated to the Industrial Power Control segment, and the investment in Cryptomathic
+was allocated to Other Operating Segments.
+3
+32
+33
+1
+2
+32
+33
+1
+52
+212
+(2)
+Unsecured loans, weighted average interest rate 1.76% (2014: 1.18%), due 2016-2023
+Bond €300 million, coupon 1.00%, due 2018
+245
+Ordinary share capital
+The ordinary share capital of Infineon Technologies AG increased during the 2015 fiscal year by €3,064,502.
+1,532,251 new shares were issued, all of which resulted from the exercise of employee stock options (2014: 484,260).
+As of September 30, 2015 the ordinary share capital stood at €2,258,542,962 divided into 1,129,271,481 no par value
+registered shares, each representing €2 of the Company's ordinary share capital. Each share grants the holder one
+vote and an equal portion of the profits in the form of a dividend as resolved by the Annual General Meeting. As of
+September 30, 2015, of the above-mentioned total number of issued shares the Company held 6 million own shares
+(2014: 6 million). Own shares held by the Company as at the date of the Annual General Meeting carry no voting
+rights and are not entitled to dividend.
+Additional paid-in capital
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €201 million
+in the 2015 fiscal year, of which €202 million related to the dividend paid in February 2015. Additional paid-in capital
+decreased by €10 million as a result of the acquisition of LSPS (see note 3). The exercise of employee stock options
+increased additional paid-in capital by €9 million. Expenses amounting to €6 million for share-based compensation
+were recorded in the 2015 fiscal year, additional paid-in capital increased by the same amount (see note 26).
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €135 million in
+the 2014 fiscal year, of which €129 million related to the dividend paid in February 2014. The Company repurchased
+for €35 million and cancelled subordinated convertible bonds that were to become due in 2014 with a nominal value
+of €11 million during the 2014 fiscal year. €21 million, net of tax, was recorded directly as a reduction of additional
+paid-in capital reflecting the repurchase of conversion rights for 4.7 million shares associated with the convertible
+bond repurchase, measured on the basis of the conversion ratio at the time of repurchase (see note 22). Additional
+paid-in capital was increased by €3 million in the 2014 fiscal year as a result of option premiums received in connec-
+tion with put options on own shares. The exercise of employee stock options increased additional paid-in capital by
+€0.3 million. Expenses amounting to €6 million for share-based compensation were recorded in the 2014 fiscal year,
+additional paid-in capital increased by the same amount (see note 26).
+Authorized share capital
+The previous Authorized Share Capitals 2010/1 and 2010/11 were cancelled by the Annual General Meeting on
+February 12, 2015. Only the Authorized Share Capital 2010/I was at the same time replaced by a new Authorized
+Share Capital 2015/1 totaling up to €676,000,000:
+Section 4(4) of the Articles of Association provides that the Management Board is authorized, with the approval
+of the Supervisory Board, to increase the share capital in the period until its expiry in February 11, 2020 once or in
+partial amounts by a total of up to €676,000,000 through the issue of new no par value registered shares, carrying
+a dividend right as of the beginning of the fiscal year in which they are issued, against contributions in cash or in
+kind (Authorized Capital 2015/1). The Management Board is authorized, with the approval of the Supervisory Board,
+to exclude the subscription rights of the shareholders in certain cases. In accordance with German law, cash capital
+increases with subscription rights excluded pursuant to section 186, paragraph 3, fourth sentence of the AktG, are
+not permitted to exceed 10 percent of a company's share capital - neither at the time of the authorization becoming
+effective nor at the time of its exercise. For share capital increases against contributions in kind or a combination of
+cash contributions and contributions in kind, the authorization further provides an upper limit of 20 percent of the
+share capital, again measured either at the time the authorization becomes effective or, if the number is lower, at the
+time of its exercise.
+246
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Conditional capital
+As of September 30, 2015, the Company's Articles of Associations provide for three conditional capitals amounting
+to up to €309,357,082 (the previous Conditional Capital 2009/I was cancelled by the Annual General Meeting on
+February 12, 2015):
+› Conditional Capital III (registered in the Commercial Register as "Conditional Capital 2001/1") pursuant to
+section 4(5) of the Articles of Association of up to €25,357,082 that may be used to issue up to 12,678,541 new
+registered no par value shares in connection with the Company's stock option plans "Infineon Technologies AG
+2001 International Long Term Incentive Plan” and “Infineon Technologies AG Aktienoptionsplan 2006" ("Stock
+Option Plan 2006") (see note 26). During the 2015 fiscal year, a total of 389,298 new no par value shares with a
+proportionate amount of €2 per share were issued out of the Conditional Capital III as a result of the exercise of
+share options in connection with the Stock Option Plan 2006. Conditional Capital III decreased accordingly by
+€778,596 to €24,578,486. The corresponding change to the Articles of Association was submitted after the end
+of the reporting period and entered into the Commercial Register as requested. As since June 3, 2015 no further
+stock options may be exercised under the Stock Option Plan 2006, the Conditional Capital III is no longer required
+and so the Management Board and the Supervisory Board will propose to the Annual General Meeting that the
+Conditional Capital III should be cancelled.
+› Conditional Capital 2010/1 pursuant to section 4(10) of the Articles of Association of up to €24,000,000 that may
+be used to issue up to 12,000,000 new no par value registered shares in connection with the Company's "Infineon
+Technologies AG Aktienoptionsplan 2010" ("Stock Option Plan 2010") (see note 26). During the 2015 fiscal year,
+a total of 1,142,953 new non-par shares with a proportionate amount of €2 per share were issued out of the Con-
+ditional Capital 2010/1 as a result of the exercise of share options in connection with the Stock Option Plan 2010.
+Conditional Capital 2010/1 decreased accordingly by €2,285,906 to €21,714,094. The corresponding change to
+the Articles of Association was submitted after the end of the reporting period and entered into the Commercial
+Register as requested.
+› Conditional Capital 2014 pursuant to section 4 (11) of the Articles of Association of up to €260,000,000 that may
+be used to issue up to 130,000,000 new no par value registered shares to satisfy the rights of the holders of
+warrants or convertible bonds, which the Company may issue at any time prior to February 12, 2019.
+Other reserves
+Changes in other reserves during the 2015 and 2014 fiscal years are as follows:
+€ in millions
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+2015
+24 Equity
+86
+8
+23 Other non-current liabilities
+Other non-current liabilities as of September 30, 2015 and 2014 consist of the following:
+€ in millions
+Personnel liabilities
+Deferred income and liabilities from the linearization of expenses
+Deferred grants and subsidies
+Other
+Total
+2015
+2014
+28
+19
+16
+28
+14
+13
+28
+12
+72
+2014
+Pretax
+Tax
+(1)
+(2)
+(2)
+Realized (gains) losses
+resulting from securities
+(4)
+1
+(3)
+---
+Unrealized (losses)
+resulting from securities
+(1)
+1
+59
+3
+62
+55
+55
+Loans payable to banks:
+2
+(3)
+resulting from hedge accounting
+Unrealized gains (losses)
+Net after tax
+Pretax
+Tax
+Net after tax
+Foreign currency translation differences
+100
+100
+12
+12
+186
+Deal Contingent Forward
+(39)
+39
+39
+Realized losses resulting
+from hedge accounting
+6
+6
+6
+6
+(39)
+134
+Total
+494
+The total lines of credit as of September 30, 2015 are summarized in the following table:
+€ in millions
+Short-term
+Long-term
+Total
+As of September 30, 2015
+As of September 30, 2014
+Aggregate
+Drawn
+Available
+facility
+Aggregate
+facility
+Drawn
+Available
+110
+33
+77
+103
+35
+In addition, Infineon has established several independent financing arrangements in the form of both short- and
+long-term credit facilities, in order to finance operating business requirements.
+68
+Other financial liabilities as of September 30, 2015 primarily consist of financing at Infineon Technologies Austria AG.
+The bonds are listed on the Luxemburg Stock Exchange.
+Total
+968
+151
+298
+Bond €500 million, coupon 1.50%, due 2022
+Long-term debt
+1,760
+151
+1,793
+186
+In connection with the acquisition of International Rectifier, Infineon Technologies AG entered into a financing
+agreement with several domestic and international banks in August 2014. The financing consisted of two senior,
+unsecured tranches:
+> a credit facility of US$934 million with a term of five years (term loan) and
+> a credit facility of €800 million with a term of one year and two extension options for Infineon each of six months
+(bridge financing).
+Upon closing of the acquisition (see note 3) both credit facilities were fully drawn. The term loan in the amount of
+US$934 million was still outstanding as at September 30, 2015. The bridge financing was repaid in full, mainly out of
+the proceeds of the bond issue described below.
+244
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+On March 10, 2015 the Company issued two senior, unsecured bonds with a total nominal amount of €800 million
+in an offering to institutional and private investors in Europe:
+> a bond with a nominal value of €300 million due in 2018 and bearing annual interest of 1.0 percent, and
+> a bond with a nominal value of €500 million due in 2022 and bearing annual interest of 1.5 percent.
+The US$934 million term loan and the bonds totaling €800 million are recorded as other financial liabilities at
+amortized cost less directly attributable transaction costs.
+968
+Term
+1,685
+33
+29
+35
+3
+16
+28
+16
+2
+303
+Interest
+28
+1
+943
+27
+4
+1
+968
+22
+118
+1
+13
+Debt
+514
+Debt
+Interest
+151
+1,534
+1,078
+1,001
+77
+1,788
+186
+1,602
+Aggregate amounts of debt and interest maturing in the coming years are as follows:
+1,809
+Less than 1 year
+1-2 years
+2-3 years
+3-4 years
+5 years and after
+€ in millions
+Total
+As of September 30, 2015
+As of September 30, 2014
+Present value at beginning of year
+taking into account future salary increases:
+Change in defined benefit obligations
+Total
+Foreign
+plans
+plans
+plans
+Foreign
+Domestic
+Total
+(730)
+Domestic
+2014
+2015
+€ in millions
+The development of Infineon's German (domestic) and non-German (foreign) pension plans and the plan assets
+to September 30, 2015 and 2014 is presented in the following table:
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+plans
+(131)
+Current service cost
+(573)
+(4)
+(24)
+The Group defined benefit pension plans are exposed to risks arising from changes to actuarial assumptions such
+as interest rates, salary and pension trends, investment risks and longevity risks. A low discount rate leads to higher
+pension liabilities. Equally, a lower than expected growth in plan assets could lead to a deterioration of the funded
+status, or require the payment of additional contributions.
+(20)
+(22)
+(5)
+(17)
+Interest cost
+(861)
+3
+Past service income
+(3)
+(15)
+(25)
+(4)
+(21)
+(681)
+(108)
+3
+(18)
+(7)
+The benefit obligation of some foreign plans is measured according to the income in the last month or year of
+service, others are dependent on average income over the service period. Furthermore, in certain countries Infineon
+makes severance payments irrespective of the reason for the termination of employment, these payments are
+usually defined by law in the relevant country. The liabilities arising from foreign defined benefit pension plans are
+partly covered by plan assets.
+15
+1
+5
+Other related
+companies
+Associates
+Other related
+companies
+Associates
+2014
+2
+2015
+Sales and service charges
+€ in millions
+Sales and service charges to and products and services received from related companies in the 2015 and 2014
+fiscal years consist of the following:
+Financial payables
+1
+Actuarial gains (losses) for:
+1
+2
+Products and services received
+The valuation date of the German and foreign pension plans is September 30, respectively.
+80
+81
+In Germany Infineon primarily offers defined contribution benefits which provide for the employees when they
+reach retirement age, or in the event of disability or death. With the Infineon pension plan new entrants receive
+a defined contribution benefit which is funded by Infineon. Payments by the Infineon pension plan are generally
+made in twelve installments. For active employees who were, before the Infineon Pension Plan came into force,
+entitled to benefits in the form of an annuity, this commitment is the overriding one and thereby the possibility
+of an annuity is guaranteed. Together with former employees, whose pension benefit obligations are no longer
+transferred into the Infineon Pension Plan, this group makes up the largest part of the obligation at this time. The
+statutory framework is provided by the Company Pension Act (in German: Betriebsrentengesetz or BetrAVG) and
+by employment law in general. An appropriate provision is recorded for the German defined benefit pension plans,
+which are partly backed by plan assets. Individual agreements are in place for the members of the Management
+Board which are backed by pension reinsurance policies (detailed in the "Compensation Report" chapter).
+Infineon's employee benefit plans consist of domestic and foreign defined benefit and defined contribution
+pension plans providing retirement, disability and surviving dependents' benefits. For the Infineon Group, the
+significant benefit plans in Germany pertain to Infineon Technologies AG, and among the foreign benefit plans to
+Infineon Technologies Austria AG.
+Defined benefit pension plans
+29 Pension plans
+In the 2015 and 2014 fiscal years there were no transactions between Infineon and related persons which fall
+outside of the scope of the existing employment, service or appointment terms, or of the contractual arrangements
+for their remuneration.
+Disclosure of the individual remuneration of the members of the Management Board and the Supervisory Board as
+required by section 315a (1) in connection with section 314 (1) no. 6a, sentences 5 to 8 of the German Commercial
+Code, is provided in the Compensation Report which is part of the Combined Management Report.
+Neither Infineon Technologies AG nor any of its subsidiaries have granted loans to any member of the Supervisory
+or Management Boards.
+As of September 30, 2015, pension liabilities for former members of the Management Board amounted to
+€60.2 million (2014: €59.5 million).
+20
+Former members of the Management Board received total payments of €1.1 million (especially pension payments)
+in the 2015 fiscal year (2014: €1.1 million).
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+252
+251
+The total compensation of the members of the Supervisory Board of Infineon Technologies AG in the 2015 fiscal
+year, including attendance fees, amounted to €1.5 million (2014: €1.2 million). Employee representatives in the
+Supervisory Board who are employed by Infineon also receive a salary for their activities as employees.
+The active members of the Management Board in the 2015 fiscal year received total fixed non-performance-related
+compensation for their services of €2.7 million (2014: €2.4 million). In addition, the members of the Management
+Board received variable performance-related compensation for their services in the 2015 fiscal year totaling
+€3.9 million (2014: €2.5 million). This comprised a Short Term Incentive of €2.0 million (2014: €1.3 million), and a
+Mid Term Incentive of €1.9 million (2014: €1.2 million). Furthermore, the Management Board received a Long Term
+Incentive (LTI) which, in 2015, took the form of performance shares. Previously the LTI was granted in the form of
+stock options based on the Stock Option Plan 2010. The expense resulting from the LTI amounted to €0.5 million
+(2014: €0.6 million). The total compensation granted to active members of the Management Board amounted to
+€7.1 million in the 2015 fiscal year (2014: €5.5 million).
+Related persons
+As of September 30, 2015, related parties sales and services relationships with related companies resulted in
+purchase commitments of €1 million.
+29
+Consolidated Financial Statements
+Experience adjustments
+(914)
+(3)
+Actuarial gains (losses)
+16
+2
+14
+12
+2
+10
+Expected return on plan assets
+437
+43
+394
+482
+52
+430
+Fair value of plan assets at beginning of year
+Change in fair value of plan assets:
+(861)
+(2)
+(3)
+(5)
+22
+Plan settlements
+10
+(15)
+(3)
+(12)
+(18)
+(4)
+(14)
+(131)
+Benefits paid
+6
+12
+19
+6
+13
+Contributions from Infineon
+24
+2
+18
+(730)
+(141)
+(773)
+(3)
+Acquisitions
+(149)
+(15)
+(134)
+6
+(2)
+8
+(3)
+Adjustments to financial assumptions
+(2)
+(1)
+(1)
+demographic assumptions
+Adjustments to
+(3)
+(3)
+(30)
+(2)
+(27)
+(1)
+Curtailments
+Present value of defined benefit obligation
+at end of year
+(3)
+(3)
+(6)
+(6)
+Foreign currency effects
+15
+3
+(1)
+12
+4
+14
+Benefits paid by Infineon
+7
+7
+Plan settlements
+5
+5
+18
+1
+Fiscal year 2015:
+1
+The gross debt to EBITDA ratio was 1.4 as of September 30, 2015 (0.2 in 2014). Infineon continues to have sufficient
+financial flexibility to ensure that in addition to financing its planned investments it is also able to pay regular
+dividends (see note 24).
+The gross cash position decreased from €2,418 million as of September 30, 2014, to €2,013 million as of September 30,
+2015 (for details see the chapter "Review of liquidity" in the Combined Management Report). Based on revenue of
+€5,795 million, the ratio of gross cash to revenue was 34.7 percent as of September 30, 2015 (56.0 percent in 2014)
+and thus within the targeted range.
+As of September 30, 2014, Infineon had a net cash position of €2,232 million. As a result of the acquisition of
+International Rectifier and the payment made by Infineon of a total of €343 million relating to the Qimonda
+partial settlement and the fine imposed by the European Commission (described in detail in note 32), there was a
+temporary net debt position in the second quarter of the 2015 fiscal year. As at September 30, 2015 Infineon had
+returned to a net cash position of €220 million.
+Infineon is not subject to any statutory capital requirements, nor are any such defined in the Articles of Association.
+Capital management as well as the corresponding objectives and definitions are based on ratios which in turn
+are based on the consolidated IFRS financial statements. Infineon defines its net cash position, or net debt position,
+as gross cash less short-term and long-term debt (gross debt). Gross cash is defined as the total of cash, cash
+equivalents and financial investments. Infineon defines EBIT as earnings (loss) from continuing operations before
+interest and taxes and EBITDA as EBIT plus depreciation/amortization.
+> gross debt of not more than 2x EBITDA (earnings from continuing operations before tax, depreciation and
+amortization).
+> positive net cash position and
+> gross cash position of between 30 and 40 percent of revenue,
+Infineon's principal capital management objective is to ensure financial flexibility on the basis of a solid capital
+structure. As with comparable companies in the semiconductor industry, it is of prime importance that sufficient
+cash funds are available to finance operating activities and planned investments throughout all phases of the
+business cycle. On the other hand, debt should only constitute a modest proportion of the financing mix. Based on
+these principles Infineon has defined the following three key objectives for capital management which are still
+being pursued following the acquisition of International Rectifier:
+25 Capital management
+A dividend of €0.20 for each share entitled to a dividend shall be proposed to be paid from the €226 million of
+distributable profits of Infineon Technologies AG for the 2015 fiscal year. Taking into account the fact that own
+shares held by the Company at the time of the Annual General Meeting are not entitled to receive a dividend, this
+would result in an expected distribution of approximately €225 million. Since payment of the dividend depends
+on approval being given by the Annual General Meeting which is set to take place on February 18, 2016, a liability
+has not been recognized in the Consolidated Financial Statements.
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+248
+247
+(6)
+For the 2014 fiscal year, a cash dividend of €0.18 per share (total amount: €202 million) was paid in accordance
+with the resolution passed at the Annual General Meeting on February 12, 2015. For the 2013 fiscal year, a cash
+dividend of €0.12 per share (total amount: €129 million) was paid in accordance with the resolution passed at the
+Annual General Meeting on February 13, 2014.
+Under the German Stock Corporation Act (Aktiengesetz), the amount of dividends available for distribution to
+shareholders is based on the level of unappropriated profit (Bilanzgewinn) of the parent company, as determined
+in accordance with the HGB. All dividend payments must be approved by the Annual General Meeting.
+Infineon has entered into a number of standard covenants as a result of the financing of the acquisition of International
+Rectifier. The covenants contain, among other things, change of control clauses as well as the compliance with a
+debt cover ratio. This covenant ratio, which provides for a certain relationship between the size of debt (adjusted)
+and earnings (adjusted), was complied with in the 2015 fiscal year, indeed Infineon reached considerably stronger
+ratio than the minimum requirement. The entire outstanding loan which amounted to US$934 million as at Sep-
+tember 30, 2015 (see note 22) can become immediately repayable if the covenant agreement is not complied with
+by Infineon.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+249
+26 Share-based compensation
+8.49
+September 30, 2018
+8.49
+September 30, 2018
+Fiscal year 2015: Employees
+Number of
+performance shares
+at September 30, 2015
+Average share price
+of the nine months
+before grant in €
+End of the
+waiting period
+Dividends
+Tranche
+The fair value of the performance shares at the date of allocation is determined by an external expert using a recog-
+nized financial-mathematical method (Monte Carlo simulation model). Variations in the underlying assumptions
+have no material effect on the fair value.
+50 percent of the performance shares are performance-related, 50 percent are not dependent on performance.
+The performance-related shares are only finally allocated if the Infineon share outperforms the Philadelphia Semi-
+conductor Index (SOX) during the period between the date of the provisional allocation and the end of the holding
+period. If at the end of the holding period the requirements for an allocation of performance shares - either all or
+only those that are not performance related - are fulfilled, then the entitlement to the transfer of the corresponding
+number of (real) Infineon shares is acquired. The value of the performance shares ultimately assigned to members
+of the Management Board may not exceed 250 percent of the respective LTI allocation; above this level performance
+shares are forfeited.
+Under this plan, (virtual) performance shares are initially provisionally allocated on October 1 for the fiscal year
+starting on that date according to a pre-determined LTI allocation amount in euro. With the allotment of a virtual
+performance share, the participant in the plan acquires the right to receive (real) Infineon shares once a personal
+investment in Infineon shares has reached a four-year holding period. The level of personal investment is dependent
+on position and LTI allocation.
+A new Long Term Incentive Plan (LTI) consisting of a "performance share" plan was developed for the Management
+Board and selected senior executives as a successor to the Stock Option Plan 2010.
+Performance share plan
+Share-based compensation expenses for the 2015 and 2014 fiscal years amounted to €6 million, respectively.
+Share-based compensation expenses
+In order to provide share-based compensation the Company has in place the Stock Option Plan 2006, the Stock
+Option Plan 2010 and, from the 2014 fiscal year, the Performance Share Plan.
+The following is an overview of the allocations made:
+409
+(40)
+6
+(27)
+632
+(3,502)
+(130)
+535
+(3,907)
+Actuarial gains on post employment benefit obligations net of tax of €1 million
+As of September 30, 2015
+Net income attributable to shareholders of Infineon Technologies AG
+(2,897)
+As of September 30, 2014
+Net income attributable to shareholders of Infineon Technologies AG
+As of October 1, 2013
+€ in millions
+The following table shows a reconciliation of accumulated deficit as of September 30, 2015 and 2014:
+Accumulated deficit
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+254
+5
+Actuarial loss on post employment benefit obligations net of tax of €3 million
+1,040,198
+100,702
+Put options on own shares and own shares
+In November 2013 the Company resolved upon a new capital returns program of up to €300 million. In the course
+of this program the Company issued put options on own shares with a total volume of €85 million, all of which had
+lapsed by the end of the program on September 30, 2015.
+40
+(8)
+(45)
+14
+85
+(in units)
+in €
+shares
+On May 9, 2011 Infineon Technologies AG resolved to make use of the authorization to repurchase shares given by
+shareholders at the Annual General Meeting on February 17, 2011 and to set up a corresponding capital returns
+program. During the 2013 fiscal year up to the end of the program on March 31, 2013, put options for 6 million shares
+were exercised which were still on hand as of September 30, 2015, and for which the Company paid €38 million to
+the holders of the options.
+Underlying
+number of
+Exercise
+Put options issued during the 2015 fiscal year
+Less: put options lapsed in the 2015 fiscal year
+Less: put options exercised in the 2015 fiscal year
+Outstanding put options as of September 30, 2015
+Outstanding put options as of September 30, 2014
+Less: put options lapsed in the 2014 fiscal year
+Less: put options exercised in the 2014 fiscal year
+Put options issued in the 2014 fiscal year
+Outstanding put options as of October 1, 2013
+In each case stated in millions
+The following table contains an overview of put options issued, lapsed and exercised during the 2015 and 2014
+fiscal year:
+value
+8
+Management Board
+September 30, 2017
+Cash and cash equivalents reported as of September 30, 2015 and 2014 totaling €673 million and €1,058 million,
+respectively, include €85 million and €53 million, respectively, which were subject to legal transfer restrictions
+and so were not available for general use by Infineon. This amount represents cash and cash equivalents of
+consolidated companies located in countries where the transfer of cash is legally restricted, for example the
+People's Republic of China.
+There were no significant non-cash transactions from acquisition or financing activities during the 2015 and
+2014 fiscal years.
+27 Supplemental cash flow information
+8.62
+1.9
+7.33
+9.5
+6.32
+(0.2)
+7.11
+(1.5)
+Exercisable at September 30, 2015
+Options outstanding as of September 30, 2015
+Forfeited and expired
+Exercised
+Granted
+7.29
+28 Transactions with related companies and persons
+Infineon has transactions in the normal course of business with associated and other related companies (collectively,
+"related companies"). The related companies which are controlled or significantly influenced by Infineon are
+disclosed in note 35. Related persons are persons in key management positions in particular members of the
+Management and Supervisory Board (see note 35) and their close relatives (collectively "related persons").
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Related companies
+1
+3
+1
+1
+companies
+Other related
+Associates
+Other related
+companies
+11.2
+Associates
+September 30, 2015
+Trade and other payables
+Financial receivables
+Trade and other receivables
+€ in millions
+Related companies receivables and payables as of September 30, 2015 and 2014 consist of the following:
+Related companies receivables and payables consist exclusively of trade and other receivables and payables from
+and to associated and other related companies.
+Infineon purchases certain raw materials and services from, and sells certain products and services to related
+companies. These purchases from and sales to related companies are generally effected at arm's length.
+September 30, 2014
+Options outstanding as of September 30, 2014
+2.72
+0.4
+Stock Option Plan 2006 and Stock Option Plan 2010
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+250
+As at 1 October, 2015 80,964 (virtual) performance shares were allocated to the Management Board and 1,301,206
+(virtual) performance shares were allocated to employees.
+5.20
+5.72
+5.31
+There are no material changes with respect to the stock option plans described in the consolidated financial
+statements as of September 30, 2013.
+5.44
+Fair Value per
+performance share
+Management Board
+114,046
+6.62
+September 30, 2017
+Fiscal year 2014:
+1,235,370
+6.62
+in €
+Fiscal year 2014: Employees
+The fair value of the stock options of the Stock Option Plans 2006 and 2010 is determined by an external expert
+using a recognized financial-mathematical method (Monte Carlo simulation model).
+Options outstanding as of September 30, 2013
+7.29
+11.2
+7.94
+(0.1)
+2.72
+(0.5)
+Exercisable at September 30, 2014
+Options outstanding as of September 30, 2014
+The development of the 2006 and 2010 stock option plans during the 2014 and 2015 fiscal years is presented below:
+Forfeited and expired
+7.11
+11.8
+(in €)
+(in millions)
+exercise price
+Weighted-
+average
+Number of
+options
+Granted
+Exercised
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+(7)
+70
+(17)
+(5)
+(22)
+(20)
+(4)
+(24)
+Expected return on plan assets
+10
+2
+12
+14
+2
+16
+Amortization of unrecognized
+past service (cost) benefit
+3
+3
+The following table shows the expected disbursements for defined benefit plans for the next ten fiscal years as at
+September 30, 2015 and 2014:
+The weighted average duration of defined benefit plans is around 18 and 17 years as of September 30, 2015
+and 2014, respectively.
+In the 2016 fiscal year, payments of €21 million are expected to be made to plan assets of which €20 million relates
+to benefits paid directly to pension recipients by the Group companies, and €1 million is contributions to plan
+assets.
+As of September 30, 2015 and 2014, cumulative actuarial losses amounted to €322 million and €292 million,
+respectively. In addition, cumulative actuarial losses amounting to €5 million, resulting from deferred compen-
+sation and health care plans, are also recognized directly in Other Comprehensive Income.
+Actuarial losses of €30 million and actuarial losses of €130 million have been recognized outside of the Consoli-
+dated Statement of Operations in Other Comprehensive Income for the years ended September 30, 2015 and 2014,
+respectively.
+Service costs are recorded within cost of goods sold to the extent that they relate to production employees,
+otherwise they are recorded as research and development or selling, general and administrative expenses. Interest
+costs and expected return on plan assets were recorded net as part of financial expense.
+Interest cost
+(21)
+(32)
+(4)
+(28)
+5
+5
+Curtailment gain recognized
+Pension cost
+(21)
+(18)
+(3)
+(15)
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+256
+The actual return on plan assets in the fiscal year ended September 30, 2015 was €7 million (2014: €40 million).
+As a matter of policy Infineon's pension plans do not invest in shares of Infineon.
+The position "Other" in the table above comprises mainly commodity funds.
+Amounts recognized in profit or loss and in total comprehensive income
+67
+74
+414
+8
+25
+15
+24
+415
+€ in millions
+The expenses and income of defined benefit plans for the years ended September 30, 2015 and 2014 comprise
+the following:
+2015
+(25)
+(4)
+(21)
+Current service cost
+plans
+plans
+€ in millions
+plans
+Foreign
+Domestic
+Total
+Foreign
+Domestic
+plans
+2014
+Total
+26
+Less than 1 year
+2-5 years
+(281)
+(281)
+(40)
+(40)
+(37)
+(37)
+Pension obligations are reported in the Consolidated Statement of Financial Position under "Pension plans and
+similar commitments".
+Since no asset ceilings applied, the funded status of the Infineon pension plans corresponds to the amounts
+reported in the Consolidated Statement of Financial Position as at September 30, 2015 and 2014.
+253
+The funding of the defined benefit obligations is as follows:
+€ in millions
+2015
+2014
+Domestic
+Foreign
+Total
+plans
+763
+833
+Plans that are wholly or partly funded
+Total
+73
+63
+10
+(313)
+81
+10
+Plans that are wholly unfunded
+Total
+Foreign
+plans
+Domestic
+plans
+plans
+71
+(313)
+Thereof: Infineon Technologies AG
+Thereof: Infineon Technologies Austria AG
+(379)
+281
+321
+175
+197
+70
+82
+Defined contribution plans
+18
+18
+21
+2014
+2015
+Total
+5-10 years
+21
+1-2 years
+In connection with defined contribution plans, fixed contributions are made to external insurance providers or
+funds. Infineon has no further performance obligations or risks with regard to these pension plans in excess of the
+fixed contributions paid. Additionally the Group makes contributions to government pension schemes. Expenses
+for defined contribution plans amounted to €134 million and €114 million in the fiscal years ended September 30,
+2015 and 2014, respectively.
+5
+(79)
+(300)
+(426)
+(90)
+(336)
+Net pension liability
+Consolidated Financial Statements
+482
+430
+488
+51
+437
+Fair value of plan assets at end of year
+2
+52
+23
+2
+33
+Sensitivity analysis
+The following sensitivity analysis table shows how the present value of all defined benefit pension obligations
+would be affected by changes in the aforementioned actuarial assumptions. In each case they reflect the effect of
+changes in one actuarial assumption holding all other assumptions constant.
+€ in millions
+2015
+2014
+Domestic
+plans
+Foreign
+plans
+Total
+Domestic
+plans
+Foreign
+plans
+Total
+Present value of defined benefit pension
+plans with:
+a 50 basis points higher discount rate
+708
+131
+783
+rate of salary increase
+a 50 basis points higher expected
+936
+136
+800
+Discount rates are derived from high-grade fixed interest corporate bonds from issuers carrying a very high
+credit rating.
+999
+847
+a 50 basis points lower discount rate
+786
+117
+669
+839
+152
+0.7
+2.0
+0.7
+Discount rate at the end of the fiscal year
+in %
+The weighted-average assumptions used in calculating the actuarial values for the pension plans are as follows:
+Actuarial assumptions
+861
+131
+Rate of salary increase
+730
+141
+773
+788
+720
+3
+68
+914
+145
+Projected future pension increases
+2014
+2.0
+2.3
+2.0
+2.4
+2.0
+3.4
+2015
+2.4
+plans
+Foreign
+Domestic
+plans
+Foreign
+plans
+Domestic
+plans
+Foreign currency effects
+2.4
+928
+3.2
+130
+Total
+Other
+Property
+Reinsurance policies
+Cash and cash equivalents
+Equity securities
+2015
+Corporate bonds
+€ in millions
+As of September 30, 2015 and 2014 the allocation of invested plan assets to the major asset categories is as follows:
+Plan asset allocation
+The pension plans' assets are invested with several fund managers. The investment guidelines require a mix of
+active and passive investment management programs covering different asset classes. Taking the duration of the
+underlying liabilities into account, a portfolio of investments of plan assets in equity, debt and other securities, and
+reinsurance policies is targeted to maximize the total long-term return on assets for a given level of risk. Investment
+risk is monitored on an ongoing basis through periodic portfolio reviews, coordination with investment managers
+and annual liability measurements. Investment policies and strategies are periodically reviewed to ensure the
+objectives of the plans are met, taking into account any changes in benefit plan design, market conditions or other
+material items. Furthermore, Infineon periodically commissions detailed asset/liability studies to be performed
+by third-party professional investment advisors and actuaries, the results of which are incorporated into the
+investment strategy.
+Investment strategies
+255
+Government bonds
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+2014
+in an active
+market
+33
+53
+33
+736
+75
+78
+Quoted
+109
+130
+153
+146
+Not quoted
+in an active
+market
+market
+Quoted
+in an active
+3
+tables were applied.
+Not quoted
+in an active
+market
+874
+941
+146
+795
+rate of pension increase
+a 50 basis points higher expected
+rate of salary increase
+746
+122
+902
+137
+The 2005 G actuarial tables by Dr. Klaus Heubeck were used for Germany, and for Austria the AVÖ 2008-P (Ang.)
+866
+765
+a 50 basis points lower expected
+724
+129
+846
+a 50 basis points lower expected
+143
+745
+875
+790
+933
+123
+715
+838
+136
+754
+Increase in life expectancy by one year
+129
+rate of pension increase
+890
+39
+1,146
+1
+116
+(4)
+41
+145
+25
+Par value
+171
+Fair value
+Fair value
+Par value
+2014
+2015
+Deal Contingent Forward
+Commodity swaps
+Total
+(2)
+(2)
+Market risk
+(2)
+Consolidated Financial Statements
+The Management Board has established policies that require Infineon's individual legal entities to manage the
+foreign exchange risk with respect to their functional currency. Group entities prepare a monthly rolling cash flow
+forecast by currency in order to determine foreign exchange risks. The net foreign exchange positions determined
+in these forecasts are required to be hedged, usually by entering into internal hedging contracts. Infineon's policy
+with respect to limiting short-term foreign currency exposure is to hedge at least 75 percent of its estimated net
+cash flow for the following two months, at least 50 percent of its estimated net cash flow for the third month and,
+depending on the nature of the underlying transactions, a portion for the periods thereafter. Part of the foreign
+currency risk cannot be mitigated due to differences between actual and forecasted amounts. Infineon calculates
+this remaining risk based on net cash flows considering items in the Statement of Financial Position, actual orders
+received or placed and all other planned cash receipts and payments. Entities acquired as a result of the acquisi-
+tion of International Rectifier which still follow their own hedging strategy were excepted from this policy in the
+2015 fiscal year.
+Forward exchange contracts purchased
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+262
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying but significant portion of its
+revenue as well as cost of goods sold, research and development and product distribution costs are denominated
+in currencies other than the euro, primarily the US dollar. Fluctuations in the exchange rates of these currencies
+compared to the euro had an effect on the results of Infineon in the 2015 and 2014 fiscal years.
+Foreign exchange risk within the meaning of IFRS is the risk arising from changes to foreign exchange rates.
+Accordingly, foreign exchange risks are associated with monetary financial instruments that are denominated in
+a foreign currency that is one that does not correspond to the functional currency, and the foreign currency
+represents the relevant risk variable. Risks arising from the translation into Infineon's reporting currency are not
+risks within the meaning of IFRS 7.
+Foreign exchange risk
+Infineon is exposed to various market risks in the ordinary course of business, primarily resulting from changes
+in foreign exchange rates and interest rates. Infineon enters into a range of derivative financial transactions with
+various counterparties to limit such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+42
+Market risk is defined as the risk of losses resulting from adverse changes in the market prices of financial instruments,
+including those related to foreign exchange rates, interest rates and other price risks.
+31 Financial risk management
+As in the previous year, no hedge ineffectiveness was recorded in the Consolidated Statement of Operations for the
+aforementioned hedging relationships. As in the previous year, no gains or losses were transferred from other
+reserves to profit or loss as a result of cash flow hedges for future raw material purchases being cancelled following
+the decision that the occurrence of the hedged transaction had become unlikely.
+To offset the price risks of highly probable gold purchases in the coming fiscal years, Infineon entered into swaps
+which are designated as cash flow hedges. The fair value of these swaps amounted to negative €2 million as of
+September 30, 2015 and negative €2 million as of September 30, 2014. €3 million of unrealized losses arose from
+these transactions in the 2015 fiscal year (2014: €3 million unrealized losses), these reduced other reserves by
+a corresponding amount. At the same time, €3 million of gains were realized in the 2015 fiscal year on swap trans-
+actions concluded in the previous year (2014: €4 million of gains); this amount was transferred from other reserves
+into the Consolidated Statement of Operations.
+261
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+The Euro/US Dollar foreign currency forward contract contingent on closing of the acquisition of International
+Rectifier (Deal Contingent Forward) entered into in August 2014 gave partial protection against exchange rate
+risks arising from the purchase price obligation (see note 3) and became due upon completion of the acquisition.
+Amounts previously recorded in other reserves for this hedge were fully taken into account when calculating the
+purchase price in euros. No ineffectiveness was recorded in the Consolidated Statement of Operations for this
+hedge relationship. Additionally, for the aforementioned hedging purpose, holdings in US Dollars (US$196 million)
+generated from operating business activities in the 2015 fiscal year were also designated as cash flow hedges. Here
+too, amounts previously recorded in other reserves were fully taken into account when calculating the purchase
+price in euros. This hedging relationship also had no effect on the Consolidated Statement of Operations.
+Foreign exchange derivatives are entered into by Infineon to offset the exchange risk from anticipated cash receipts
+from operating activities. In 2015 as in 2014 no foreign exchange derivatives used to hedge ongoing business were
+designated as cash flow hedges.
+38
+(8)
+Infineon's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate
+risk and price risk), credit risk and liquidity risk. Infineon's financial risk management program seeks to minimize
+potential adverse effects on its profitability and liquidity. Infineon uses derivative financial instruments to hedge
+certain risks to which it is exposed. Financial risk management is carried out by the central Finance & Treasury (FT)
+department in accordance with policies approved by the Chief Financial Officer. The FT department identifies,
+evaluates and hedges financial risks in close cooperation with the operating units. The FT department's policy
+contains principles for overall risk management as well as policies covering specific areas such as foreign exchange
+risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the investment
+of excess liquidity.
+Forward exchange contracts sold
+Other non-current assets include equity holdings and investments in funds. Where these are traded on an active
+market, the fair value is based on the actual market price (Level 1). For equity investments where no actively traded
+market price is available, the fair value is determined by considering existing contractual arrangements based on
+externally observable dividend policy (Level 3).
+The nominal values and fair values of Infineon's derivative instruments as of September 30, 2015 and 2014 are
+as follows:
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+260
+In the 2015 and 2014 fiscal years there were no reclassifications between the levels.
+In addition, other non-current assets include an option to sell shares in an equity holding for a fixed price. The option
+is recognized as a derivative financial instrument and is not designated as a hedging instrument. The fair value is
+determined using the Black-Scholes option pricing model (Level 3).
+Other current liabilities contain derivative financial instruments, including cash flow hedges. Their fair value is
+determined by discounting future cash flows according to the discounted cash flow method. Where possible,
+valuation parameters observed on the reporting date in the relevant markets (such as currency rates or commodity
+prices) drawn from reliable external sources are used (Level 2).
+There is no active market for the securities included in financial investments. The fair value is calculated as the
+present value of future expected cash flows, taking into account valuation parameters which can be observed in
+the market (Level 2).
+3
+3
+3
+3
+5
+105
+16
+126
+5
+16
+21
+For the net result related to foreign currency derivatives and foreign currency transactions included within net
+income see note 30.
+41
+The net gain or loss on financial instruments within continuing operations in the Group Statement of Operations
+amounted to the following:
+€ in millions
+Loan and receivables
+Held for trading
+Infineon holds derivative financial instruments exclusively for hedging purposes. This includes the use of forward
+exchange contracts and commodity swaps. The objective is to reduce the impact of exchange rate and commodity
+price fluctuations on future net cash flows.
+Derivative financial instruments and hedging activities
+Infineon does not net financial instruments. The Infineon Group conducts derivative transactions according to the
+global netting agreement (Master Agreement) of the International Swaps and Derivatives Association (ISDA) and
+other comparable national framework agreements. These agreements contain no legally enforceable requirement
+for netting.
+Interest income from financial instruments not measured at fair value through profit and loss amounted to €6 million
+in the 2015 fiscal year (2014: €10 million); interest expense from such financial instruments amounted to €39 million
+(2014: €11 million).
+The currency effects included within net gains and losses amount to negative €2 million (2014: negative €4 million).
+This net currency effect arose exclusively from financial instruments according to IFRS 7.
+(8)
+(35)
+(7)
+(6)
+€ in millions
+(40)
+(21)
+36
+64
+3
+5
+2014
+2015
+Designated hedging instruments (cash flow hedges)
+Total
+Other financial liabilities
+(77)
+The following table shows the effects on profit or loss and equity for continuing operations of a 10 percent shift in
+the currency exchange rates for the major foreign currencies (which can be found in note 2) as of September 30, 2015
+and 2014. The assumed exchange rate changes relate only to financial instruments within the meaning of IFRS 7.
+332
+September 30, 2015
+970
+46
+1,012
+2,914
+Total
+(201)
+(201)
+Cash inflow'
+209
+209
+Cash outflow
+financial liabilities:
+Derivative
+540
+14
+970
+332
+46
+1,004
+14
+540
+2014
+2015
+64
+53
+60
+Cash outflow
+financial liabilities:
+Derivative
+17
+107
+6
+2,906
+16
+865
+1,032
+financial liabilities
+Non derivative
+beyond 2019
+2019
+2018
+2017
+2016
+21
+financial liabilities
+Non derivative
+beyond 2020
+263
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Changes in market interest rates affect interest income and interest expense on variable rate financial instruments.
+Assuming an increase (decrease) of 100 basis points in market interest rates in 2015, interest income in the 2015
+fiscal year would have been worse (better) by €9 million; assuming an increase (decrease) of 100 basis points in
+market interest rates in 2014, interest income in the 2014 fiscal year would have been worse (better) by €0 million.
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market interest rates on profit or loss
+and equity. Infineon prepares this using the iteration method. Infineon does not hold any fixed-rate financial assets
+or liabilities that are measured at fair value through profit or loss. Furthermore, Infineon did not hold any fixed-rate
+available-for-sale financial assets either in 2015 or 2014.
+To reduce the net remaining risks caused by changes in interest rates, Infineon is able to make use of interest rate
+derivatives in order to align the fixed interest periods of assets and liabilities.
+Infineon is exposed to interest rate risk through its financial assets and debt instruments resulting from bond
+issuances and debt financing. Due to the cyclical nature of its core business and the need to maintain high
+operational flexibility, Infineon holds a relatively high level of liquid financial assets that are invested in short-term
+fixed-interest instruments. These investments generally have a contract duration of between one and twelve
+months in order to achieve short-term interest rate returns. The risk to these assets of changing interest rates is
+partially offset by financial liabilities, some of which are based on variable interest rates.
+In accordance with IFRS 7 "Financial Instruments: Disclosures", interest rate risk is defined as the risk that the
+fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates.
+Interest rate risk
+(11)
+Other price risk
+3
+(13)
+11
+(10%)
++10%
+(10%)
++10%
+Equity
+Profit or Loss
+September 30, 2014
+(2)
+€ in millions
+According to IFRS 7 “Financial Instruments: Disclosures”, other price risk is defined as the risk that the fair value or
+future cash flows of a financial instrument could fluctuate because of changes in market prices (other than those
+arising from interest rate risk or currency risk), irrespective of whether those changes are caused by factors specific
+to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded in
+the market.
+Additionally, Infineon is exposed to price risks with respect to raw materials upon which it is dependent. Infineon
+seeks to minimize these risks through its procurement policy (including the use of multiple sources, where possible)
+and its operating procedures. In line with these measures Infineon concluded additional financial derivative
+contracts for certain commodity supplies (gold) for the following fiscal year in order to mitigate the remaining risk
+arising from the fluctuation of commodity prices. The change in relevant market prices as of September 30, 2015
+and September 30, 2014 had no significant impact on equity of the 2015 and 2014 fiscal years.
+2020
+2019
+2018
+Contractual cash flows
+2017
+2016
+2015
+€ in millions
+The following table discloses the maturity profile for non-derivative financial liabilities and a cash flow analysis for
+derivative financial instruments with negative fair values. The table shows the undiscounted contractually agreed
+cash flows that result from the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign currencies are translated using the
+closing rate at the reporting date. The value of financial instruments with variable interest payments is determined
+using the interest rate from the last interest fixing date before September 30, 2015. The cash outflows of financial
+liabilities that can be repaid at any time are assigned to the period in which the earliest redemption is possible.
+Infineon held financial instruments that are exposed to market price risks. A change in the relevant market prices
+would have no significant impact on the result of the 2015 and 2014 fiscal years.
+Liquidity risk could arise from a potential inability of Infineon to meet maturing financial obligations. Infineon's
+liquidity management provides that sufficient levels of cash and other liquid assets are available as well ensuring
+the availability of funding through adequate levels of committed credit facilities.
+Financing and liquidity risk
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+264
+Infineon has spread its cash investments over more than 10 banks. At September 30, 2015 no financial institution was
+responsible for more than 15 percent (2014: 14 percent) of Infineon's cash investments. This gives rise to a maxi-
+mum risk of €203 million (2014: €190 million) in the event of the default of a single financial institution assuming no
+deposit insurance scheme is in place. Infineon also holds derivative financial instruments with a positive fair value
+of €1 million (2014: €41 million, of which €39 million related to the Deal Contingent Forward).
+Worldwide foreign exchange and interest hedging contracts as well as the investment of liquid assets in cash
+equivalents and financial investments are entered into with major financial institutions worldwide that have high
+credit ratings. Infineon assesses the creditworthiness of banks using a methodology that establishes investment
+limits for individual banks that are updated on a daily basis based on current ratings (Standard & Poor's, Moody's or
+Fitch) and credit default swap premiums. Any possible breaches of stipulated investment thresholds result in an
+immediate notification and a call to reduce the risk.
+Credit risk with respect to trade receivables is limited by the large number and geographic diversity of the customer
+base. Infineon controls credit risk through comprehensive credit evaluations for all major customers, the use of
+credit limits and monitoring procedures. New customers are evaluated for creditworthiness in accordance with
+Infineon guidelines. Credit limits are also in place for individual customers and creditworthiness and credit limits
+are constantly monitored. A further measure taken to reduce credit risk is the use of reservation of title clauses.
+However, despite continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising from the
+default of one of its contract parties.
+Credit risk arises when a customer or other counterparty of a financial instrument fails to discharge its contractual
+obligations. Infineon is exposed to this risk as a consequence of its ongoing operations, the financial investments
+and certain financing activities. Infineon's credit risk arises primarily from trade receivables, cash and cash equiva-
+lents, financial investments and derivative financial instruments. Excluding the impact of any collateral received,
+the carrying amount of financial investments, cash and cash equivalents and trade receivables corresponds to the
+maximum credit risk.
+Credit risk
+Financing and liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated
+with financial liabilities.
+9
+€ in millions
+41
+39
+3,106
+85
+2
+3,232
+Total
+118
+97
+21
+118
+3,232
+Other non-current assets
+115
+39
+74
+581
+1,360
+1,058
+1,058
+1,296
+581
+64
+☐ ☐
+2
+Non-current assets:
+115
+257
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+hedging
+instruments
+(amortized
+cost)
+liabilities
+financial
+through
+profit or loss
+Designated
+Other
+At fair value
+Carrying
+amount
+financial liabilities
+258
+Categories of
+Other non-current liabilities
+Long-term debt
+Non-current liabilities:
+Other current liabilities
+Trade payables
+of long-term debt
+Short-term debt and current maturities
+Current liabilities:
+Balance as of September 30, 2015
+Financial liabilities
+Total
+581
+1,360
+1,058
+Fair value
+Designated
+cash flow
+hedges
+Loans and
+receivables
+Available
+for sale
+At fair value
+through
+profit or loss
+Carrying
+amount
+Categories of financial assets
+Balance as of September 30, 2014
+Total
+Other non-current assets
+673
+Non-current assets:
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Current assets:
+Balance as of September 30, 2015
+Financial assets
+€ in millions
+The following table presents the carrying amounts and the fair values of financial instruments by their respective
+classes, and a breakdown by category of financial instruments as defined by IAS 39.
+30 Additional disclosures on financial instruments
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Other current assets
+1,340
+742
+74
+Other current assets
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Current assets:
+2,958
+2,741
+216
+1
+2,958
+129
+97
+32
+129
+74
+73
+742
+742
+673
+1,340
+1,156
+184
+673
+1
+(cash flow
+hedges)
+9
+Fair value
+33
+1
+1
+62
+122
+184
+Other current assets
+Financial investments
+Level 3
+Level 2
+Level 1
+Non-current assets:
+Fair value by category
+259
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Current assets:
+2015 Fiscal year
+€ in millions
+The allocation to the levels as of September 30, 2015 and 2014 is as follows:
+> Level 3: valuation parameters for assets and liabilities which are not based on observable market data.
+> Level 2: valuation parameters whose prices are not the ones considered in Level 1, but which can be observed
+either directly or indirectly for the assets or liabilities,
+> Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities,
+Financial instruments measured at fair value are allocated to the following measurement levels in accordance with
+IFRS 13. The allocation to the different levels is based on the market proximity of the valuation parameters used
+in the determination of the fair value:
+Fair value
+For assets measured at amortized costs categorized as "Loans and receivables", it is assumed that the fair values
+correspond to their carrying amounts. The same assumption applies to liabilities resulting from trade payables and
+other current liabilities categorized as "Other financial liabilities (amortized cost)".
+Other non-current assets
+19
+64
+9
+9
+Total
+Other current liabilities
+Current Liabilities
+Total
+Other non-current assets
+Non-current assets:
+Other current assets
+32
+Financial investments
+2014 Fiscal year
+Total
+Other current liabilities
+Current Liabilities
+13
+63
+141
+217
+Total
+13
+Current assets:
+1,028
+2
+1,025
+Current liabilities:
+Balance as of September 30, 2014
+2,763
+2
+2,755
+7
+2,764
+32
+32
+32
+Short-term debt and current maturities
+1,759
+1,760
+137
+2
+128
+7
+137
+802
+802
+802
+33
+1,760
+of long-term debt
+35
+35
+1
+1,028
+15
+15
+15
+151
+151
+151
+Total
+Other non-current liabilities
+Long-term debt
+Non-current liabilities:
+179
+2
+176
+1
+179
+Other current liabilities
+648
+648
+648
+Trade payables
+35
+33
+7
+Available-for-sale financial assets
+868
+In December 2014, an indirect customer filed a lawsuit against Infineon and Renesas in London (Great Britain)
+which was served upon the Company on April 20, 2015. In this lawsuit the plaintiff claims for damages in an amount
+still to be determined in connection with the allegations of the EU Commission.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Two class actions for damages in connection with the EU Commission investigative proceedings have been filed
+in Canada: The first action was filed in the state of British Columbia in July 2013, and the second in the state of
+Quebec in September 2014. The actions followed the press reports on the investigation and subsequent decision
+of the EU Commission. No dates have been set for court proceedings.
+In October 2008, the EU Commission initiated an investigation into the Company and other manufacturers of chips
+for smartcards for alleged violations of antitrust laws. On September 3, 2014, the EU Commission imposed a fine of
+€83 million on Infineon which was paid in October 2014. Infineon rejects the allegations as unfounded. Moreover
+Infineon believes its procedural rights to have been violated by the EU Commission and brought an action against the
+decision to fine before the European Court of Justice in Luxembourg in mid-November 2014.
+Litigation and government inquiries
+32 Legal risks
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+17
+Any further statements about these matters by the Company could seriously compromise the Company's position
+in these proceedings.
+107
+16
+21
+1,035
+Total
+(7)
+(50)
+(57)
+Cash inflow¹
+6
+Proceedings in relation to Qimonda
+Smartcard antitrust litigation
+Partial settlement on September 11, 2014
+As described above, Infineon faces certain risks in connection with the insolvency proceedings relating to the assets
+of Qimonda and that entity's subsidiaries. As a result, Infineon recorded provisions and liabilities in connection
+with some of the above-mentioned matters totaling €55 million as of September 30, 2015 (2014: €315 million). Of
+the provisions and liabilities recorded as of September 30, 2015, €32 million has been provided in connection with
+the residual liability as former shareholder of Qimonda Dresden. For the defense of the proceedings still pending
+for the alleged activation of a shell company and liability for impairment of capital, the Company has recorded a
+provision of €18 million as of September 30, 2015. Remaining provisions in connection with the Qimonda insolvency
+total €5 million as of September 30, 2015. In October 2015 the Company paid €14 million to the insolvency adminis-
+trator for selected settlement agreements for residual liability claims for former employees of Qimonda Dresden.
+Infineon recognizes provisions and liabilities for such obligations and risks which it assesses at the end of each
+reporting period are more likely than not to be incurred (that is where, from Infineon's perspective at the end of
+each reporting period, the probability of having to settle an obligation or risk is greater than the probability of not
+having to) and the obligation or risk can be estimated with reasonable accuracy at this time.
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
+Infineon was a shareholder with personal liability of Qimonda Dresden until the carve-out of the memory busi-
+ness; as a result certain long-standing creditors have residual liability claims against Infineon. These claims, which
+include the potential repayment of public subsidies, trade tax demands, receivables of service providers and
+suppliers and employee-related claims such as salaries and social security contributions, can only be exercised by
+the administrator acting in the name of the creditors concerned. In the meantime, settlements have been concluded
+with many of the residual liability creditors, in particular with respect to the employee-related claims.
+All significant assets, liabilities and business activities attributable to the memory business (Memory Products) were
+carved out from Infineon and transferred to Qimonda in the form of a non-cash contribution with economic effect
+from May 1, 2006. Qimonda filed an application at the Munich Local Court to commence insolvency proceedings on
+January 23, 2009. On April 1, 2009, the insolvency proceedings formally opened. The insolvency of Qimonda has
+given rise to various disputes between the administrator and Infineon.
+The legal dispute is being pursued with great effort by both parties, and many extensive written submissions have
+already been exchanged between the parties. Both sides have engaged numerous specialists and experts who are
+supporting the respective parties with assessments and opinions.
+The legal dispute has, in the meantime, focused on the claims asserted for alleged lack of value. On August 29, 2013
+the court appointed an independent expert in order to clarify the valuation issues raised by the administrator.
+Furthermore, an additional expert has yet to be appointed to deal with technical questions.
+The alleged impairment of capital runs contrary to two valuations prepared as part of the preparatory documen-
+tation for the capital increase by independent auditing companies, one of which had been engaged by Infineon
+and the other of which was acting in the capacity of a court-appointed auditor of non-cash contributions and post-
+formation acquisitions. The auditing company engaged by Infineon concluded in its valuation that the business
+area contributed had a value of several times the lowest issue price of the shares issued, while the court-appointed
+auditor of non-cash contributions and post-formation acquisitions confirmed to the court that the lowest issue
+price of the shares issued was covered - as legally required - by the value of the non-cash contributions. Addition-
+ally, in the course of its defense against the claims asserted by the administrator, Infineon has commissioned several
+expert opinions all of which arrive at the same conclusion, that the objections raised by the administrator against
+the valuation of the non-cash contribution are not valid.
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Due to the highly complex nature of the issues to be decided and the level of the claims asserted, it is not clear
+at this stage if this legal dispute can be ended with an out-of-court settlement, and absent a settlement when
+a first-instance court decision would be reached.
+265
+In addition to the request for declaratory judgment against Infineon in an unspecified amount, on February 14, 2012
+the administrator also lodged a request for payment based on an alternative claim (in German: "Hilfsantrag"), as
+well as making other additional claims. In conjunction with this alternative claim, the administrator has requested
+the payment of at least €1.71 billion plus interest in connection with the alleged activation of a shell company. On
+June 15, 2012 the insolvency administrator increased his request for payment of February 14, 2012 on the grounds
+of activation of a shell company to at least approximately €3.35 billion plus interest. Furthermore, the insolvency
+administrator continues to base a substantial part of his alleged payment claims, as already asserted out of court
+against Infineon in August 2011 for an unspecified amount, on so-called liability for impairment of capital (in German
+"Differenzhaftung”). This claim is based on the allegation that, from the very beginning, the carved-out memory
+products business had a negative billion euro value. The administrator therefore asserts that Infineon is obliged to
+make good the difference between this negative value and the lowest issue price (in German: “geringster Ausgabe-
+betrag") of the subscribed stock. Additionally, the insolvency administrator has asserted a claim for repayment of
+allegedly unjustly charged consultancy fees in an amount of €10 million in connection with the flotation of Qimonda.
+The administrator filed a request for declaratory judgment in an unspecified amount against Infineon Technologies
+AG and, by way of third party notice, Infineon Technologies Holding B.V. and Infineon Technologies Investment B.V.,
+at Regional Court Munich I in November 2010. This requested that Infineon be deemed liable to make good the
+deficit balance of Qimonda as it stood when the insolvency proceedings in respect of the assets of Qimonda began,
+i.e., to refund to Qimonda the difference between the latter's actual business assets when the insolvency proceedings
+began and its share capital (in German: “Unterbilanzhaftung"). The administrator contended that the commence-
+ment of operating activities by Qimonda amounted to what is considered in case law to be the activation of a shell
+company (in German: "Wirtschaftliche Neugründung"), and that this activation of a shell company was not disclosed
+in the correct manner. On March 6, 2012, with respect to another matter, the German Federal High Court issued a
+ruling on principle that any liability resulting from the activation of a shell company only depends on the situation
+at the date of the activation of a shell company and not, as asserted by the administrator, on the situation at the
+date on which insolvency proceedings are opened.
+Alleged activation of a shell company and liability for impairment of capital
+Additionally, further out-of-court claims of right to contest under insolvency law, as well as any other claims made
+by the administrator are settled, apart from those relating to the proceedings in connection with the alleged activa-
+tion of a shell company and liability for impairment of capital.
+With the partial settlement insolvency law proceedings contesting intercompany payments were also by mutual
+consent brought to a close.
+The partial settlement includes the acquisition by Infineon of Qimonda's patent business including the entire
+patent portfolio. On the closing day, the administrator transferred the patent business including the ownership of
+the patents to Infineon. With the exception of the proceedings mentioned below, the payment on the closing day
+by mutual consent ends the actions with respect to the continuing use of the Qimonda patents and Infineon's
+ownership of the license.
+On September 11, 2014 the Company and the administrator reached a partial settlement which was closed on
+October 9, 2014. On the closing day the Company paid €260 million to the administrator.
+266
+(72)
+Total
+446
+83
+57
+46
+Payments arising
+39
+177
+Payment obligations as of September 30, 2014
+from lease contracts
+(14)
+567
+44
+(15)
+2015)
+(15)
+93
+Payments arising
+from lease contracts
+594
+100
+72
+(15)
+61
+53
+249
+Payments arising
+from sub-lease contracts
+(148)
+(17)
+59
+81
+Total rental expenses under operating lease contracts amounted to €67 million and €68 million in the 2015 and 2014
+fiscal years, respectively, and related mainly to minimum lease payments.
+49
+270
+269
+On December 23, 2003, the Company entered into a long-term lease contract with MoTo Objekt Campeon GmbH
+& Co. KG ("MoTo"). This included an agreement to lease our office complex south of Munich, Campeon, whose con-
+struction was completed by MoTo in the second half of 2005. Infineon has no obligations with respect to financing
+Moto and has taken over no guarantees related to the construction. The Company took on Campeon under an
+operating lease arrangement in October 2005 and completed the move of its employees to this new location in the
+2006 fiscal year. The complex was leased by the Company for a period of 20 years. After 15 years the Company has
+the option to acquire the complex or otherwise continue the lease for the remaining period of five years. Pursuant to
+the agreement, the Company placed a rental deposit of €75 million in escrow, which was included in cash deposited
+as collateral as part of other non-current assets in the Consolidated Statement of Financial Position as of Septem-
+ber 30, 2015 (see note 17). Lease payments are subject to limited adjustments based on specified financial ratios
+related to Infineon. The agreement was classified as an operating lease, in accordance with IAS 17, with monthly
+lease payments expensed on a straight-line basis over the lease term.
+Infineon, through certain of its sales and other agreements may, in the normal course of business, be obligated
+to indemnify its counterparties under certain conditions for warranties, patent infringement or other matters.
+The maximum amount of potential future payments under these types of agreements is not predictable with any
+degree of certainty, since the potential obligation is contingent on events that may or may not occur in the future,
+and depends on certain facts and circumstances specific to each agreement. Historically, payments made by
+Infineon under these types of agreements have not had a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+In conjunction with its investing activities, Infineon receives government grants and subsidies related to the
+construction and financing of certain of its production facilities. Grants are also received for selected research and
+development projects. These amounts are recognized upon the achievement of specified criteria. Certain of these
+grants have been received contingent upon Infineon complying with certain project-related requirements, such as
+creating a specified number of jobs over a defined period of time. Infineon is committed to maintaining these
+requirements, and from today's perspective Infineon expects to be able to do so. Nevertheless, should such require-
+ments not be met, as of September 30, 2015, a maximum of €71 million (September 30, 2014: €66 million) of these
+subsidies could be refundable. This amount does not include any potential liabilities for Qimonda-related subsidies
+(see note 32).
+Long-term purchase commitments are in place for the supply of commodities and raw materials, in particular for
+wafers, semiconductor intermediate products, electricity and gas. Overall, these minimum purchase commitments
+give rise to other financial obligations amounting to approximately €728 million as at the reporting date (Septem-
+ber 30, 2014: €519 million). These contracts generally have terms of between one and seven years. Purchases under
+these agreements are recorded as incurred in the normal course of business. Infineon assesses its anticipated
+purchase requirements on a regular basis in order to meet customer demand for its products. An assessment of
+potential losses under these purchase contracts is made on a regular basis for example in the event that anticipated
+purchase quantities fall below the minimum contractual quantities.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Purchase commitments for planned investments in intangible assets at September 30, 2015 amounted to €2 million
+(September 30, 2014: €2 million).
+Contracts already entered into for commenced or planned investments in property, plant and equipment
+(purchase commitments) at September 30, 2015 amounted to €200 million (September 30, 2014: €122 million).
+The total income arising from sub-lease contracts amounted to €16 million and €18 million for the years ended
+September 30, 2015 and 2014, respectively.
+Payment obligations as of September 30, 2015
+154
+33
+34
+55
+40
+76
+402
+Total
+(87)
+(15)
+(15)
+(15)
+(16)
+(17)
+(165)
+from sub-lease contracts
+Payments arising
+241
+48
+65
+4-5 years After 5 years
+2
+2-3 years
+(€ in millions)
+Payments due in
+The following table summarizes Infineon's contingent liabilities with respect to external parties, excluding possible
+liabilities arising from litigation, as of September 30, 2015 and 2014:
+Contingent liabilities relate to possible future events, the occurrence of which would result in an obligation. The
+occurrence of these obligations is considered to be unlikely at the reporting date, but cannot be ruled out entirely.
+Contingent liabilities
+33 Contingent liabilities and other financial commitments
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+268
+267
+A settlement or adverse judicial decision in any of the matters described above could result in significant financial
+liabilities for Infineon and other adverse effects, and these in turn could have a material adverse effect on its
+business and financial condition, liquidity position and results of operations. Irrespective of the validity of the
+allegations and the success of the aforementioned claims and other matters described above, Infineon could incur
+significant costs in the defense of these matters.
+Any potential liability is reviewed again as soon as additional information becomes available and the estimates are
+revised if necessary. Provisions with respect to these matters are subject to future developments or changes in
+circumstances in each of the matters, which could have a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+Provisions and contingent liabilities for legal proceedings and other uncertain legal issues
+Provisions relating to legal proceedings and other uncertain legal issues are recorded when it is probable that
+a liability has been incurred and the associated amount can be reasonably estimated. To the extent that liabilities
+arising from legal disputes and other uncertain legal positions are not probable or cannot be reliably estimated,
+then they qualify as contingent liabilities.
+Furthermore, in connection with its existing or previous business operations, Infineon is also exposed to numerous
+legal risks which have until now not resulted in legal disputes. These include risks related to product liability,
+environment, capital market, anti-corruption, competition and antitrust legislation as well as other compliance
+regulations. Claims could also be made against Infineon in connection with these matters in the event of breaches
+of law committed by individual employees or third parties.
+Total
+Infineon is also involved in various other legal disputes and proceedings in connection with its existing or previous
+business activities. These can relate to products, services, patents, environmental issues and other matters. Further-
+more, since the acquisition of International Rectifier Infineon is at present and may also in the future become sub-
+ject to various legal disputes and proceedings and exposed to risks related to current or previous activities of Inter-
+national Rectifier. In particular these include litigation and claims for environmental issues in which International
+Rectifier has been named as a defendant or a potentially responsible party or has made voluntary disclosures;
+in some instances with the involvement of governmental authorities and in others with non-governmental parties.
+Based on its current knowledge, Infineon does not believe that the ultimate resolution of these other pending legal
+disputes and proceedings will have a material adverse effect on Infineon's financial condition, liquidity position
+and results of operations. However future revisions to this assessment cannot be ruled out and any reassessment
+of the miscellaneous legal disputes and proceedings could have a material adverse effect on the financial condition,
+liquidity position and results of operations, particularly in the period in which re-assessment is made.
+There can be no certainty that the provisions recorded for Qimonda will be sufficient to cover all of the liabilities
+that could ultimately be incurred in relation to the insolvency of Qimonda and, in particular, the matters discussed
+above. In addition, it is possible that liabilities and risks materialize that are currently considered to be unlikely to
+do so, and accordingly represent contingent liabilities that are not included in provisions. This applies in particular
+to the legal dispute for alleged activation of a shell company and liability for impairment of capital described above.
+Should the alleged claims prove to be valid, substantial financial obligations could arise for Infineon which could
+have a material adverse effect on its business and its financial condition, liquidity position and results of operations.
+Any further statements about these matters by the Company could seriously compromise the Company's position
+in these proceedings.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Professor
+Management Consultant
+Former members of the Supervisory Board
+Annual General
+Meeting 2020
+Annual General
+Meeting 2020
+(since February 12,
+2015)
+40
+Diana Vitale¹
+71
+Dr. Eckart Sünner
+2015)
+Annual General
+Meeting 2020
+(since February 12,
+Other
+3-4 years
+Less than
+1 year
+2-3 years
+1-2 years
+Less than
+1 year
+Total
+(€ in millions)
+Payments due in
+Undiscounted future minimum operating lease and rental payments arising from operating lease contracts at
+September 30, 2015 amounted to €446 million (September 30, 2014: €402 million). The corresponding payment
+obligations fall due as follows:
+In addition to provisions, liabilities and contingent liabilities, Infineon also has other financial obligations, relating
+in particular to lease and long-term rental arrangements, and unconditional purchase commitments. These are
+explained in more detail below.
+Other financial obligations and other risks
+In total, Infineon has guarantees outstanding to third parties as of September 30, 2015 amounting to €72 million.
+Guarantees are mainly issued for the payment of import duties, rentals of buildings, and contingent obligations
+related to government grants received.
+28
+4
+47
+7
+11
+1-2 years
+13
+as of September 30, 2014
+Guarantees
+28
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+4
+16
+8
+14
+72
+as of September 30, 2015
+Guarantees
+After 5 years
+4-5 years
+3-4 years
+110
+Consolidated Financial Statements
+Chief Operating Decision Maker, definition of Segment Result and allocation of assets and liabilities
+to the individual segments
+Identification of Segments
+(6)
+(6)
+Share-based compensation expense
+(8)
+(13)
+(3)
+(31)
+Impairment on assets including assets classified as held for sale, net of reversals
+Impact on earnings of restructuring and closures, net
+Plus/minus:
+620
+897
+2014
+2015
+Segment Result
+Acquisition-related depreciation/amortization and other expenses
+€ in millions
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+272
+620
+897
+(4)
+(3)
+6
+53
+43
+121
+172
+352
+144
+The following table provides the reconciliation of Segment Result to income from continuing operations before
+income taxes:
+122
+(274)
+Gains (losses) on sales of assets, businesses, or interests in subsidiaries, net
+Dr. Manfred Puffer
+Infineon Technologies AG
+Regensburg,
+Infineon Works Council,
+Chairman of the
+Infineon Technologies AG
+Central Works Council
+Chairman of the
+1 Employee representative
+February 12, 2015
+61
+Gerd Schmidt¹
+February 12, 2015
+54
+(8)
+Reinhard Gottinger¹
+Labor union secretary
+February 12, 2015
+62
+Wigand Cramer¹
+Member of the Supervisory Board
+> K+S AG, Kassel
+> BKK of BMW AG, Dingolfing
+Member of the Administrative Board
+> Krones AG, Neutraubling
+Member of the Supervisory Board
+> Athene Holding Ltd., Pembroke, Bermuda
+> Athene Life Re Ltd., Pembroke, Bermuda
+Member of the Board of Directors
+Deputy Chairwoman
+of the Infineon Works
+Council, Warstein,
+Infineon Technologies AG
+Independent works
+council representative
+of the Infineon Works
+Council, Dresden,
+Infineon Technologies
+Dresden GmbH
+Independent Attorney
+Munich Technical University
+First authorized agent
+of IG Metall, Regensburg
+IG Metall, Berlin
+34 Segment reporting
+259
+2014
+Revenue:
+€ in millions
+The following tables present selected segment data:
+Segment Information
+The exception to this approach is certain inventory information which is regularly analyzed at a segment level.
+Infineon also allocates depreciation and amortization expense to the operating segments based on production
+volume and products produced using standard costs.
+Neither assets, liabilities nor cash flows per segment are reported to the Management Board, nor is segment
+performance assessed on this basis.
+Decisions relating to financing and the investment of cash funds are taken at a Group level and not at a segment
+level. For this reason, financial income and financial expense (including interest income and expense) are not
+allocated to the segments.
+Segment Result is defined as the operating income (loss) excluding: asset impairments (net of reversals); impact
+on earnings of restructuring measures and closures; share-based compensation expense; acquisition-related
+depreciation/amortization and other expenses; gains (losses) on sales of assets, businesses, or interests in sub-
+sidiaries and other income (expense), including the costs of legal proceedings.
+Based on revenue and Segment Result, the Management Board assesses performance and defines operating
+targets and budgets for the segments.
+The Management Board, as joint Chief Operating Decision Maker, decides how resources are allocated to
+the segments.
+53
+271
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Furthermore, raw materials, supplies and work in progress of the common production frontend facilities, and
+raw materials and supplies of the common backend facilities, are not under the control or responsibility of the
+operating segment management and are therefore allocated to corporate functions. Only work in progress of
+backend facilities and finished goods are allocated to the operating segments.
+Automotive
+Similarly, certain items are included in Corporate and Eliminations which are not allocated to the other segments.
+These include certain corporate headquarter costs and specific strategic technology initiatives, such as the
+300-millimeter thin-wafer technology, which are not allocated to the segments since they arise from corporate
+decisions not within the direct control of segment management.
+Corporate and Eliminations
+Other Operating Segments comprises the remaining activities of businesses that have been disposed of, and other
+business activities. Since the closing of the sale of the Wireline Communications business and the Wireless mobile
+phone business, supplies of product to Lantiq and Intel Mobile Communications under the corresponding production
+agreements, other than those assigned to discontinued operations, are included in this segment.
+Other Operating Segments
+The Chip Card & Security segment designs, develops, manufactures and markets semiconductor-based security
+products for card applications and networked systems.
+Chip Card & Security
+The Power Management & Multimarket segment designs, develops, manufactures and markets semiconductors
+for energy-efficient power supplies as well as for mobile devices and mobile phone network infrastructures.
+Power Management & Multimarket
+The Industrial Power Control segment designs, develops, manufactures and markets semiconductors for the
+generation, transmission and savings in the consumption of electric power.
+Industrial Power Control
+The Automotive segment designs, develops, manufactures and markets semiconductors for use in automotive
+applications.
+Automotive
+International Rectifier's various lines of business have been fully integrated into Infineon's existing Automotive,
+Industrial Power Control and Power Management & Multimarket segments, whereby the largest proportion by far
+has been allocated to the Power Management & Multimarket segment.
+During the 2015 fiscal year, Infineon's business was structured on the basis of four operating segments, namely
+Automotive, Industrial Power Control, Power Management & Multimarket and Chip Card & Security. Additionally
+Infineon differentiates between Other Operating Segments and Corporate and Eliminations.
+Infineon identifies reportable segments on the basis of the differences between the types of products and their
+applications.
+Corporate and Eliminations reflects the elimination of intragroup revenue and profits/losses to the extent that
+these arise between the segments.
+300
+Industrial Power Control
+Chip Card & Security
+2015
+Total
+Corporate and Eliminations
+Other Operating Segments
+Chip Card & Security
+Power Management & Multimarket
+Industrial Power Control
+Automotive
+Segment Result:
+€ in millions
+The operating segments do not currently have any trading relationships with one another. Accordingly, there was
+no intersegment revenue during the 2015 and 2014 fiscal years. Costs are recharged if applicable without impact on
+profit or loss.
+4,320
+5,795
+(5)
+Power Management & Multimarket
+(1)
+14
+494
+666
+1,061
+1,794
+783
+971
+1,965
+2,351
+2014
+2015
+Total
+Corporate and Eliminations
+Other Operating Segments
+22
+Kerstin Schulzendorf¹
+Total
+54
+> Infineon Technologies Japan K.K.,
+> Infineon Technologies North America Corp.,
+Wilmington, Delaware, USA (Chairman)
+> Infineon Technologies India, Pvt. Ltd.,
+Bangalore, India
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+Singapore (Chairman)
+Member of the Board of Directors
+> tesa SE, Hamburg
+(since January 13, 2015)
+Wilmington, Delaware, USA
+> International Rectifier Corporation,
+Wilmington, Delaware, USA
+> Infineon Technologies North America Corp.,
+> Infineon Technologies China Co., Ltd.,
+Shanghai, People's Republic of China
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+Singapore
+Member of the Board of Directors
+Villach, Austria
+Tokyo, Japan
+> International Rectifier Corporation,
+Wilmington, Delaware, USA
+(since January 13, 2015)
+Peter Bauer
+2015)
+(since February 12,
+Annual General
+Meeting 2020
+50
+Johann Dechant'
+Deputy Chairman
+Management Consultant
+> Infineon Technologies Austria AG,
+Annual General
+Meeting 2020
+Wolfgang Mayrhuber
+Chairman
+Occupation
+Term expires
+Age
+Name
+The members of the Supervisory Board during the 2015 fiscal year, the Supervisory Board position held by them,
+their occupation, their membership of other supervisory and governing bodies and their ages are as follows (as
+at September 30, 2015):
+The Supervisory Board
+68
+> EPCOS AG, Munich
+Member of the Supervisory Board
+> Infineon Technologies (Kulim) Sdn. Bhd.,
+Kulim, Malaysia (Chairman)
+Age
+Name
+The members of the Management Board during the 2015 fiscal year were as follows:
+Management Board
+Notes to the Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The remuneration of the individual members of the Management Board and the Supervisory Board, as required
+by section 314 (1) no. 6a, sentences 5 to 8 HGB, is disclosed in the Compensation Report which is part of the
+Combined Management Report.
+Term expires
+Management compensation in the 2015 fiscal year
+Fees of €0.1 million were charged by KPMG in the 2015 fiscal year for other services.
+Fees for other services
+In addition to the amounts described above, KPMG charged the Company an aggregate of €22 thousand in the
+2015 fiscal year for professional services relating to tax.
+Fees for tax advisory services
+In addition to the amounts described above, KPMG charged an aggregate of €0.4 million in the 2015 fiscal year
+for other audit services. These services consisted primarily of services rendered in connection with the review of
+quarterly financial statements.
+At the Annual General Meeting held on February 12, 2015, the shareholders elected KPMG AG Wirtschaftsprüfungs-
+gesellschaft ("KPMG"), Munich, as auditor for the 2015 financial statements and the Consolidated Financial
+Statements of Infineon Technologies AG. The audit fees charged by KPMG in the 2015 fiscal year amounted to
+€1.7 million for the audit of the Consolidated Financial Statements and various separate financial statements.
+Fees for other advisory services
+Year-end audit fees
+Management Board and Supervisory Board
+55
+Dr. Reinhard Ploss
+September 30, 2020
+Member of the Board of Directors
+Villach, Austria (Chairman)
+> Infineon Technologies Austria AG,
+Member of the Supervisory Board
+(as at September 30, 2015)
+Membership of Supervisory Boards and governing
+bodies of domestic and foreign companies
+Member of the
+Management Board,
+Executive Vice President
+59
+Member of the
+Management Board,
+Executive Vice President,
+Chief Financial Officer
+Position
+December 31, 2019
+44
+Arunjai Mittal
+December 31, 2018
+46
+Dominik Asam
+Chairman of the
+Management Board,
+Chief Executive Officer,
+Labor Director
+Accounting fees pursuant to section 314 paragraph 1 no. 9 HGB
+(since February 12,
+2015)
+Development Engineer
+Managing Director
+Institut für Demoskopie
+Allensbach GmbH,
+Allensbach
+Member of the Infineon
+Works Council, Campeon,
+Infineon Technologies AG
+Management Consultant
+Senior Vice President
+Operations Finance
+Infineon Technologies AG
+Annual General
+Meeting 2020
+63
+Prof. Dr. Renate Köcher
+Annual General
+Meeting 2020
+Hans-Ulrich Holdenried 64
+Annual General
+Meeting 2020
+53
+Gerhard Hobbach¹
+Senior Management
+Annual General
+Meeting 2020
+Representative of
+Member of the Supervisory Board
+> Infineon Technologies Dresden GmbH,
+Dresden
+Member of the Supervisory Board
+> Infineon Technologies Dresden GmbH,
+Dresden
+Member of the Board of Directors
+Annual General
+Meeting 2020
+(since February 12,
+Annual General
+Meeting 2020
+Lachenmann¹
+48
+Dr. Susanne
+> Nestlé Deutschland AG, Frankfurt am Main
+54
+> Robert Bosch GmbH, Gerlingen
+> Allianz SE, Munich
+Member of the Supervisory Board
+> Wincor Nixdorf AG, Paderborn
+(until February 10, 2015)
+> Integrata AG, Stuttgart
+Member of the Supervisory Board
+> Infineon Technologies (Kulim) Sdn. Bhd.,
+Kulim, Malaysia
+> BMW AG, Munich
+Peter Gruber¹
+2015)
+Annual General
+Meeting 2020
+> OSRAM GmbH, Munich
+(Chairman)
+> OSRAM Licht AG, Munich
+(Chairman)
+Member of the Supervisory Board
+> BKK of Siemens AG, Heidenheim
+Member of the Administrative Board
+> Heico Corporation, Hollywood, Florida, USA
+Member of the Board of Directors
+> Kontron AG, Eching
+Gesellschaft AG, Munich
+(until May 13, 2015)
+> BMW AG, Munich
+> Deutsche Lufthansa AG, Köln
+(Chairman)
+Member of the Supervisory Board
+Membership of Supervisory Boards and
+comparable governing bodies of domestic
+and foreign companies
+Management Consultant
+Chairman of the Infineon
+Works Council, Regensburg,
+Infineon Technologies AG
+> Münchener Rückversicherungs-
+Annual General
+Meeting 2020
+(until August 31, 2015)
+276
+(since February 12,
+50
+Annette Engelfried¹
+2015)
+Member of the
+Annual General
+Meeting 2020
+(since February 12,
+275
+56
+Management Board
+Volkswagen AG, Wolfsburg
+Labor union secretary IG
+Metall district management,
+Berlin-Brandenburg-Saxony
+Membership of Supervisory Boards and
+comparable governing bodies of domestic
+and foreign companies
+Occupation
+Term expires
+Age
+Name
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+Dr. Herbert Diess
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the Management Board and
+the Supervisory Board and made permanently available to the public on the internet at www.infineon.com
+("About Infineon/Investor/Corporate Governance/Declaration of Compliance").
+Member of the Supervisory Board
+Due to the insolvency, Qimonda and its subsidiaries are not included in the Company's Consolidated Financial
+Statements. Infineon has no information as to whether Qimonda draws up Consolidated Financial Statements or
+makes use of the possibility of exemptions with respect to their preparation.
+€ in millions
+514
+760
+8
+114
+506
+646
+5
+3
+61
+Jürgen Scholz'
+Information pursuant to section 161 Stock Corporation Act (AktG)
+82
+111
+165
+Inventories:
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+237
+396
+40
+58
+112
+228
+104
+101
+126
+321
+2014
+2015
+Annual General
+Meeting 2020
+Corporate and Eliminations
+Other Operating Segments
+Chip Card & Security
+214
+112
+228
+284
+Financial expenses
+10
+10
+525
+555
+Financial income
+Operating income
+Gain (loss) from investments accounted for using the equity method, net
+Income from continuing operations before income taxes
+(72)
+Other income and expense, net¹
+2
+(2)
+Prof. Dr. Doris
+62
+Schmitt-Landsiedel
+Annual General
+Meeting 2020
+(16)
+1,129
+(49)
+4
+2014
+2015
+Depreciation and amortization not allocated to the segments
+Total depreciation and amortization
+Depreciation and amortization allocated to the segments
+Other Operating Segments
+Chip Card & Security
+Power Management & Multimarket
+(19)
+Industrial Power Control
+Depreciation and amortization:
+€ in millions
+Of the €274 million "acquisition-related depreciation/amortization and other expenses" incurred in the 2015
+fiscal year, €143 million is attributable to cost of goods sold, €15 million to research and development expenses and
+€116 million to selling, general and administrative expenses.
+1 Included in the 2014 fiscal year is the €83 million fine imposed on Infineon by the EU-Commission in their chip card antitrust investigations.
+519
+520
+3
+Automotive
+707
+Income from associated companies accounted for using the equity method totaled €4 million and €3 million in the
+2015 and 2014 fiscal years, respectively, and was recognized in the Industrial Power Control segment. This allocated
+income is however not included in the Segment Result.
+273
+22
+31
+670
+939
+862
+982
+1,321
+52
+1,504
+2014
+2015
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Therein: USA
+Americas
+Japan
+Therein: China
+Asia-Pacific (without Japan)
+Therein: Germany
+Europe
+1
+Non-current assets:
+1
+16
+Infineon Technologies Dresden GmbH makes use of the possibility of exemption from the obligation to prepare
+a management report, and the exemption from the requirements of governing the publication of annual financial
+statements (section 325 HGB).
+make use of the possibility of exemption from the publication requirements for annual financial statements
+according to section 325 HGB.
+> Infineon Technologies Mantel 27 GmbH, Neubiberg,
+> Infineon Technologies Mantel 21 GmbH, Neubiberg and
+> Infineon Technologies Akquisitionsgesellschaft 2 mbH, Neubiberg,
+> Infineon Technologies Akquisitionsgesellschaft 1 mbH, Neubiberg,
+> Infineon Technologies Finance GmbH, Neubiberg,
+> Hitex GmbH, Karlsruhe,
+The entities listed below have entered into control and profit and loss transfer agreements with Infineon
+Technologies AG, and intend to make use of the option contained in section 264 paragraph 3 HGB exempting
+incorporated companies from certain requirements relating to the preparation, audit and publication of annual
+financial statements:
+Application of exemption regulations
+35 Additional information in accordance with HGB
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+274
+Non-current assets do not include financial instruments, deferred tax assets and assets from employee benefits.
+2,008
+3,893
+16
+1,402
+1,449
+€ in millions
+Total
+Total
+284
+399
+868
+1,337
+1,845
+2,666
+859
+1,707
+2,020
+942
+2014
+484
+2015
+Americas
+Japan
+Therein: China
+Asia-Pacific (without Japan)
+Therein: Germany
+Europe, Middle East, Africa
+Revenue:
+€ in millions
+The following is a summary of revenue and of non-current assets by geographic area for the years ended Septem-
+ber 30, 2015 and 2014:
+Entity-wide disclosures in accordance with IFRS 8
+Therein: USA
+568
+710
+367
+5,795
+4,320
+No single customer accounted for more than 10 percent of Infineon's revenue during the 2015 fiscal year. For the
+2014 fiscal year revenue with one single customer amounted to €441 million. This revenue is allocated to all
+four operating segments of Infineon.
+The attribution of revenues from external customers is based on the customers' billing location. The average
+number of employees by geographic region is provided in note 6.
+Hong Kong, People's
+Klagenfurt, Austria
+0.40
+1.73
+100
+3
+Milan, Italy
+0.00
+0.13
+100
+Republic of China
+100
+Rotterdam, The Netherlands
+1.73
+14.47
+100
+4
+Bangalore, India
+0.17
+1.37
+3
+Infineon Technologies India, Pvt. Ltd.
+Infineon Technologies Investment B.V.
+Infineon Technologies Italia s.r.l.
+Infineon Technologies IT-Services GmbH
+Infineon Technologies Japan K.K.
+Infineon Technologies Korea Co., Ltd.
+3
+Infineon Technologies Hong Kong, Ltd.
+100
+Infineon Technologies Holding B.V.
+2,087.90
+250.79
+Hong Kong, People's
+Republic of China
+5
+100
+15.89
+Rotterdam, The Netherlands
+0.23
+11.43
+Infineon Technologies Hong Kong Sales Limited
+100
+Infineon Technologies France S.A.S.
+3
+0.00
+369.89
+100
+Neubiberg, Germany
+Infineon Technologies Finance GmbH
+3
+3
+3.16
+St. Denis, France
+100
+112.30
+3.57
+6.03
+0.83
+Wilmington, Delaware, USA
+100
+2.58
+3
+Muntinlupa City, Philippines
+100
+0.18
+0.17
+100
+5
+3
+100
+0.89
+0.85
+m
+100
+1.34
+0.23
+3
+3
+Bucharest, Romania
+3
+Kista, Sweden
+Maia, Portugal
+Tokyo, Japan
+3
+100
+8.44
+2.35
+Seoul, Republic of Korea
+3
+100
+3.85
+0.73
+Infineon Technologies Neu-Isenburg Vertriebs GmbH
+Neu-Isenburg, Germany
+5
+100
+7.94
+1.85
+Infineon Technologies Nordic AB
+Infineon Technologies North America Corp.
+Infineon Technologies Philippines, Inc.
+Infineon Technologies Romania & Co. Societate
+in Comandita
+Infineon Technologies Shared Service Center,
+Unipessoal Lda.
+Infineon Technologies Southeast Asia Pte, Ltd.
+Infineon Technologies Taiwan Co., Ltd.
+6.42
+0.00
+Wolfgang Mayrhuber
+100
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+Infineon Semiconductors (Wuxi) Co. Ltd.
+Infineon Technologies (Advanced Logic) Sdn. Bhd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Infineon Technologies (Wuxi) Co., Ltd.
+Infineon Technologies (Xi'an) Co., Ltd.
+Hitex GmbH
+3
+1.47
+1.52
+72
+Infineon Technologies Akquisitionsgesellschaft 1 mbH
+(prior Infineon Technologies Mantel 19 GmbH)
+Infineon Technologies Akquisitionsgesellschaft 2 mbH
+(prior Infineon Technologies Mantel 25 GmbH)
+Infineon Technologies Asia Pacific Pte. Ltd
+Infineon Technologies Australia Pty. Ltd.
+Linz, Austria
+note
+(€ in
+millions)
+(€ in
+millions)
+Foot-
+Net result
+Equity
+DICE Danube Integrated Circuit Engineering
+GmbH & Co. KG
+Infineon Technologies Austria AG
+Karlsruhe, Germany
+3
+100
+Malacca, Malaysia
+12
+(0.01)
+13.71
+100
+Wuxi, People's Republic of China
+1.06
+16.30
+100
+6
+Beijing, People's Republic of China
+0.00
+2.16
+100
+Share-
+holdings
+in %
+Fully consolidated subsidiaries:
+Registered office
+Name of company
+Strategy and Technology Committee
+Singapore, Singapore
+Annette Engelfried
+Johann Dechant
+Dr. Eckart Sünner (Chairman)
+Investment, Finance and Audit Committee
+Hans-Ulrich Holdenried
+Gerhard Hobbach
+Johann Dechant
+Wolfgang Mayrhuber (Chairman)
+Executive Committee
+Jürgen Scholz
+Hans-Ulrich Holdenried
+Johann Dechant
+Wolfgang Mayrhuber (Chairman)
+Prof. Dr. Doris Schmitt-Landsiedel (Chairwoman)
+20.62
+Peter Gruber
+Dr. Susanne Lachenmann
+as of September 30, 2015
+Subsidiaries, associated companies and other related companies
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+278
+277
+The business address of each member of the Supervisory Board is: Infineon Technologies AG, Am Campeon 1-12,
+D-85579 Neubiberg (Germany).
+The members of the Company's Supervisory Board, individually or in aggregate, do not own, directly or indirectly,
+more than 1 percent of Infineon Technologies AG's outstanding share capital as of September 30, 2015.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Notes to the Consolidated Financial Statements
+Dr. Manfred Puffer
+Prof. Dr. Renate Köcher
+Wolfgang Mayrhuber (Chairman)
+Nomination Committee
+Jürgen Scholz
+Wolfgang Mayrhuber
+Hans-Ulrich Holdenried
+224.27
+1.46
+3
+100
+Cegléd, Hungary
+Infineon Technologies Cegléd Kft.
+3
+1.45
+16.23
+13.54
+100
+Batam, Indonesia
+Infineon Technologies Batam PT
+3
+0.13
+118.75
+495.59
+100
+3
+(0.49)
+Infineon Technologies Center of Competence
+(Shanghai) Co., Ltd.
+Shanghai, People's
+Dresden, Germany
+Infineon Technologies Dresden GmbH
+3
+14.70
+138.96
+100
+6
+Republic of China
+Shanghai, People's
+Infineon Technologies China Co., Ltd.
+0.24
+3.37
+100
+6
+Republic of China
+Villach, Austria
+1.05
+100
+3
+6
+12.29
+135.74
+100
+Wuxi, People's Republic of China
+Xi'an, People's Republic of China
+6
+12.08
+125.01
+100
+Malacca, Malaysia
+3
+19.19
+128.86
+100
+Kulim, Malaysia
+100
+3
+6.92
+Neubiberg, Germany
+Bayswater, Australia
+41.11
+162.23
+3
+100
+Singapore, Singapore
+0.00
+0.02
+100
+Neubiberg, Germany
+3
+0.00
+0.05
+100
+3
+0.32
+100
+5
+5
+100
+Duisburg, Germany
+3
+0.20
+0.49
+100
+0.05
+3
+Hitex (UK) Limited
+Haus der Zukunft gGmbH
+eupec Thermal Management Inc. in liquidation
+EPOS embedded core & power systems
+Verwaltungs GmbH
+GmbH & Co. KG
+EPOS embedded core & power systems
+Duisburg, Germany
+0.00
+Wilmington, Delaware, USA
+3
+Villach, Austria
+Infineon Technologies Austria Pensionskasse AG
+Infineon Technologies Bipolar Verwaltungs GmbH
+0.41
+2.31
+88
+3
+Coventry, Great Britain
+N.A.
+N.A.
+N.A.
+Berlin, Germany
+13
+0.01
+0.02
+51
+0.00
+100
+0.10
+Linz, Austria
+60
+60
+Warstein, Germany
+Cegléd, Hungary
+CHIL Semiconductors Corporation
+Advanced Power Electronics Corp.
+Other companies (non consolidated): 1
+666
+Infineon Technologies Bipoláris Kft.
+Associated companies:
+6
+(0.90)
+2.90
+100
+5
+Infineon Technologies Bipolar GmbH & Co. KG
+3
+68.92
+2.62
+DICE Danube Integrated Circuit Engineering GmbH
+3
+0.00
+0.00
+100
+Wilmington, Delaware, USA
+5
+N.A.
+N.A.
+N.A.
+Hsinchu County, Taiwan
+13
+0.20
+1.54
+3
+72
+0.80
+(0.03)
+6
+100
+3
+Neubiberg, Germany
+Infineon Technologies Mantel 21 GmbH
+millions)
+millions)
+0.03
+in %
+(€ in
+(€ in
+Foot-
+Net result
+Equity
+Share-
+holdings
+note
+0.00
+Infineon Technologies Mantel 24 GmbH
+Neubiberg, Germany
+0.00
+10
+0.03
+100
+Neubiberg, Germany
+Infineon Technologies Mantel 27 GmbH
+0.04
+100
+Neubiberg, Germany
+Infineon Technologies Mantel 26 AG
+3
+0.00
+0.02
+100
+3
+Registered office
+Name of company
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Consolidated Financial Statements
+280
+3
+0.00
+0.00
+100
+St.John, New Brunswick, Canada
+Madrid, Spain
+Infineon Technologies Ireland Ltd.
+Infineon Technologies Iberia S.L.U.
+Infineon Technologies Canada, Inc.
+Infineon Technologies Delta GmbH
+Infineon Technologies Gamma GmbH
+3
+0.00
+0.03
+60
+Warstein, Germany
+3
+Neubiberg, Germany
+(28.36)
+100
+0.00
+GRI G4-17
+0.10
+0.42
+100
+3
+Dublin, Ireland
+0.03
+0.14
+100
+3
+0.00
+0.02
+100
+Neubiberg, Germany
+3
+0.02
+9.37
+100
+Tijuana, Mexico
+International Rectifier HiRel Products, Inc.
+5
+(256.59)
+1,238.56
+100
+Wilmington, Delaware, USA
+International Rectifier Japan Co., Ltd.
+International Rectifier Corporation
+182.06
+100
+5
+Newport, Great Britain
+International Rectifier Company (Great Britain), Ltd.
+millions)
+14.14
+International Rectifier Korea
+International Rectifier Malaysia Sdn Bhd
+International Rectifier Mauritius, Inc.
+41.07
+100
+Wilmington, Delaware, USA
+Shanghai, People's
+Republic of China
+Molstanda Vermietungsgesellschaft mbH
+Rectificadores Internacionales, S.A. de C.V.
+Shanghai International Rectifier Trading, Ltd.
+LS Power Semitech Co., Ltd.
+IR UK Holdings Limited
+IR Taiwan Co., Ltd.
+IR Newport Limited
+IR Italy s.r.l.
+IR Infotech Private, Ltd. in liquidation
+IR France SAS
+IR EPI Services, Inc.
+IR Denmark Aps
+International Rectifier Power Management
+Private Limited (in liquidation)
+millions)
+in %
+note
+(€ in
+Wilmington, Delaware, USA
+Infineon Technologies US HoldCo Inc.
+11
+0.57
+2.38
+100
+Bristol, Great Britain
+Infineon Technologies U.K. Ltd.
+3
+0.54
+2.17
+100
+3
+Taipei, Taiwan
+1.38
+100
+(52.22)
+0.06
+Infineon Technologies US InterCo LLC
+Foot-
+Net result
+Equity
+(€ in
+Share-
+holdings
+Registered office
+Name of company
+Notes to the Consolidated Financial Statements
+279
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+GRI G4-17
+0.00
+0.00
+100
+11
+Wilmington, Delaware, USA
+0.00
+55.19
+5
+100
+5
+(2.86)
+181.63
+100
+Newport, Great Britain
+0.06
+Taipei, Taiwan
+1.86
+Milan, Italy
+5
+0.00
+0.92
+100
+8
+100
+100
+0.40
+5
+2.39
+14.56
+94
+6
+Neubiberg, Germany
+3,9
+(0.75)
+8.36
+100
+Cheonan, Republic of Korea
+17.66
+41.94
+100
+Newport, Great Britain
+0.15
+Mumbai, India
+0.22
+1.19
+100
+5
+Curepipe, Mauritius
+5
+0.00
+0.41
+100
+Kuala Lumpur, Malaysia
+0.02
+1.04
+100
+5
+Seoul, Republic of Korea
+5.32
+5
+12.13
+100
+Tokyo, Japan
+3.16
+Bangalore, India
+5
+Les Ulis (Courtaboeuf), France
+5
+(48.65)
+36.71
+100
+Wilmington, Delaware, USA
+0.10
+1.49
+100
+5
+Skovlunde (Kopenhagen, Denmark)
+0.00
+0.16
+100
+0.02
+0.00
+7,950
+Infineon Technologies Romania s.r.l.
+Infineon Technologies RUS LLC
+20.3%
+14.1%
+22.3%
+62.1%
+CONSOLIDATED STATEMENTS OF CASH FLOWS DATA
+Net cash provided by operating activities from continuing operations
+957
+988
+610
+667
+983
+Net cash used in investing activities from continuing operations
+(2,593)
+(272)
+(328)
+(1,013)
+(2,499)
+Net cash provided by (used in) financing activities
+from continuing operations
+1,363
+(179)
+(165)
+(199)
+(352)
+Net increase in cash and cash equivalents
+12.8%
+from discontinued operations
+19.1%
+4.6%
+2,323
+2,518
+Total equity
+4,665
+4,158
+3,776
+3,575
+3,355
+Statement of Financial Position Ratios
+Equity ratio
+Return on equity
+Return on assets
+Return on Capital Employed (ROCE)
+53.4%
+64.6%
+63.9%
+60.6%
+57.1%
+13.6%
+12.9%
+7.2%
+11.9%
+33.4%
+7.3%
+8.3%
+7.2%
+(140)
+(8)
+(10)
+Closing price Xetra Trading System in €
+Closing price OTCQX in US$
+Shares issued in million
+0.20
+0.18
+0.12
+0.12
+0.12
+225
+202
+129
+129
+130
+10.06
+8.19
+7.40
+4.94
+5.59
+11.31
+10.30
+9.98
+6.44
+7.39
+1,129
+1,128
+Dividend 7 in € million
+Dividend per share 7 in €
+The IFX Share (as of September 30)
+106
+(40)
+1,206
+Depreciation and amortization
+760
+514
+466
+428
+364
+Purchases of property, plant and equipment
+and intangible assets and other assets
+Cash flow
+Free cash flow
+2,129
+(785)
+(378)
+(890)
+(887)
+(413)
+529
+107
+(585)
+(662)
+(1,654)
+317
+235
+(219)
+(668)
+1,081
+2,280
+Total liabilities
+5
+6
+(9)
+5
+14
+Corporate and Eliminations
+(3)
+(4)
+(2)
+(13)
+(5)
+Segment Result:
+Segment Result Margin
+897
+620
+377
+527
+786
+15.5%
+14.4%
+9.8%
+13.5%
+19.7%
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+285
+Other Operating Segments
+Financial Data 2011-2015
+54
+39
+881
+1,104
+Segment Result
+Automotive
+300
+259
+167
+219
+279
+Industrial Power Control
+122
+144
+38
+118
+202
+Power Management & Multimarket
+352
+Mediation Committee
+172
+144
+142
+242
+Chip Card & Security
+121
+43
+56
+€ in millions, except otherwise stated
+2015
+2014
+5
+Property, plant and equipment
+2,093
+1,700
+1,600
+1,731
+1,343
+Goodwill and other intangible assets
+1,738
+250
+170
+146
+111
+Debt
+Provisions
+1,793
+186
+303
+295
+305
+474
+660
+721
+740
+836
+5
+Assets classified as held for sale
+507
+567
+2013
+2012
+2011
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION DATA
+Total assets
+8,741
+6,438
+5,905
+5,898
+5,873
+Gross cash position
+2,013
+4,076
+2,418
+2,235
+2,692
+Net cash position
+220
+2,232
+1,983
+1,940
+2,387
+Inventories
+1,129
+707
+609
+2,286
+793
+1,080
+Market capitalization € in millions
+in the 2015 fiscal year
+43
+G10 Expected growth of the server market worldwide
+G11 Development of Infineon's market share for
+silicon microphone ICs from 2006 to 2014
+Waste management methods
+G45
+38
+various types of vehicles
+99
+98
+98
+98
+97
+96
+94
+92
+12222222222
+Waste generation
+G44
+Standardized water consumption
+G43
+38
+Water discharges 2015
+G42
+37
+compared to the global semiconductor market
+G08 Worldwide light vehicle production by region
+G09 Average semiconductor content of
+99
+Water consumption
+G46
+99
+G52
+888
+48
+102
+G51 Allocation of emissions by origin
+G14 Segment Result and Segment Result Margin
+over the last three years
+101
+Calculation of the CO2 burden
+G50
+46
+46
+100
+Energy consumption per revenue
+G49
+G13 Expected growth in chip-based payment cards
+in the USA, China and India
+100
+Standardized electricity consumption
+45
+2014 to 2019
+G48
+100
+Energy consumption
+G47
+G12 Development of global mobile data traffic
+44
+Standardized waste generation
+G41
+G07 Revenue in the fiscal years 1999 to 2015
+G40 Water balance
+Further Information
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+286
+This would result in a distribution of approximately €225 million.
+7 A cash dividend of €0.20 per share for the 2015 fiscal year will be proposed at the Annual General Meeting.
+6 Return on assets = net income (loss) divided by total assets.
+5 EBITDA = EBIT plus scheduled depreciation and amortization.
+4 EBIT margin = EBIT divided by revenue.
+3 EBIT = earnings from continuing operations before interest and tax.
+2 Return on sales = net income/loss divided by revenue.
+1 The Industrial & Multimarket segment was split into two separate segments effective January 1, 2012, namely the Industrial Power Control segment
+and the Power Management & Multimarket segment. Prior year figures have been adjusted accordingly.
+25,720
+26,658
+26,725
+29,807
+35,424
+Infineon employees (as of September 30 in total figures)
+8,031
+6,957
+10,729
+11,554
+12,704
+Market capitalization US$ in millions
+6,073
+5,335
+List of graphics
+Graphic
+Page
+G01 Dividend per share for the 2010
+36
+97
+G 39 Lost Day Rate (LDR)
+G06 Compound annual growth rate of the main
+semiconductor target markets, 2014 to 2019
+G38 Injury Rate (IR)
+31
+G05 Infineon revenue by region
+Reports of possible compliance breaches
+G37
+30
+for the 2014 calendar year
+Infineon CSR Concept
+G15 Development of Infineon's market share and
+relative market share for power semiconductors
+G36
+75
+Page
+G34 "More out of less": The ampacity of
+silicon carbide (SiC) is far higher than that
+of silicon (Si). One 150-millimeter SiC wafer
+is able to switch the same amount of
+current as two 200-millimeter silicon wafers.
+Investments
+Graphic
+G35
+28
+G03 Revenue by segment in the 2015 fiscal year
+G04 Top 20 semiconductor manufacturers
+28
+in the 2015 fiscal year compared to
+the previous year
+G02 Revenue growth of the individual segments
+26
+to 2015 fiscal years
+82
+1,087
+G53
+102
+Assets
+G71
+65
+133
+G70 Selling, general and administrative expenses
+65
+132
+132
+G69 R&D expenses
+G 68 Gross profit and gross margin
+55
+65
+131
+130
+129
+120
+Orders received and revenue
+63
+G67
+Revenue by region
+G 66
+Revenue by segment
+G65
+22
+62
+136
+61
+66
+G72 Liabilities and equity
+11,294
+73
+150
+G78 Risk assessment matrix
+The two sensor chips are placed exactly
+on top of each other.
+G33 Interior design of the dual Hall sensor.
+143
+and 2014 by comparison
+G77 Liquidity position as of September 30, 2015
+142
+G76 Free cash flow
+62
+72
+G32 R&D expenses
+69
+141
+G75 Cash flow
+67
+138
+ROCE
+G74
+138
+Debt by currencies
+G73
+136
+99
+G31 World microcontroller-based
+chip card ICs market share 2014
+segment revenue by region
+G30 Chip Card & Security
+57
+57
+market share 2014; Infineon in third place
+for the first time
+110
+G58 Nationalities (Infineon worldwide 2015)
+G59 Women in management positions
+G19 China automotive semiconductor
+57
+108
+107
+106
+G55 Corporate Citizenship expenditure
+G56 Examples of the Corporate Citizenship
+activities of Infineon in the 2015 fiscal year
+High Performance Behavior Model
+G57
+55
+55
+market share 2014
+G18 World automotive semiconductor
+G17 Automotive Segment revenue by region
+54
+the Automotive segment
+G16 Revenue and Segment Result of
+105
+G54 Principles of Purchasing
+49
+49
+104
+(Infineon worldwide)
+G60 Training expenses
+111
+112
+G29 Revenue and Segment Result of
+the Chip Card & Security segment
+G28 World silicon microphone ICs
+market share 2014 by units
+market share 2014
+G27 World standard power MOSFET
+G26 Power Management & Multimarket segment
+revenue by region
+Power Management & Multimarket segment
+G25 Revenue and Segment Result of the
+115
+115
+115
+G 62 Age structure (new entries worldwide 2015)
+G 63 Age structure (Infineon worldwide 2015)
+G64 Development of the Infineon Technologies AG
+share compared to Germany's DAX Index
+and Philadelphia Semiconductor Index (SOX)
+and the Dow Jones US Semiconductor Index
+from the beginning of the 2015 fiscal year
+(daily closing prices)
+G24 World IPM (Intelligent Power Module)
+market share 2014
+Normalized Emission Rate
+Carbon footprint
+61
+61
+and modules market share 2014
+G22 World discrete power semi-conductors
+59
+segment revenue by region
+G21 Industrial Power Control
+(new entries worldwide 2015)
+Female/male employees
+G61
+58
+the Industrial Power Control segment
+G20 Revenue and Segment Result of
+G23 World IGBT components market share 2014
+(discrete IGBTs and IGBT modules)
+9,190
+1,042
+18.5%
+77
+2
+77
+2
+77
+2
+Rotterdam, The Netherlands
+77
+Suzhou, People's Republic of China
+2
+77
+2
+Padua, Italy
+77
+2
+Seoul, Republic of Korea
+77
+2
+Fort Lauderdale, Florida, USA
+77
+Name of company
+Registered office
+Qimonda Memory Product Development
+Center (Suzhou) Co., in liquidation
+Qimonda North America Corp. in insolvency
+Qimonda Richmond LLC in insolvency
+Qimonda Solar GmbH
+Qimonda Taiwan Co. Ltd. in liquidation
+2
+Suzhou, People's
+Republic of China
+77
+FFFF
+Dresden, Germany
+77
+Qimonda Dresden Verwaltungsgesellschaft mbH
+in insolvency
+Dresden, Germany
+Qimonda Europe GmbH in liquidation
+Qimonda Finance LLC in insolvency
+Qimonda Flash Geschäftsführungs GmbH
+in liquidation
+Qimonda Flash GmbH in insolvency
+Munich, Germany
+Wilmington, Delaware, USA
+བབྲབ
+2
+77
+2
+2
+2
+Qimonda France SAS in liquidation
+Qimonda Holding B.V. in insolvency
+Qimonda International Trade (Shanghai) Co. Ltd.
+Qimonda Investment B.V.
+Qimonda IT (Suzhou) Co., Ltd. in liquidation
+Qimonda Italy s.r.l. in liquidation
+Qimonda Korea Co. Ltd. in liquidation
+GRI G4-17
+Dresden, Germany
+Dresden, Germany
+St. Denis, France
+Rotterdam, The Netherlands
+Shanghai, People's
+Republic of China
+2
+Wilmington, Delaware, USA
+Wilmington, Delaware, USA
+Dresden, Germany
+Taipei, Taiwan
+10 Opening balance as of October 16, 2014.
+11 Opening balance as of November 1, 2014 (the company was founded on October 21, 2014 and consolidated for the first time as of November 1, 2014).
+12 Opening balance as of June 30, 2015 (the company was founded on April 17, 2015 and consolidated for the first time as of June 30, 2015).
+13 Share of less than 5 percent.
+The values in the above table represent financial statements prepared according to local requirements and are,
+in some cases, provisional.
+Neubiberg, November 20, 2015
+Infineon Technologies AG
+Management Board
+Dr. Reinhard Ploss
+Dominik Asam
+Arunjai Mittal
+GRI G4-17
+282
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Further Information
+Responsibility Statement by the
+Management Board
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated
+Financial Statements give a true and fair view of the assets, liabilities, financial position and profit or loss
+of the Group, and the Group Management Report, which has been combined with the Management Report for
+Infineon Technologies AG, includes a fair review of the development and performance of the business and
+the position of the Group, together with a description of the principal opportunities and risks associated with
+the expected development of the Group.
+Neubiberg, November 24, 2015
+Infineon Technologies AG
+Dr. Reinhard Ploss
+Dominik Asam
+Arunjai Mittal
+Auditor's Report
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Auditor's Report
+283
+9 Equity and net result as of September 30, 2014 (short fiscal year from January 1, 2014 until September 30, 2014).
+8 Equity and net result as of May 13, 2013 (period from April 1, 2013 until May 13, 2013).
+7 Equity and net result as of March 31, 2015.
+6 Equity and net result as of December 31, 2014.
+Qimonda UK Ltd. in liquidation
+High Blantyre, Scotland
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+281
+Notes to the Consolidated Financial Statements
+Share-
+holdings
+in %
+77
+77
+77
+77
+77
+77
+Qimonda Dresden GmbH & Co. OHG in insolvency
+Equity
+(€ in
+Net result
+(€ in
+millions)
+Foot-
+note
+2
+2
+2
+2
+2
+1 Certain immaterial subsidiaries were not consolidated in the 2015 and 2014 fiscal years. Infineon evaluates the significance of these subsidiaries annually
+at each reporting date. Net income, external revenue and total assets of all subsidiaries deemed to be immaterial were in total less than 1 percent of the respective
+Group values.
+2 On January 23, 2009 Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally opened on April 1,
+2009. The equity and earnings of Qimonda AG and its subsidiaries are not disclosed due to the substantial and ongoing restriction of Infineon's rights as a result
+of Qimonda AG's insolvency. In addition, the list of subsidiaries held by Qimonda AG was based on information from September 30, 2010, since Infineon had not
+received any further information from the insolvency administrator of Qimonda AG with respect to the insolvency or liquidation of Qimonda companies. Since all
+Qimonda-related investments were written down in full in previous years, this has no effect on Infineon's net assets, financial position and results of operations.
+3 Equity and net result as of September 30, 2014.
+4 Equity and net result as of March 31, 2014.
+5 Equity and net result as of June 30, 2014.
+millions)
+We have audited the consolidated financial statements prepared by the Infineon Technologies AG, Neubiberg,
+comprising the statements of financial position, operations, comprehensive income, cash flows and changes
+in equity, together with the management report of the Company and the Group for the business year from
+October 1, 2014 to September 30, 2015. The preparation of the consolidated financial statements and the group
+management report in accordance with IFRSS, as adopted by the EU, and the additional requirements of German
+commercial law pursuant to § 315a Abs. 1 HGB [Handelsgesetzbuch "German Commercial Code"] are the respon-
+sibility of the Managing Board of the Company. Our responsibility is to express an opinion on the consolidated
+financial statements and on the group management report based on our audit.
+2
+Bratislava, Slovakia
+100
+0.03
+(0.04)
+3
+5
+Wilmington, Delaware, USA
+100
+0.00
+0.00
+Wilmington, Delaware, USA
+5
+100
+0.00
+0.00
+Villach, Austria
+6
+100
+0.10
+0.00
+Lippstadt, Germany
+6
+24
+2.04
+0.14
+Kaohsiung, Taiwan
+São Paulo, Brazil
+13
+0.03
+100
+Infineon Technologies Schweiz GmbH
+Infineon Technologies South America Ltda.
+IR International Holdings China, Inc.
+IR International Holdings, Inc.
+KAI Kompetenzzentrum Automobil-
+und Industrieelektronik GmbH
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+MicroLinks Technology Corp.
+OSPT IP Pool GmbH
+R Labco, Inc.
+Schweizer Electronic AG
+TTTech Computertechnik AG
+Xi'an IR PERI Company, Ltd.
+Bucharest, Romania
+6
+100
+0.04
+0.01
+Moscow, Russian Federation
+6
+100
+0.09
+0.03
+Zurich, Switzerland
+3
+0.22
+N.A.
+N.A.
+N.A.
+Qimonda Asia Pacific Pte. Ltd.
+Colorado Springs, Colorado, USA
+17
+2
+Vila do Conde, Portugal
+40
+2
+Malacca, Malaysia
+77
+2
+Munich, Germany
+Singapore, Singapore
+77
+2
+77
+2
+Qimonda Belgium BVBA in insolvency
+Leuven, Belgium
+77
+2
+Qimonda Beteiligungs GmbH in insolvency
+Munich, Germany
+77
+2
+Qimonda Bratislava s.r.o. in liquidation
+Qimonda AG in insolvency
+Qimonda (Malaysia) Sdn. Bhd. in liquidation
+Itarion Solar Lda.
+Celis Semiconductor Corp.
+3
+Neubiberg, Germany
+100
+0.02
+0.00
+Wilmington, Delaware, USA
+5
+100
+0.00
+0.00
+6
+Schramberg, Germany
+77
+9
+5.58
+Wien, Austria
+13
+N.A.
+N.A.
+N.A.
+Xi'an, People's Republic of China
+50
+N.A.
+N.A.
+Qimonda AG and its subsidiaries: 2
+2
+48.44
+1,322
+We conducted our audit of the consolidated financial statements in accordance with § 317 HGB and German
+generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer
+[Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such
+that misstatements materially affecting the presentation of the net assets, financial position and results of opera-
+tions in the consolidated financial statements in accordance with the applicable financial reporting framework
+and in the group management report are detected with reasonable assurance. Knowledge of the business activities
+and the economic and legal environment of the Group and expectations as to possible misstatements are taken
+into account in the determination of audit procedures. The effectiveness of the accounting-related internal control
+system and the evidence supporting the disclosures in the consolidated financial statements and the group
+management report are examined primarily on a test basis within the framework of the audit. The audit includes
+assessing the annual financial statements of those entities included in consolidation, the determination of entities
+to be included in consolidation, the accounting and consolidation principles used and significant estimates made
+by management, as well as evaluating the overall presentation of the consolidated financial statements and group
+management report. We believe that our audit provides a reasonable basis for our opinion.
+In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSS, as
+adopted by the EU, the additional requirements of German commercial law pursuant to § 315a Abs. 1 HGB and give
+a true and fair view of the net assets, financial position and results of operations of the Group in accordance with
+these requirements. The group management report is consistent with the consolidated financial statements and
+as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of
+future development.
+2
+(1)
+4
+Income tax
+102
+(31)
+(23)
+1
+30
+Income from continuing operations
+622
+488
+283
+432
+744
+Income (loss) from discontinued operations, net of income taxes
+12
+47
+(11)
+(5)
+375
+Net income
+634
+535
+272
+3
+427
+4
+(26)
+(455)
+(439)
+Selling, general and administrative expenses
+(778)
+(496)
+(440)
+(475)
+(449)
+Other operating income and expense, net
+(30)
+(76)
+(33)
+(42)
+(30)
+Operating income
+555
+525
+325
+455
+736
+Net financial result
+(39)
+(9)
+(21)
+(23)
+Income (loss) from investments accounted for using the equity method
+1,119
+Basic earnings (loss) per share attributable to shareholders of Infineon
+Technologies AG (in €):
+Basic earnings per share from continuing operations (in €)
+0.56
+0.48
+0.25
+0.39
+0.98
+Adjusted earnings per share (in €) - diluted
+0.60
+0.48
+Key Data for the Consolidated Statement of Operations
+Return on sales²
+EBIT3
+EBIT margin 4
+EBITDA 5
+10.9%
+12.4%
+7.1%
+562
+528
+327
+9.7%
+12.2%
+8.5%
+10.9%
+453
+11.6%
+28.0%
+740
+Diluted earnings per share (in €)
+0.32
+(0.01)
+0.04
+0.55
+0.44
+0.26
+0.40
+0.68
+Basic earnings (loss) per share from discontinued operations (in €)
+0.01
+0.04
+(0.01)
+0.35
+Basic earnings per share (in €)
+0.56
+(525)
+0.48
+0.40
+1.03
+Diluted earnings (loss) per share attributable to shareholders
+of Infineon Technologies AG (in €):
+Diluted earnings per share from continuing operations (in €)
+0.55
+0.44
+0.26
+0.39
+0.66
+Diluted earnings (loss) per share from discontinued operations (in €)
+0.01
+0.25
+Our audit has not led to any reservations.
+(550)
+Research and development expenses
+1,920
+908
+1,090
+2,666
+1,845
+1,560
+1,470
+1,450
+1,337
+868
+710
+637
+663
+399
+284
+227
+252
+202
+710
+484
+489
+450
+425
+568
+367
+1,732
+368
+1,567
+795
+2,020
+942
+Munich, November 20, 2015
+KPMG AG
+Wirtschaftsprüfungsgesellschaft
+Braun
+Wolper
+Wirtschaftsprüfer
+Wirtschaftsprüfer
+284
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Further Information
+Financial Data 2011-2015
+€ in millions, except otherwise stated
+CONSOLIDATED STATEMENTS OF OPERATIONS DATA
+Revenue by region
+Europe, Middle East, Africa
+Therein: Germany
+Asia-Pacific (w/o Japan)
+Therein: China
+Japan
+Americas
+2015
+2014
+2013
+2012
+2011
+1,707
+859
+332
+315
+Therein: USA
+216
+Corporate and Eliminations
+(1)
+(5)
+2
+5
+1
+Total Revenue
+Gross profit
+Gross margin
+5,795
+4,320
+3,843
+3,904
+3,997
+2,080
+1,647
+1,323
+1,427
+1,654
+35.9%
+38.1%
+34.4%
+36.6%
+41.4%
+125
+26
+22
+14
+Revenue by Segment
+Automotive
+2,351
+1,965
+1,714
+1,660
+1,552
+Industrial Power Control
+971
+783
+651
+728
+(717)
+797
+1,794
+1,061
+987
+929
+1,003
+Chip Card & Security
+666
+494
+463
+457
+428
+Other Operating Segments
+Power Management & Multimarket
+Qimonda Licensing LLC
+Supervisory Board committees
+The Supervisory Board explicitly welcomed the fact that all previously serving shareholder
+representatives wished to stand for re-election, particularly as personnel stability and continuity
+on the Supervisory Board is seen as an important factor for success in any sector, and all the
+more so in the rapidly changing semiconductor industry. The Supervisory Board agreed that
+two excellent candidates for the new mandates had been found in Mr. Bauer and Dr. Diess.
+In conjunction with the search and selection process, the Nomination Committee focused on
+opportunities to increase the number of female members on the Supervisory Board. Unfortu-
+nately, their intensive efforts failed to bear fruit. Irrespective of this outcome, Infineon exceeds
+the gender quota stipulated by law (which does not come into force until January 1, 2016 and
+therefore did not need to be complied with in the elections at the 2015 Annual General Meeting)
+with a current female quota of 37.5 percent.
+P
+see page 174
+With the resolution dated May 6, 2014, the Supervisory Board generally approved the con-
+tinuation of cooperation between the Company and Technische Universität München
+(Institute for Technical Electronics, headed by Prof. Dr. Schmitt-Landsiedel). At its meeting held
+on August 4, 2015, the Supervisory Board approved the specific research and development
+contract subsequently drawn up.
+Other information relating to corporate governance at Infineon can be found in the Corporate
+Governance Report issued jointly by the two boards.
+Composition of the Supervisory Board
+The Supervisory Board was reconstituted during the year under report, firstly, due to the fact
+that all mandates for employee and shareholder representatives expired at the end of the 2015
+Annual General Meeting, and secondly, to take account of the requirement under co-determi-
+nation legislation to increase the size of the Supervisory Board from 12 to 16 members.
+Election of new employee representatives
+The following employee representatives were elected at the end of 2014 by delegates elected
+from the relevant Company locations: Johann Dechant, Annette Engelfried, Peter Gruber,
+Gerhard Hobbach, Dr. Susanne Lachenmann, Jürgen Scholz, Kerstin Schulzendorf and Diana
+Vitale. Gerd Schmidt, Wigand Cramer and Reinhard Gottinger are no longer members of the
+newly constituted Supervisory Board. The Supervisory Board would like to thank the employee
+representatives who have now left for their constructive and trusted cooperation over the past
+years and wishes them all the best for the future. Special thanks go to Mr. Schmidt, who had
+served on the Supervisory Board since the Company's foundation, working for many years
+with great success in the capacity of Deputy Chairman of the Supervisory Board.
+Election of new shareholder representatives
+The shareholder representatives were elected at the 2015 Annual General Meeting. All members
+of the Supervisory Board in office at that stage were re-elected as follows: Hans-Ulrich Holdenried,
+Prof. Dr. Renate Köcher, Wolfgang Mayrhuber, Dr. Manfred Puffer, Prof. Dr. Schmitt-Landsiedel
+and Dr. Eckart Sünner. Peter Bauer and Dr. Herbert Diess became shareholder representatives
+for the first time.
+The resolution on candidates to be put forward for election at the Annual General Meeting was
+taken at the meeting held on November 26, 2014. The resolution was prepared by the Nomi-
+nation Committee, which took a leading role in seeking and selecting potential candidates, a
+process already commenced during the 2014 fiscal year.
+SUSTAINABILITY AT INFINEON
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report of the Supervisory Board to the Annual General Meeting
+21
+21
+Elections within the Supervisory Board
+The constituting meeting of the Supervisory Board took place immediately after the Annual
+General Meeting on February 12, 2015. At that meeting, Mr. Mayrhuber was re-elected as
+Chairman of the Supervisory Board and Mr. Dechant elected as Deputy Chairman.
+In addition to the statutorily prescribed Mediation Committee, the Supervisory Board once
+again resolved to form an Executive Committee, an Investment, Finance and Audit Committee,
+a Strategy and Technology Committee and a Nomination Committee. In keeping with the
+wishes of the Supervisory Board, all of these committees will be composed on a parity basis, i.e.
+with equal numbers of shareholder and employee representatives, with the exception of the
+Nomination Committee. Mr. Mayrhuber remains Chairman of the Supervisory Board, the
+Mediation Committee and the Executive Committee. He was also elected as Chairman of the
+Nomination Committee. Dr. Sünner will again chair the Investment, Finance and Audit Commit-
+tee. Prof. Dr. Schmitt-Landsiedel continues to chair the Strategy and Technology Committee.
+Report on the work of the Supervisory Board's Committees
+The committees draw up resolutions or prepare topics that are required to be dealt with by the
+full Supervisory Board. Certain decision-making powers have been delegated to committees,
+to the extent permitted under German law. The chairpersons of each committee routinely report
+on committee meetings at the next relevant full Supervisory Board meeting.
+Nomination and Mediation Committee
+Management Board and Supervisory Board
+After convening once in summer 2014, the Nomination Committee met again during the year
+under report to discuss the election of shareholder representatives at the 2015 Annual General
+Meeting as well as the necessary proposals for election to be put forward by the Supervisory
+Board. The recommendations to the full Supervisory Board regarding the proposals for election
+were then the subject of a written resolution.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+20
+P see page 186
+Personnel matters
+At an early stage, the Supervisory Board agreed to extend Dr. Ploss's term of office as member
+of the Management Board, Chief Executive Officer and Labor Relations Director, which had been
+due to expire on September 30, 2015. Dr. Ploss's term of office has now been extended for a
+further five-year term that expires on September 30, 2020 and his service contract continued.
+The resolution relating to the extension was taken at the Supervisory Board meeting held on
+November 17, 2014.
+The "Law on Equal Participation of Women and Men in Leadership Positions in the Private
+and Public Sector" came into force during the year under report. The new law stipulates a
+gender quota of 30 percent for the supervisory boards of parity-based, co-determined listed
+corporations such as Infineon Technologies AG. Target quotas were also introduced by the
+new legislation, requiring the Supervisory Board to set a quota for female participation on the
+Management Board by the end of the year under report at the latest. The Supervisory Board
+was also required to stipulate a date no later than June 30, 2017 by which this target quota
+should be achieved. The Supervisory Board is convinced that the decisive criterion for selecting
+members of the Management Board must be their professional skills and personal suitability.
+Consideration must be given to ensuring that the members of the Management Board as a
+whole possess the knowledge, skills and experience required to exercise the board's duties to
+the fullest possible extent. The Supervisory Board seeks to ensure appropriate female repre-
+sentation on the Management Board within the framework of these specifications. In order to
+achieve this aim, the Supervisory Board is of the opinion that greater efforts are required to
+develop women for Management Board positions. In view of the successful work of the current
+Management Board team, and taking the agreed terms of service contracts into account, the
+Supervisory Board sees neither a practical need nor a legal opportunity to increase the per-
+centage of women on the Management Board at this current point in time. A target quota of
+0 percent was therefore determined and will remain valid until June 30, 2017.
+Management Board compensation
+The Supervisory Board engages an external compensation expert to review the Management
+Board compensation system and the compensation of individual members of the Management
+Board on a regular basis. The results contained in the compensation expert's report presented
+during the 2015 fiscal year were discussed in detail during the Executive Committee meeting
+held on October 23, 2014 and by the full Supervisory Board on November 17, 2014. The com-
+pensation expert reached the conclusion that the compensation system complies with both the
+legal requirements and the recommendations set out in the German Corporate Governance
+Code. In particular, the review concluded that the compensation of Infineon's Management
+Board is commensurate with market conditions and that the variable compensation compo-
+nent is oriented towards the sustainable growth of the enterprise. The Supervisory Board shares
+the opinion of the compensation expert. The review report also considered the moderate
+increase in Management Board compensation effective October 1, 2014, resolved by the
+Supervisory Board at the meeting held on May 6, 2014, and confirmed the appropriateness
+of the increase.
+Detailed information concerning Management Board compensation is provided in the
+Compensation Report.
+Litigation
+The Supervisory Board was informed regularly and comprehensively regarding major legal
+disputes during the 2015 fiscal year and deliberated on them in conjunction with the Manage-
+ment Board. Besides the Company's appeal against the fine imposed by the EU Commission
+and the consequences of the Commission's decision, matters discussed included the legal
+disputes with the insolvency administrator of Qimonda AG.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report of the Supervisory Board to the Annual General Meeting
+19
+Corporate governance
+Declaration of Compliance 2015
+As in previous years, the Supervisory Board and the Management Board resolved to issue the
+2015 Declaration of Compliance with one deviation from the Code's recommendations regard-
+ing Supervisory Board compensation. The two boards still consider that the compensation
+regulation resolved by the Annual General Meeting adequately takes account of Infineon's
+long-term success. With the exception of the recommendation with respect to Supervisory
+Board compensation, Infineon has complied with, and continues to comply with, all other
+recommendations contained in the Code. The most recent Declaration of Compliance was
+published on the Company's website in November 2015.
+Changes to the Supervisory Board's target catalog
+The German Corporate Governance Code recommends that the Supervisory Board determine
+specific targets for its composition. The Supervisory Board revised its existing catalog of targets
+in resolutions taken on November 17, 2014 and August 4, 2015, partly in response to the require-
+ment to enlarge the Supervisory Board from 12 to 16 members due to the increased size of the
+workforce. It was also necessary for the target catalog to reflect the new statutory gender
+quota for supervisory boards as well as changes to the German Corporate Governance Code
+that became applicable in the year under report. The changes to the Code related primarily
+to the introduction of recommendations concerning the usual length of appointments to a
+supervisory board. In this respect, the Supervisory Board was guided by its recognition of
+the importance of continuous personnel renewal, but that this must always be weighed against
+the benefits of having continuity on the Company's representative bodies. Stability in the
+composition of the Supervisory Board promotes a spirit of trust, both within the Supervisory
+Board itself and with the Management Board. Having given consideration to the above
+aspects, the Supervisory Board decided that its members should not, as a general rule, be
+appointed for more than three periods of office.
+Efficiency review for Supervisory Board activities
+The Supervisory Board examines the efficiency of its activities annually. Based on the ques-
+tionnaire tried and tested in past examinations, in summer 2015 members of the Supervisory
+Board were again requested to provide critical feedback regarding their work and the extent of
+cooperation between the two boards. The results of this survey were discussed at the Super-
+visory Board meeting held on August 4, 2015. No noteworthy shortcomings were identified.
+Assessment of potential conflicts of interest
+During the year under report, the Supervisory Board consented to Dr. Ploss taking on a
+mandate in the Supervisory Board of "Haus der Zukunft gGmbH" and to Mr. Mittal taking on
+a mandate in the Board of Directors of Global Semiconductor Alliance (GSA). Both of these
+entities are non-profit organizations. In the previous fiscal year, Mr. Mittal received the approval
+of the Supervisory Board to accept a mandate as member of the Board of Directors of the
+Singapore Economic Development Board. Mr. Mittal took up this position during the year under
+report. The exercising of these mandates does not conflict with any of Infineon's interests.
+The Company entered into a consultancy agreement with the former CEO, Mr. Bauer, in 2012
+when he stood down from the Management Board. In view of his candidacy for the Supervisory
+Board, the consultancy mandate ended on January 31, 2015.
+@www.infineon.com/cms/en/
+about-infineon/investor/
+corporate-governance/
+declaration-of-compliance/
+20
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Management Board and Supervisory Board
+The Mediation Committee did not need to convene.
+The Executive Committee held one ordinary and one extraordinary meeting during the year
+under report, the latter taking place in the form of a telephone conference. In addition, one
+written resolution was taken.
+24
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Combined
+Management
+Report
+Our Group
+This report combines the Group Management Report of the Infineon Group
+("Infineon" or "Group") - comprising Infineon Technologies AG (hereafter
+also referred to as "the Company") and its consolidated subsidiaries - and
+the Management Report of Infineon Technologies AG. It should be read in
+conjunction with the audited Consolidated Financial Statements, including
+the notes to the Consolidated Financial Statements ("notes") included else-
+where in this report. The audited Consolidated Financial Statements have
+been prepared on the basis of a number of assumptions and accounting
+policies more fully explained in note 1 ("Basis of the Consolidated Financial
+Statements") and note 2 ("Summary of significant accounting policies").
+The Combined Management Report contains forward-looking statements
+about the business, financial condition and earnings performance of the
+Infineon Group. These statements are based on assumptions and projections
+based on currently available information and present estimates. They are
+subject to a multitude of uncertainties and risks. Actual business develop-
+ment may therefore differ materially from what has been expected. Beyond
+disclosure requirements stipulated by law, Infineon does not undertake
+any obligation to update forward-looking statements.
+26
+52
+FINANCES AND STRATEGY
+28 Successful 2015 fiscal year
+32 Group strategy
+THE SEGMENTS
+54 Automotive
+58 Industrial Power Control
+62 Power Management & Multimarket
+66 Chip Card & Security
+RESEARCH & DEVELOPMENT
+70
+80
+OPERATIONS
+88
+23
+Executive Committee
+Chairman of the Supervisory Board
+On behalf of the Supervisory Board
+The ordinary meeting focused on preparing the Supervisory Board's resolution with respect to
+the appropriateness of Management Board compensation. At this meeting, the committee also
+drew up resolutions for the full Supervisory Board regarding the measurement of the variable
+compensation of the members of the Management Board. Important aspects of this work
+were to determine the degree to which targets for the 2014 fiscal year were achieved and to
+set new target levels for the 2015 fiscal year.
+At the extraordinary meeting, the Executive Committee prepared the Supervisory Board's
+resolutions on the various corporate governance issues referred to above, most notably speci-
+fying a target quota for the membership of women on the Management Board and revising the
+Supervisory Board's target catalog.
+22
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Management Board and Supervisory Board
+Investment, Finance and Audit Committee
+The Investment, Finance and Audit Committee convened four times during the year under report.
+Its activities centered on monitoring the financial reporting process, reviewing the half-year and
+quarterly financial statements, conducting the preliminary audit of the Separate Financial State-
+ments, Consolidated Financial Statements and Management Report of Infineon Technologies AG
+and of the Infineon Group, and discussing the audit report with the auditor. Another important
+task performed by the committee was to examine and discuss Infineon's financial and invest-
+ment plans and to determine a borrowing limit for the 2015 fiscal year. The committee also
+considered the effectiveness of the internal control system, internal audit system and risk
+management system. The committee's members also received reports from the Compliance
+Officer on a regular basis. The committee was provided with regular updates on significant
+legal disputes, including the Company's appeal against the fine imposed by the EU Commis-
+sion as well as the consequences of the Commission's decision. Matters discussed also included
+the legal disputes with the insolvency administrator of Qimonda AG, which were deliberated
+upon at length.
+Other duties performed by the committee included specifying key areas to be examined by the
+external auditor, monitoring the auditor's independence and considering the additional services
+performed by the auditor. The committee prepared the Supervisory Board's proposal to the
+Annual General Meeting regarding the selection of the auditor to audit the Separate and Consol-
+idated Financial Statements and review the half-year financial statements. It subsequently
+engaged the auditor to perform these tasks and, furthermore, to review the quarterly financial
+statements. The relevant fee arrangements were also considered.
+The committee (and the full Supervisory Board) gave lengthy consideration to the report drawn
+up by KPMG on the statutorily prescribed audit regarding compliance with the so-called
+EMIR Directive, which, among other things, imposes certain duties on entities such as Infineon
+with regard to derivatives management.
+The auditor attended all of the meetings of the Investment, Finance and Audit Committee and
+reported in detail on its audit activities.
+Strategy and Technology Committee
+The Strategy and Technology Committee convened three times during the period under report.
+The committee received detailed reports on the "excellence initiatives" in the area of research
+and development on the one hand and sales and marketing on the other. It also addressed issues
+relating to the acquisition and integration of International Rectifier. Topics dealt with at these
+meetings included future manufacturing and location strategies as well as the product and
+technology portfolio within the Group. The committee also considered a number of technological
+topics such as the potential offered, and challenges posed, by new semiconductor materials.
+Separate and Consolidated Financial Statements
+KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, audited the Separate Financial Statements of
+Infineon Technologies AG and the Consolidated Financial Statements as of September 30, 2015
+as well as the Management Report of Infineon Technologies AG and of the Infineon Group, and
+issued unqualified audit opinions thereupon. KPMG also reviewed the half-year and quarterly
+financial reports.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report of the Supervisory Board to the Annual General Meeting
+The Separate Financial Statements, the Consolidated Financial Statements prepared in
+accordance with IFRS, the Management Report and the Management Board's proposal for
+the appropriation of unappropriated profit (all prepared by the Management Board) and the
+long-form reports of KPMG pertaining to the audits of the Separate Financial Statements, the
+Consolidated Financial Statements, and the Management Report, were discussed thoroughly
+with KPMG at the meeting of the Investment, Finance and Audit Committee held on November
+11, 2015. At the meeting, the aforementioned committee resolved to propose that the Super-
+visory Board approve the two sets of financial statements.
+The Chairman of the Investment, Finance and Audit Committee reported on the committee's
+recommendations at the meeting of the Supervisory Board held on November 17, 2015. At
+the Supervisory Board meeting held on November 24, 2015, the financial statements were
+examined thoroughly in the presence of the auditor and scrutinized by the Supervisory Board
+to ensure, in particular, that they were lawful, compliant and adequate.
+The scope, key areas and costs of the audit were also reported on at the aforementioned Super-
+visory Board meeting and the risk management system explained. The Management Report
+of Infineon Technologies AG and of the Infineon Group was also examined and found to be
+consistent with legal requirements in the opinion of the Supervisory Board. The Supervisory
+Board concurs with the statements made in the Management Report regarding Infineon's
+future development. The Supervisory Board has examined and endorses the Management
+Board's proposal for the appropriation of unappropriated profit, which provides for a dividend
+of €0.20 per qualifying share.
+In view of the result of the audit, the Supervisory Board has no objections to the financial
+statements and the audit performed by the auditor. The Supervisory Board therefore concurred
+with the results of the audit on November 24, 2015 and approved the Separate Financial State-
+ments of Infineon Technologies AG and the Consolidated Financial Statements of the Infineon
+Group. The Separate Financial Statements have therefore been adopted.
+The Supervisory Board would like to express its thanks to the Management Board and to the
+entire staff for their outstanding commitment and excellent achievements during the 2015
+fiscal year.
+Neubiberg, November 2015
+Wolfgang Mayrhuber
+18
+17
+The Supervisory Board continues to appreciate the importance of focusing one meeting a
+year exclusively on strategic topics. Therefore, in the meeting held on August 3, 2015, the
+Board engaged in a detailed discussion on Infineon's overall strategy, the principal trends
+in the semiconductor industry, the main areas of growth, Infineon's positioning and the
+competitive environment.
+Combined Management Report - Our Group
+Combined
+Management Report
+Our Group
+25
+26
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+G 01
+Dividend per share for the
+2010 to 2015 fiscal years
+in €-Cent
+12 12 12
+18
+201
+10
+2010 2011 2012 2013
+2014 2015
+1 Proposal to the Annual General Meeting to be held on February 18, 2016.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+INTERNAL MANAGEMENT SYSTEM
+92
+THE INFINEON SHARE
+124
+AWARDS
+122
+INFINEON WORLDWIDE
+118
+NOTABLE EVENTS 2015
+116
+OUR EMPLOYEES
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Report of the Supervisory Board to the Annual General Meeting
+Wolfgang Mayrhuber
+Chairman of the Supervisory Board
+The Chairman of the Supervisory Board, the Chairman of the Investment, Finance and Audit
+Committee and the Chairwoman of the Strategy and Technology Committee were in continual
+contact with the Management Board. The Chairman of the Supervisory Board was also informed
+without delay by the Chief Executive Officer of all significant events relevant to the business.
+The full Supervisory Board Committee convened for six ordinary meetings during the 2015 fiscal
+year. At three of these meetings, one member on each occasion was absent and excused.
+Attendance at the meetings of the full Supervisory Board therefore averaged over 96 percent,
+while attendance at Supervisory Board committee meetings averaged over 98 percent.
+Financial and investment planning and business strategy
+In the previous fiscal year, the Supervisory Board had already approved the acquisition of
+International Rectifier prior to signature of the contract in August 2014. In the year under report,
+alongside the regular updates reported by the Management Board on the progress of integra-
+tion, the focus of attention with respect to the acquisition turned to financing. Among other
+things, the Supervisory Board consented to the refinancing of the bridging facility, initially
+entered into to finance the acquisition, by means of the issuance of two corporate bonds
+(so-called "eurobonds").
+At its meeting held on November 17, 2014, the Supervisory Board approved the financial and
+investment budget including the overall investment budget and the borrowing limit deter-
+mined for the 2015 fiscal year, as presented by the Management Board. At the meeting held on
+May 12, 2015, the Supervisory Board agreed to an increase in total investments for the 2015
+fiscal year, in light of the acquisition of International Rectifier.
+108
+ESD
+Electrostatic discharge. ESD is a spark or disruptive discharge
+caused by a large potential difference in an electrically iso-
+lating material that causes a very short, high electrical current
+impulse capable of destroying electronic devices such as mobile
+telephones. The cause of the potential difference is mostly
+a static electricity charge, which can happen, for example,
+when walking over a carpet and can charge a person with up
+to 30,000 volts.
+Electric Power Steering is an electrically-driven power steering
+system, which is equipped with an electric motor as opposed
+to hydraulically driven systems. The advantage is that the
+power steering can be tailored to suit the current requirement.
+In other words, it is only activated as needed during steering
+operations, which leads to greater fuel economy compared with
+hydraulic power steering systems.
+"Mixed-signal" is a generic term for integrated circuits that
+operate simultaneously with analog and digital signals. Owing
+to similar requirements in terms of development and manu-
+facturing processes, they are generally grouped together with
+integrated circuits operating exclusively with analog signals,
+hence giving rise to the combination "analog-mixed-signal".
+From the Greek epi "upon" and taxis "arrangement" or "orien-
+tation". Epitaxy is a form of crystalline growth that occurs
+both in nature (such as in minerals) and in the technical world.
+In semiconductor technology, epitaxy is the artificial growth
+of crystalline layers on a substrate, which is usually a wafer.
+Epitaxy enables various doping profiles for transistors to be
+created, which are not feasible using other methods such as
+diffusion or ion implantation.
+Epitaxy
+291
+ESC
+EPS
+Electronic Stability Control. A vehicular technology system
+that uses sensors and computers to brake individual wheels
+in order to prevent skidding.
+Frontend manufacturing
+European New Car Assessment Programme. The Euro NCAP
+carries out crash tests and provides automobile buyers with
+a realistic, independent assessment of the safety features
+of many of the most sold vehicles in Europe. Euro NCAP was
+founded in 1997 and is meanwhile supported by seven
+European governments as well as automobile and consumer
+organizations from all EU states.
+Exa
+A decimal prefix for usage in the international system of units,
+Exa stands for 1018 = 1 quintillion, abbreviated "E", for example
+exabyte (EByte).
+FACTS
+Flexible AC Transmission System - control systems used in
+electrical engineering. They are used in the field of electrical
+power supply to specifically control power transmission and
+distribution in AC networks, in which in principle components
+of power electronics and therefore power semiconductors
+such as IGBT modules are used. The controlling of power
+transfers can be implemented in alternating current networks
+by changing the idle and active power by means of capacitor
+batteries or compensation coils.
+Firmware
+Firmware is software that is embedded in electronic devices.
+It is mostly embedded in the memory of a microcontroller and
+cannot usually be replaced by the user. The term derives from
+the fact that firmware is functionally firmly connected with
+the hardware, which means that neither one can function
+without the other. It occupies an intermediate position
+between hardware and the application software.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Technology Glossary
+Frontend process is the designation for all process steps in
+cleanrooms 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 frontend process, the wafer may
+have been through as many as 500 individual process steps.
+After the conclusion of the frontend manufacturing, the
+processed wafers are transferred to backend manufacturing
+for testing and packaging (see Backend manufacturing).
+Gallium nitride
+Euro NCAP
+A nonvolatile memory that is integrated on a chip together
+with a microcontroller processor core. The nonvolatile memory
+contains the program code.
+Embedded flash
+A driver assistance system is an electronic system integrated
+into a vehicle. It supports the driver in his driving task by
+providing information and warnings and – if designed for this -
+by actively intervening with the driving in a regulatory capacity.
+The driver has to consciously activate or deactivate the system.
+The driver assistance system can be overruled by the driver at
+any time.
+The breakthrough voltage for semiconductor components is
+the voltage that, when exceeded, the current increases sharply
+and can ultimately lead to the destruction of the component.
+The breakthrough voltage can be determined by the doping of
+the semiconductor layers.
+Breakthrough voltage
+Information unit; can take one of two values "true"/"false"
+or "0"/"1".
+Bit
+A power bipolar transistor is a specialized version of a bipolar
+transistor that is optimized for conducting and blocking large
+electric currents (up to several hundred amperes) and very
+high voltages (up to several 1,000 volts). In industry, the power
+bipolar transistor - like the power MOSFET (see MOSFET) often
+used as an alternative - constitutes an important industrial
+semiconductor component for influencing electric current.
+Bipolar
+A bare die is a single, unpackaged chip. Bare die business
+means the sale of fully processed, unpackaged chips. The
+packaging and subsequent testing of the packaged chips
+is performed by the customer. Bare die business is mostly
+conducted with IGBT module manufacturers that produce
+their own modules but not their own semiconductors.
+290
+Bare die
+Authentication
+Infineon brand name for the 32-bit multicore automotive
+microcontroller family.
+AURIX™
+Application Specific Standard Product. Standard product
+designed for a specific use that can be used by many customers;
+implemented on an integrated circuit.
+ASSP
+Application Specific Integrated Circuit. Logic IC specially
+constructed for a specific application and customer;
+implemented on an integrated circuit.
+ASIC
+The part of the semiconductor manufacturing process that
+happens after the wafer has left the cleanroom (frontend
+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.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Further Information
+Brushless DC motor
+An important type of electric motor is the so-called brushless
+DC motor (BLDC motors). Commutation in BLDC motors is
+performed electronically, depending on the rotor position,
+the rotor speed and the torque. The rotor position and torque
+can be measured via sensors, such as magnetic field sensors.
+Depending on this positional information, the windings, which
+generate the torque in the rotor, are controlled via appropriate
+power semiconductors.
+Driver Assistance Systems
+Direct Current (DC) to Direct Current (DC) conversion. A high DC
+input voltage is converted to a mostly lower, highly precise DC
+output voltage. The DC-DC conversion is usually positioned on
+the motherboard in close proximity to the electrical consumer.
+These consumers can be, for example, the microprocessors of
+a PC or server, the graphics controller of a graphics card or the
+network processor of a telecommunications facility.
+DC-DC conversion
+High-voltage power transistor for voltages from 300 to 1,200 V.
+CoolMOST
+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.
+Converter
+In contrast to silicon-based semiconductors, compound
+semiconductors consist of several chemical elements. The
+combination of materials from the chemical main group III
+(e.g. gallium) and V (e.g. nitrogen) have the electrical conduc-
+tivity of semiconductors. This also applies to the combination
+of materials from the main group IV (carbon, silicon). These
+compound semiconductors (e.g. gallium nitride or silicon
+carbide) are therefore of highest importance in technical
+applications in semiconductor technology, especially for
+power semiconductors.
+Common Criteria for Information Technology Security Evalua-
+tion, generally known as Common Criteria for short, constitute
+an international standard for evaluating and certifying the
+security of computer systems with regard to data security. The
+Common Criteria define seven levels of reliability (Evaluation
+Assurance Level, EAL1 to EAL7, i.e., the highest level), which
+describe the correctness of the implementation and the depth
+of inspection of the system being evaluated.
+Common Criteria
+Complementary Metal Oxide Semiconductor. Standard semi-
+conductor manufacturing technology used to manufacture
+microchips with low power usage and a high level of integration.
+CMOS
+Cloud computing is the provision of processing capacity,
+data storage, network capacity and ready-to-use software
+via a network with supply matched dynamically to demand.
+The IT infrastructure functions accessed appear remote and
+opaque from the user's perspective, as if enveloped in a cloud.
+The remote systems of the cloud are accessed via a network,
+usually the internet, using a terminal such as a netbook or
+tablet (see tablet).
+Cloud computing
+Unit of information in data processing components. One byte
+is equivalent to eight bits (see bit).
+Byte
+The electronic commutation does not cause wear and tear
+in BLDC motors, such as in standard DC motors. Moreover,
+BLDC motors do not require maintenance. Major advances in
+the field of power electronics and circuit design in recent
+years have made it possible to manufacture BLDC motors at
+a reasonable market price.
+Analog-mixed-signal
+Compound Semiconductor
+Authentication means the ability to prove one's own identity,
+i.e., proof of the authentic original. However, authentication
+does not necessarily refer to people only, but also to any
+tangible or intangible object, such as a device or an electronic
+document. A user can be authenticated in any one of three
+different ways: 1.) By providing a certain piece of information,
+i.e., the user knows something, such as a password; 2.) Through
+the use of a possession, i.e., the user possesses something,
+such as a key; 3.) Through the direct presence of the user,
+i.e., the user is someone or something, such as in the form of
+a biometric feature.
+Alternating Current (AC) to Direct Current (DC) conversion.
+This is a generic term for power supplies in which alternating
+current from the mains is converted to direct current, which
+often then needs to be precisely converted to a lower current
+(see also "DC-DC conversion").
+Cash flow from operating and investing activities from continu-
+ing operations excluding cash flows related to the purchase
+or sale of financial investments.
+Free cash flow
+A forward transaction taking place on a set future date with indi-
+vidually negotiated contract terms where the delivery and pay-
+ment of a security is effected with the rate set on the day
+the transaction is concluded; in the case of a foreign exchange
+forward, the exchange of one currency for another at a fixed rate.
+Forward contract
+The fair value is defined as price that would be received to sell
+an asset or paid to transfer a liability in an orderly transaction
+between market participants at the measurement date.
+Fair Value
+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.
+Equity Method
+Earnings Per Share. Basic earnings per share is calculated by
+dividing net income (loss) by the weighted average number
+of ordinary shares outstanding during the period. For the
+calculation of diluted earnings per share the weighted average
+number of ordinary shares outstanding is increased by all
+additional ordinary shares that would have been outstanding
+if potentially dilutive instruments had been converted into
+ordinary shares.
+EPS
+A financial instrument that derives its value from the price,
+price fluctuations or expected price of an underlying asset
+(e.g. a security, currency or bond).
+Derivate
+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.
+Defined benefit obligations (DBO)
+Since tax laws often differ from the recognition and measure-
+ment requirements of financial accounting standards, differ-
+ences 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 account-
+ing 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.
+287
+Deferred tax
+288
+Goodwill
+Proportional share in net income and equity attributable to
+outside shareholders, and not to shareholders of the Infineon
+Group's parent company.
+Profit or loss and capital-share attributable to
+non-controlling interests
+One of three marketplaces for trading over-the-counter stocks
+provided and operated by the OTC Markets Group.
+OTCQX
+Gross cash position less short-term and long-term debt.
+Net cash position
+A contractual arrangement whereby two or more parties
+undertake an economic activity that is subject to joint control.
+Joint Venture
+International Financial Reporting Standards; Infineon prepares
+its Consolidated Financial Statements in accordance with IFRS,
+as adopted by the European Union.
+IFRS
+Revenues less cost of goods sold.
+Gross profit
+Total of cash and cash equivalents plus financial investments.
+Gross cash position
+An intangible asset of the Company that results from a busi-
+ness acquisition, representing the excess of the purchase price
+(cost) paid for the acquired business over the fair value of
+the separately identifiable assets acquired and liabilities and
+contingencies assumed. Under IFRS, goodwill is not reduced
+through scheduled amortization, but rather written down to its
+fair value if impaired. An impairment assessment is performed
+at least once a year.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Further Information
+Deutscher Aktienindex - The German Stock Index tracking the
+30 major German companies traded on the Frankfurt Stock
+Exchange, in terms of order volume or market capitalization.
+DAX
+Convertible notes/bonds are interest-bearing securities which
+normally - in addition to the right to receive interest and
+repayment of the nominal amount - give the bearer a conver-
+sion option. During the term of the option (conversion period),
+the bearer can exchange the convertible bond/note for a
+specified number of shares of the issuing entity. The conversion
+ratio is stipulated and is typically adjusted for transactions
+affecting the shareholders, such as dividend payments. If the
+bondholder/noteholder does not convert the bond/note
+into shares during the conversion period, the issuer redeems
+the bond/note at the end of the term at its nominal amount.
+Infineon defines Segment Result as operating income (loss)
+excluding: the net amount of asset impairments and reversals
+thereof; the impact on earnings of restructuring and closures;
+share-based compensation expense; acquisition-related
+depreciation/amortization and other expenses; gains (losses)
+on sales of assets, businesses, or interests in subsidiaries as
+well as other income (expense), including litigation 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 revenue.
+Working capital
+Working capital consists of current assets less cash and cash
+equivalents, financial investments and assets held for sale
+less current liabilities excluding short-term debt and current
+maturities of long-term debt excluding liabilities classified as
+held for sale.
+Technology Glossary
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Technology Glossary
+289
+300-millimeter technology
+Comprehensive term for the manufacture and processing of
+wafers with a diameter of 300 millimeters.
+40-/65-/90-nanometer technology
+Manufacturing technology can be described by feature size,
+such as 90, 65, or 40 nanometers. The smaller the structures,
+e.g. lines and pitches, the smaller the chip and the cheaper
+its manufacturing. The 40 nanometer technology succeeds
+the 65 nanometer technology, which followed the 90 nano-
+meter technology.
+ABS
+The anti-lock braking system is an electronic vehicle safety
+feature that prevents the wheels from locking during
+heavy braking.
+AC-DC conversion
+Segment Result
+Return on Capital Employed is defined as the operating
+result after tax from continuing operations divided by capital
+employed. RoCE shows the linkage between profitability and
+capital resources required to run the business.
+ROCE
+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 Company's
+Annual General Meeting.
+Convertible bond
+The cash-effective balance arising from inflows and outflows
+of funds over the fiscal year. The Consolidated Statement of
+Cash Flows 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).
+Cash flow
+Legal separation of business operations (e.g. business units).
+Carve-Out
+An entity in which the Company has significant influence,
+but not a controlling interest, over the operating and financial
+management policy decisions of the entity. Significant influ-
+ence is generally presumed when the Company holds between
+20 percent and 50 percent of the voting rights.
+Associated Companies
+Gallium nitride (abbreviated to GaN) is a compound semicon-
+ductor material made from gallium (chemical symbol Ga) and
+nitrogen (chemical symbol N). GaN is used for components
+including radio-frequency power MOSFETs (see MOSFET) on
+account of the material's special properties (such as good
+thermal conductivity and high electron mobility).
+American Depositary Shares - ADSS are U.S.-traded securities
+represented by an American Depositary Receipt for non-U.S.
+issuers. These securities simplify the 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. secu-
+rities. Since the delisting from the New York Stock Exchange
+("NYSE"), the Infineon ADSs have been traded over the counter
+on the OTCQX International Premier market as a sponsored
+Level 1 program with the ticker symbol IFNNY.
+Earnings per share in accordance with IFRS are influenced by
+amounts relating to purchase price allocations for acquisitions
+as well as by other exceptional items. In order to enable better
+comparability of operating performance over time, Infineon
+computes adjusted earnings per share by excluding extraordi-
+nary effects including the tax effect on them.
+Adjusted EPS
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Financial Glossary
+Financial Glossary
+Put options
+In the case of a put option, the buyer acquires a contractual
+right to sell a stipulated quantity of an underlying asset
+(e.g. a share) at a predetermined date (European option) at a
+specified price (underlying price). In return, the issuer receives
+an option premium from the buyer of the put option.
+Registered shares
+ADS
+Giga
+Backend manufacturing
+GMR
+A transistor is an electronic component for switching and
+amplifying electrical signals. Transistors are used in fields
+including telecommunications, computer systems and power
+electronics both as discrete components and by the million
+in integrated circuits.
+Transistor
+Trusted Platform Module. A chip that adds elementary security
+functions such as license and data protection to a computer
+or similar device. TPMS can be integrated into tablet PCs,
+smartphones and consumer electronics as well as PCs and
+notebooks. A trusted computing platform (see Trusted Com-
+puting) can be created by combining a specially configured
+operating system and appropriate software with a device
+containing a TPM.
+TPM
+A wafer (see Wafer) is typically around 350 microns (μm; see
+Micron) thick when sawn into individual chips. A thin wafer
+is one that has been polished down to less than 200 microns
+thick (a human hair or a sheet of paper, by comparison, is
+about 60 microns thick). Thin wafer technology offers benefits:
+Thinner chips mean losses can be reduced and the heat gener-
+ated can be dissipated more effectively. Another advantage
+is that electrically active patterns can be produced on the
+backside as well, enabling the chip to provide completely new
+functions. Thin wafer chips also allow more compact packages.
+Thin wafer
+Decimal prefix for usage in the international system of units.
+Tera stands for 10¹² = 1 trillion, abbreviated “T”, for example
+terabyte (TByte).
+Tera
+A portable computer that can be used in a number of ways
+including as a note pad. The tablet is operated by applying
+a stylus or, increasingly, finger contact directly onto a
+touch-sensitive screen. Recently tablets have come to be
+used primarily for internet access and hence as a terminal
+for cloud computing (see cloud computing).
+Tablet
+A decimal prefix for usage in the international system of units,
+Giga stands for 109 = 1 billion, abbreviated to "G", for example
+gigabyte (GByte).
+Switch-mode power supply
+Apart from the generally improved robustness of power
+semiconductor components with regard to high current and
+voltage peaks and the reduction of on-state resistance, an
+increasing number of functions are being integrated in the
+component. These components are then commonly known
+as Smart Power Devices and, apart from protective circuitries
+(such as thermal and overcurrent protection), they also contain
+more complex functions such as simple microcontrollers or
+analog-digital converters. The special technology needed
+to produce Smart Power Devices is known as Smart Power
+Technology, such as SPT9 from Infineon.
+Smart Power Technology
+295
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Technology Glossary
+A smartphone is an internet-ready mobile telephone that
+provides more computer functionality and connectivity than
+a modern conventional mobile telephone. Current smart-
+phones generally allow users to upgrade their device with new
+functions by installing additional programs known as apps.
+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 (see Silicon Carbide). 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 the
+German physicist Walter Schottky (1886-1976).
+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.
+Shrink
+A shrink in the context of semiconductor manufacturing is the
+process of scaling manufacturing down from an existing feature
+size to the next smaller feature size. The move to smaller
+structures generally involves shrinking all semiconductor circuit
+elements equally, although there are some exceptions. Chip
+function is unchanged, but since the chips are smaller, more
+can be squeezed onto each wafer and manufacturing costs fall.
+Silicon
+Trusted Computing
+A chemical element with semiconducting characteristics.
+Silicon is the most important raw material in the semicon-
+ductor industry.
+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).
+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.
+Smartcard
+Plastic card with built-in memory chip and/or microcontroller,
+which can be combined with a Personal Identification
+Number (PIN).
+Smartphone
+Silicon Carbide
+Trusted Computing means that the hardware and software
+used in PCs, as well as other computer-controlled 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.
+VSD
+Variable Speed Drive. Electronic control units for controlling
+the speed (revolutions per minute) of electric motors.
+> German Electrical and Electronic Manufacturers' Association (ZVEI)
+> German Association of the Automotive Industry (VDA)
+Standardization organizations
+> International Electrotechnical Commission (IEC)
+> International Organization for Standardization (ISO)
+› Global Standards for the Microelectronics Industry (JEDEC)
+› Federal Association for Information Technology, Telecommunications and New Media (BITKOM)
+> Universal Serial Bus Implementers Forum (USB-IF)
+› European Telecommunications Standards Institute (ETSI)
+> Automotive Open System Architecture (AUTOSAR)
+> German Institute for Standardization (DIN)
+> German Commission for Electrical, Electronic & Information Technologies of DIN and VDE (DKE)
+Others
+> United Nations Global Compact
+› TCG-Trusted Computing Group (Computer Security Standards)
+Schottky diode
+> US Semiconductor Industry Association (SIA)
+› Association representing the Smart Security Industry (EUROSMART)
+Wafer
+Thin slice of semiconductor material from which the actual
+chip is produced. Typical diameters for wafers currently
+are 200 millimeters and 300 millimeters.
+Zetta
+A decimal prefix for usage in the international system of units.
+Zetta stands for 1021 = 1 sextillion, abbreviated "Z", for exam-
+ple zettabyte (ZByte).
+296
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+> China Semiconductor Industry Association (CSIA)
+Further Information
+Infineon is engaged in numerous industry associations
+and standardization organizations - some examples:
+Industry associations
+> World Semiconductor Council (WSC; organization of regional semiconductor associations)
+> Global Semiconductor Alliance (GSA)
+> Industrial Internet Consortium (IIC)
+› European Semiconductor Industry Association (ESIA)
+Memberships and partnerships
+Repowering in a renewables context generally refers to the
+replacement of old wind turbines with newer, more powerful
+and more efficient models. This is done in order to make
+better use of the available locations and increase the installed
+capacity while simultaneously reducing the number of turbines.
+A switch-mode power supply is an electronic module that
+transforms an AC voltage into a DC voltage. Switch-mode
+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. Switch-mode power supplies are mainly used in PCs,
+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.
+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).
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Technology Glossary
+293
+Inverter
+An inverter, also called a DC/AC converter, is an electrical
+device for converting DC voltage into AC voltage, or direct
+current into alternating current. Inverters are used in solar
+power plants, for example, for converting the DC voltage
+generated in the solar modules into AC voltage, which is then
+fed into the electricity network.
+ISO 26262
+ISO 26262 is an ISO standard for safety-related electrical
+and electronic systems in various types of vehicle. ISO 26262
+defines a procedure model together with required activities
+and methods to be used in development and production.
+The implementation of the standard is designed to guarantee
+the functional safety of systems that include electrical and
+electronic components in vehicles. The standard is used by
+carmakers, automotive suppliers and testing institutions.
+Kilo
+A decimal prefix for usage in the international system of units,
+kilo stands for 103 = 1,000, or abbreviated to "k". In the world
+of information technology, Kilo stands for 210 = 1,024, or "K"
+for short, e.g. kilobyte (KByte).
+LDMOS
+Laterally Diffused MOS transistor. The increasingly stringent
+standards concerning the electrical properties of field-effect
+transistors (MOSFETs) have led to the development of variations
+of the planar MOSFET in recent decades. They frequently
+differ in the design of their doping profile or the selection of
+material. For instance, there is a difference between lateral
+(i.e., those aligned parallel to the surface) and vertical designs.
+Whereas lateral transistors (LDMOS) are primarily used in
+radio-frequency applications for telecommunications, the
+vertical design is mainly used in the field of power electronics.
+Integrity Guard (IG) is a revolutionary security technology
+designed for chip cards and security applications, with which
+Infineon is ringing in a new era in the field of hardware-based
+security. IG was specially developed for sophisticated, long-
+life applications such as payment cards and government
+identification documents. IG enables a security controller for
+the first time to provide complete error detection and com-
+prehensive encryption of all chip functions across the entire
+data path within the chip. For this reason it is known as "digital
+security”. IG is used in the security controllers of the SLE 77
+and 78 families and has won numerous international awards.
+Mega
+MEMS
+Micro-electro-mechanical system. A micro-electro-mechanical
+system, or simply a microsystem, is a miniaturized device,
+assembly or part that contains components of minute dimen-
+sions (only measurable in micrometers) that work together
+as a system. Usually a microsystem consists of one or more
+sensors, actuators and control electronics on one chip.
+Infineon manufactures microphones as MEMS. Due to their
+diminutive size, low power consumption, good shielding from
+interfering signals and low-cost production, these types of
+microphone are being increasingly installed in mobile devices
+such as smartphones, tablets, cameras, and accessories such
+as headsets and hearing aids.
+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.
+MOSFET
+Metal-Oxide-Semiconductor Field-Effect Transistor. MOSFET
+is currently the most widely used transistor architecture.
+MOSFETs are used both in highly integrated circuits and in
+power electronics as special power MOSFETs.
+Nanometer
+Metric unit of length. Corresponds to the billionth part of a meter
+(10-9); the symbol is nm. The diameter of deoxyribonucleic
+acid (DNA) is roughly 2 nanometers. Fabrication features in the
+semiconductor industry are now measured in nanometers
+(see 40-/65-/90-nanometer technology).
+Decimal prefix for usage in the international system of units.
+Mega stands for 106 = 1,000,000 = 1 million, or "M" for short.
+In the world of information technology, Mega stands for
+220 1,048,576, e.g. megabyte (MByte).
+Integrity Guard
+The Internet of Things (IoT) is the network of physical objects
+that contain embedded electronics to compute, sense, actuate
+and communicate. There is no clearly defined “IoT market",
+instead the term loT describes an ongoing and long-term trend
+that affects many applications, some of which exist today
+with different names and many additional applications that
+might exist sometime in the future. For Infineon we currently
+see lot-related opportunities mainly in mobility, industry,
+energy, consumer and ICT (Information and Communication
+Technology) infrastructure markets.
+Internet of Things
+Giant Magneto-Resistance. The GMR effect is utilized in sensors
+for the purpose of measuring magnetic fields. GMR sensors
+are employed in a range of applications, e.g. as steering angle
+sensors in automobiles.
+GPS
+Global Positioning System. Satellite-based location identifi-
+cation and positioning system based on the transit time
+differences of received signals.
+292
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Further Information
+Hall sensor
+A sensor based on the Hall principle, used for measuring
+magnetic fields, named after the US physicist Edwin Herbert
+Hall (1855-1938). Hall sensors are used in automobiles,
+for example, for detecting pedal positions or for measuring
+the speed at which shafts rotate.
+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).
+HEV/EV
+Repowering
+HVDC
+High-voltage direct-current transmission. HVDC transmission
+is a method of transmitting electrical energy at high direct-
+current voltages of up to 800,000 volts over distances of more
+than 1,000 kilometers. HVDC transmission is also used for
+connecting offshore wind farms to the electricity grid on the
+mainland.
+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.
+Hybrid technology
+The word "hybrid" comes from the Greek for "mixed" or
+"originating from two different sources". It has come to be
+used to denote the heart of a new drive technology in the
+automotive industry: hybrid vehicles operate with a combi-
+nation of a diesel or gas engine and an electric motor.
+IC
+Integrated Circuit. Electronic Component parts composed of
+semiconductor materials such as silicon; numerous compo-
+nents, including transistors, resistors, capacitors and diodes
+can be integrated into ICs and interconnected.
+IGBT Module
+Insulated Gate Bipolar Transistor Module. IGBTs are semi-
+conductor 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.
+Industrial Internet, Industry 4.0
+Industrial Internet, in Germany commonly referred to as
+"Industrie 4.0", describes the gradual evolution towards the
+smart, efficient and flexible factory of the future. It is character-
+ized by high degrees of automation, deep horizontal and
+vertical integration of production and logistics processes,
+and the use of advanced “big data" analytics. Or simply put:
+Industrial Internet = Industrial Automation + Internet of Things
+(see Internet of Things).
+NFC
+Near field communication. An international communication
+standard for contactless data exchange over short distances.
+The initial drafts of the communication standard appeared
+several years ago, but the technology did not break through
+until 2011 when it was included in the first smartphones. NFC
+can be used as an access key to content on terminals and
+for services such as cashless payment and paperless ticketing.
+Hybrid electric vehicle/electric vehicle: collective terms
+for vehicles powered partly or entirely by an electric motor
+(see hybrid car).
+Peta
+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.
+On-state resistance
+The term used to describe the minimal resistance of a field-
+effect transistor. The correct way to write it is RDS(on). The R
+stands for the electrical resistance. The index DS stands for
+the connections to the field-effect transistor, which are known
+as Drain (D) and Source (S). "On" stands for the state of the
+field-effect transistor.
+Power semiconductor
+OptiMOS™
+Infineon's brand name for low-voltage power transistors for
+voltages between 20 and 300 V.
+Power transistor
+Decimal prefix for usage in the international system of units.
+Peta stands for 1015 = 1 quadrillion, abbreviated "P", for example
+petabyte (PByte).
+294
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Further Information
+Plug-in hybrid electric vehicle (PHEV)
+Plug-in hybrid electric vehicles combine the advantages of
+battery-powered vehicles with those powered by combustion
+engines. On short trips and in urban traffic, the vehicle is driving
+purely electrically, and, therefore, quietly, emission-free and
+economically. The electric power is supplied by the battery.
+The combustion engine is used on longer trips or whenever
+the battery needs recharging, making it possible to drive much
+further. The battery can be charged either using mains power
+or via the recuperation of braking energy.
+G4-12
+PRESENCE IN LOCAL MARKETS
+Management approach
+5
+G4-EC4
+Financial assistance received
+GRI G4
+Operations with significant
+actual and potential negative
+impacts on local communities
+G4-SO2
+community engagement
+106-107
+withdrawn by source
+Operations related to local
+G4-SO1
+98
+Remarks
+Development of significant
+infrastructure investments
+and services supported
+Total water
+G4-EC7
+indirect economic impacts
+positive and negative
+32-36
+Significant identified
+G4-EC8
+from governments
+224
+G4-EN8
+Page
+93-95, 174
+Specific Standard Disclosures
+2
+G4-31
+Contact point
+G4-32
+GRI Content Index
+G4-33
+External verification
+302 (Back cover)
+297-300
+283, CSR website
+(www.infineon.com/
+csr_reporting)
+Remarks
+Issue
+For the definition of our stakeholders we evaluated international
+sustainability guidelines and directives, such as the OECD Guidelines
+for Multinational Enterprises, and applied the EFQM (European
+Foundation for Quality Management) Model for Excellence and
+the UN Global Compact Blueprint. For those activities included in
+chart 36, in which the frequency of engagement is not described,
+Infineon engagement is carried out regularly whenever required.
+The following topics require a special frequency of engagement:
+> Great Place to Work Assessment: is carried out every two years.
+> Principles of Purchasing: part of contractual negotiations.
+> Annual Report and yearly financial statements: on a yearly basis.
+GOVERNANCE
+G4-34
+Governance structure
+of the organization
+180-185
+ETHICS AND INTEGRITY
+G4-56
+Principles, standards
+and norms of behavior
+Splitting of "received benefits" by country is not relevant.
+Governments do not participate in Infineon.
+The reference to the external audit of G4-56
+is only relevant for the pages 93-95.
+> Suppliers' evaluation: is carried out for new suppliers. For specific
+supplier groups it is also carried out on an annual basis.
+Reporting cycle
+Through the use of products in which our semiconductors are
+used, Infineon has indirect economic impacts, for example
+in efficiency improvements. The significance of those impacts,
+was due to external parameters - not determined in each
+individual case.
+Content Index
+Energy consumed outside
+of the organization
+100, 102
+G4-EN5
+Energy intensity
+100
+G4-EN6
+Reductions in
+100
+energy consumption
+G4-EN7
+Reductions in the energy
+103
+requirements of sold products
+G4-EN8
+Total volume of
+98
+water withdrawn
+reductions achieved
+100
+G4 EN19 GHG emissions
+102
+G4-EN18 GHG emissions intensity
+101, 103
+G4-EN4
+G4 EN17 Other indirect (Scope 3)
+GHG emissions
+G4 EN16 Indirect (Scope 2)
+GHG emissions
+GHG emissions
+101-103
+G4 EN15 Direct (Scope 1)
+98
+G4-EN10 Total volume of water
+recycled and reused
+101, 103
+of the organization
+100
+Energy consumed inside
+G4-EC8
+G4-EC2
+Direct economic value
+generated and distributed
+G4-EC1
+Management approach
+299
+Risks and opportunities
+posed by climate change
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+GRI G4 Content Index
+Page
+LONG-TERM VIABILITY OF CORE BUSINESS
+Issue
+External
+Audit
+External
+Audit
+During the 2015 fiscal year our worldwide citizenship
+representatives did not find any adverse effects.
+Remarks
+Indicator applicable due to the production site placed in a water-
+stressed area and the associated specific local requirements.
+Significant positive
+and negative indirect
+Cover page
+G4 - EN3
+4
+Management approach
+RESPONSIBLE MANUFACTURING
+Content Index
+GRI G4
+4
+Total number of incidents
+of non-compliance with
+regulations and voluntary
+codes concerning the health
+and safety impacts of products
+G4-PR2
+Retained economic value is not reported.
+Splitting EVG&D by region or market is not relevant.
+32-36
+158, 159
+89, 106, 224
+"Infineon key data",
+economic impacts
+G4-30
+3-4,92-93
+2
+G4-20
+Description of material aspects 4-7
+within the organization
+G4-21
+Description of material aspects 4-7
+outside the organization
+G4-22
+Effect of any restatements
+of information
+G4-23
+Significant changes in
+the scope of the Report
+STAKEHOLDER ENGAGEMENT
+128-129,
+Explanatory Notes
+(www.infineon.
+com/csr_reporting)
+2-3,
+Explanatory Notes
+(www.infineon.
+com/csr_reporting)
+G4-24
+Overview of
+92
+stakeholder groups
+G4-25
+Selection of stakeholders
+3-4, 92-93
+Audit of the consolidated financial statements
+Limited Assurance
+4-7
+Material aspects
+G4-19
+limitations on its scope
+G4-13
+Percentage of total employees
+covered by collective
+bargaining agreements
+Organization's supply chain
+Significant changes during
+the year under report
+118-121
+57, 61, 65, 69
+Cover page
+"Infineon
+at a glance"
+110 111, 114-115
+94
+85, 105-106
+116-117
+G4-14
+Consideration of
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+28-31, 128-129
+G4-15
+Externally developed charters, 2-3
+principles and initiatives
+G4-16
+Memberships
+296
+IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES
+G4-17
+G4-18
+Structure of the organization
+124 125, 278-281
+Report's boundaries and
+2-3
+precautionary approach
+GRI G4 Content Index
+Materiality
+Disclosures
+GRI
+Remarks
+STRATEGY AND ANALYSIS
+Issue
+General Standard Disclosures
+GRI G4 Content Index
+G4-EN21 Other significant air emissions 103
+G4-EN22 Volume of water discharges
+Nov 2015
+Service
+External
+Audit
+.
+298
+G4-26
+Page
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Issue
+Page
+Stakeholder engagement
+3-4, 92-93
+G4-27
+Consideration of key concerns
+raised through stakeholders
+G4-11
+REPORT PROFILE
+G4-28
+Reporting period
+2
+G4-29
+Date of most recent
+Further Information
+previous report
+G4-1
+10-13
+Infineon Technologies AG
+At Infineon stakeholders are involved continuously.
+297
+Employee structure
+G4-10
+Scale of the organization
+G4-9
+Markets served
+G4-8
+and legal form
+Nature of ownership
+G4-7
+124-125
+Statement from the
+Management Board
+124-125
+"Infineon
+Countries where the
+organization operates
+G4-6
+Organization's headquarters
+G4-5
+products, and services
+Cover page
+Primary brands,
+G4-4
+Cover page
+Name of the organization
+G4-3
+ORGANIZATIONAL PROFILE
+at a glance"
+97-98
+106-107
+99
+In addition to the general accident data, in the 2015 fiscal year we
+began sorting the information by gender. The female employees
+had an IR of 0.45 and LDR of 7.39 and the male employees had
+an IR of 0.47 and LDR of 4.49. Reporting of the accident rate and
+lost days rate by region is not a global steering-relevant figure.
+Infineon has currently no globally harmonized information for
+the reporting of occupational diseases. The absenteeism rate
+is not a global steering-relevant figure.
+External
+Audit
+Financial calendar
+Tuesday, February 2, 2016¹
+Publication of first quarter 2016 results
+Thursday, February 18, 2016
+Annual General Meeting 2016
+(Start 10:00 a.m. CET)
+ICM - International Congress Center Munich
+(Germany)
+Tuesday, May 3, 2016'
+Publication of second quarter 2016 results
+Tuesday, August 2, 2016¹
+Publication of third quarter 2016 results
+Wednesday, November 30, 2016'
+Publication of fourth quarter and
+fiscal year 2016 results
+1 preliminary
+Visit us on the web: www.infineon.com
+Infineon, including International Rectifier led 5,850 training hours
+on the individual "codes of conduct". This included information
+on human rights. In the last two years all employees were
+compulsorily trained.
+Imprint
+Compliance training is carried out in particular at management
+level and Board level. Splitting training participation by individual
+regions or employees category is not an indicator relevant to the
+management process for Infineon.
+Audit of the consolidated financial statements
+252-256
+106-107
+and services provided
+G4-LA1
+Employee turnover by age
+group, gender and region
+115
+and new employee hires
+G4-LA2
+Benefits provided to
+113
+full-time employees
+G4-LA5
+G4-LA6
+Committees are in place
+that also offer employers,
+employees and/or employee
+representatives the opportunity
+to discuss on topics relating to
+environmental protection, and
+occupational safety and health
+Work-related accidents
+and lost days
+94
+96-97
+Limited Assurance
+Infrastructure investments
+f
+t
+Fotostudio Reller GmbH, Munich (Germany): page 73, 76, 84
+Leopold Kostal GmbH & Co. KG, Lüdenscheid (Germany): page 74
+YouTube/Google ATAP, Mountain View (California, USA): page 74
+Fotolia, New York (New York, USA): page 77
+Kirsten Johannes Lassig, Dresden (Germany): page 117
+BluePrintGroup, Munich (Germany)
+Note
+The following were brand names of Infineon Technologies AG in the 2015 fiscal year: Infineon, the Infineon logo,
+.dp digital power, AURIX, CoolMOS, OPTIGA, OptiMOS, REAL3, SOLID FLASH, XHP.
+Forward-looking statements
+This Report contains forward-looking statements about the business, financial condition and earnings
+performance of the Infineon Group.
+These statements are based on assumptions and projections resting upon currently available information
+and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development
+may therefore differ materially from what has been expected.
+Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update
+forward-looking statements.
+INFINEON TECHNOLOGIES AG
+Headquarters:
+Contact for Investors and Analysts:
+Media Contact:
+Visit us on the web:
+Am Campeon 1-12, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+www.infineon.com
+Getty Images, Munich (Germany): page 59, 63, 74
+8+
+Audi AG, Ingolstadt (Germany): page 54, 55
+Werner Bartsch, Hamburg (Germany): page 11, 14
+in
+You
+Tube
+Published by:
+Editors:
+Copy deadline:
+Fiscal year:
+Infineon Technologies AG, Neubiberg (Germany)
+Investor Relations, Accounting, Consolidation & Reporting
+November 25, 2015
+October 1 to September 30
+Independent auditors: KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin (Germany)
+Designed by:
+Photography:
+Printing:
+HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg (Germany)
+Tom Trenkle Fotografie, Gräfelfing (Germany): cover picture, page 1
+Rolf Bewersdorf, Frankfurt/Main (Germany): page 17
+G4-EC7
+G4-EN23 Total weight of hazardous
+G4-EC3
+PRODUCT SUSTAINABLE VALUE
+Management approach
+G4-EN7
+Reductions in the energy
+requirements of sold products
+Significant environmental
+G4-EN30
+impacts of transporting
+products and other goods
+and materials
+Page
+Remarks
+6
+103
+101, 103-104
+G4-PR1
+Significant product and
+Issue
+104
+Further Information
+300
+Coverage of benefit plans
+and non-hazardous waste,
+by disposal methods
+G4-EN27 Activities to minimize the
+103-104
+G4-HR6
+environmental impacts
+of products and services
+105-106
+Audit of the consolidated financial statements
+Limited Assurance
+Through the use of products in which our semiconductors are used,
+Infineon has indirect economic impacts, for example in efficiency
+improvements. The significance of those impacts, was - due to
+external parameters - not determined in each individual case.
+During the 2015 fiscal year, Infineon could not identify any incidents
+of non-compliance with regulations and voluntary codes related to the
+impacts of products and services on health and safety.
+The description of the Scope 3 emissions is based on the Infineon
+CO2 balance, which includes the whole energy consumption of Infineon,
+and is reported in metric tons of CO2 equivalents. The other steps,
+that is, the use phase of the products by the customer as well as their
+disposal, cannot be automatically calculated due to the different
+potential applications and fields of use of Infineon products.
+Due to the confidentiality of specific information, Infineon reported the
+specific energy consumption in gigawatt hours per euro (chart 49).
+Reported by the NER (Normalized Emission Rate). Herewith only
+PFC emissions were taken into account, since these are the most
+significant source of CO2 emissions.
+The avoided CO2 emissions were reported in the form of energy under
+the indicator EN6. These are equivalent to 2,814.60 CO₂e.
+External
+Audit
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+service categories for which
+health and safety impacts are
+assessed for improvement
+Measures taken intended
+to contribute to the
+elimination of all forms of
+forced or compulsory labor
+in the supply chain
+Legally required information
+95
+G4-S07
+Legal actions for
+264-265
+anti-competitive behavior
+G4-HR2
+Employee training on
+human rights
+94
+G4-HR3
+Incidents of discrimination
+94
+7
+LABOR RELATIONS
+Management approach
+G4-PR3
+Percentage of employees
+trained in anti-corruption
+7
+and measures taken
+BUSINESS ETHICS
+Management approach
+G4-SO4
+about product and
+DIVERSITY AND EQUAL OPPORTUNITY
+Management approach
+5
+G4-LA12
+Governance bodies by
+diversity categories
+services labeling
+G4-LA13
+94
+110-111, 114
+Incidents of discrimination
+and measures taken
+104
+113
+Wage differences by gender
+G4-HR3
+Infineor
+H
+Micron
+Texas Instr.
+Toshiba
+Broadcom
+12.2
+Top 20 semiconductor manufacturers for the 2014 calendar
+Revenue in billion US$
+MediaTek
+Source: IHS Inc., "2015 Competitive Landscaping Tool", August 2015. Foundries and subcontractors are not included in this market analysis.
+STMicro
+16.1
+G04
+1 Including revenue of US$1.135 billion recorded by International Rectifier.
+50
+19.3
+38.1
+30
+40
+50.0
+60
+SK Hynix
+20
+Qualcomm
+Samsung
+10
+Intel
+0
+16.1
+Renesas
+AMD
+10.2 8.4
+The semiconductor market is highly fragmented. Only the two largest competitors had a market
+share in excess of 10 percent in the 2014 calendar year, namely Intel and Samsung Electronics,
+with revenues of US$49.964 billion (14.1 percent) and US$38.064 billion (10.7 percent) respec-
+tively. Intel is market leader for processors, Samsung Electronics for memory. Infineon does
+not operate in either of these product categories. Hence, neither of these companies competes
+directly with Infineon in these two categories. The ten largest companies account for 52 percent
+of global revenue. The remaining 48 percent is spread over several hundred other semicon-
+ductor companies.
+Market share
+Position
+1 Including a market share of 0.3 percent attributable to International Rectifier
+Source: IHS Inc., ❝2015 Competitive Landscaping Tool", August 2015
+Japan
+World
+Asia-Pacific
+Americas
+Europe, Middle East, Africa
+Infineon's ranking and market share by region (including International Rectifier)
+According to IHS, with revenue of US$7.072 billion, Infineon (including International Rectifier)
+was ranked 10th in the 2014 calendar year, corresponding to 2.0 percent of the world market.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Successful 2015 fiscal year
+Marvell
+nVidia
+Freescale
+year
+Sony
+Avago
+SanDisk
+3.7
+4.1
+4.5
+5.1
+5.4
+5.5
+5.6
+6.3
+6.8
+7.0
+7.1
+7.4
+NXP
+According to the market research firm IHS, semiconductor revenues worldwide totaled
+US$355 billion in the 2014 calendar year, up 8.6 percent on the previous year. According to IHS,
+revenue recorded by Infineon (including International Rectifier) increased by 13.8 percent in
+the same period from US$6.212 billion to US$7.072 billion.
+41%
+Based on the strong earnings performance in the 2015 fiscal year and Infineon's positive
+business outlook, a proposal will be made to the Annual General Meeting to be held on
+February 18, 2016 to pay a dividend of €0.20 per share, an increase of 2 cents compared to
+the previous year.
+Automotive: €2,351 million
+17%
+0%
+11%
+31%
+Revenue by segment in the 2015
+fiscal year
+G 03
+3 Power Management & Multimarket
+4 Chip Card & Security
+35%
+2 Industrial Power Control
+24%
+20%
+1 Automotive
+CCS4
+PMM3
+IPC²
+ATV¹
+Revenue growth of the
+individual segments in the 2015 fiscal
+year compared to the previous year
+G 02
+> Good performance enables higher dividend
+> Strong revenue growth in all segments;
+Segment Result Margin better than expected
+> Acquisition of International Rectifier closed;
+substantial progress made with integration
+Successful 2015 fiscal year
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+28
+27
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+and strategy
+#3
+Industrial Power Control: €971 million
+Power Management & Multimarket:
+€1,794 million
+Chip Card & Security: €666 million
+Other Operating Segments,
+Our dividend policy is aimed firstly at having our shareholders participate appropriately
+in growing earnings and secondly to at least keep the dividend at a constant level in times
+of flat or declining earnings and/or negative free cash flows.
+Planned dividend increase of 2 cents
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+50
+30
+29
+P see page 248
+P see page 91
+P see page 248
+P see page 91
+P see page 90
+P see page 139
+P see page 90
+P see page 128
+Developments in the semiconductor industry
+The net cash position (see the chapter "Internal Management System" for definition) decreased
+by 90 percent to stand at €220 million at the end of the 2015 fiscal year (September 30, 2014:
+€2,232 million). This significant decrease was attributable to the exceptional cash outflows
+referred to above, in particular the purchase price for International Rectifier. Based on these
+figures, Infineon's capital structure target in terms of the net cash position (see note 25
+"Capital management" to the Consolidated Financial Statements for the 2015 fiscal year) was
+again achieved.
+The gross cash position (see the chapter "Internal Management System" for definition) totaled
+€2,013 million as of September 30, 2015, a decrease of 17 percent compared to the previous
+year's reported figure of €2,418 million. In addition to the negative free cash flow of €1,654 mil-
+lion described above, the gross cash position was also reduced by the dividend payment
+of €202 million for the 2014 fiscal year and by payments totaling €140 million relating to the
+Qimonda insolvency reported as net cash used for discontinued operations. The main items
+working in the opposite direction were net debt raised totaling €1,567 million as well as
+positive free cash flow from continuing operations (adjusted for exceptional items).
+The Return on Capital Employed (ROCE) in the 2015 fiscal year amounted to 12.8 percent and
+was thus well down on the previous year's figure of 20.3 percent. The decrease was mainly
+due to the acquisition of International Rectifier and the related higher level of capital employed.
+This effect could not be offset by the income from continuing operations after taxes which
+increased from €497 million to €664 million in the 2015 fiscal year. (For a definition of, and
+details relating to, the calculation of ROCE, see the chapters "Internal Management System"
+and "Review of financial condition".)
+Free cash flow from continuing operations (see the chapter "Internal Management System"
+for definition) totaled a negative amount of €1,654 million in the 2015 fiscal year, a deteriora-
+tion of €1,971 million compared to the €317 million generated one year earlier. The sharp
+reduction mainly related to the purchase of International Rectifier (€1,869 million). Further-
+more, free cash flow from continuing operations was reduced by €178 million due to payments
+to the insolvency administrator for the settlement of the dispute over the continuation of
+the right to use Qimonda patents less the subsequent proceeds from the sale of the Qimonda
+patents as well as the payment to the EU Commission for the fine imposed in the chip card
+antitrust proceedings. Excluding these exceptional items, free cash flow from continuing
+operations in the 2015 fiscal year totaled €393 million, a year-on-year improvement of 24 per-
+cent. Net cash provided by operating activities amounting to €957 million thereby exceeded
+additions to property, plant and equipment and intangible assets totaling €785 million
+(2014: €668 million).
+Basic and diluted earnings per share for the 2015 fiscal year amounted in each case to €0.56
+and were therefore 17 percent higher than the previous year's figure of €0.48 (also in each
+case). Adjusted earnings per share (diluted) improved year-on-year from €0.48 to €0.60
+(see the chapter "Review of results of operations" for details of the calculation of adjusted
+earnings per share).
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Successful 2015 fiscal year
+Despite the high level of expenses incurred in conjunction with the acquisition of International
+Rectifier, net income increased in the 2015 fiscal year, thanks to the sharp rise in revenue
+as well as positive tax effects of €209 million (see the chapter "Review of results of operations"
+P page 128) and amounted to €634 million in the 2015 fiscal year, an increase of 19 percent
+compared to the previous year's figure of €535 million.
+Net income and earnings per share up; free cash flow, return on capital employed
+and cash position down, mainly due to acquisition-related factors; significant capital
+structure targets nevertheless achieved
+The Segment Result for the 2015 fiscal year totaled €897 million, surpassing the previous year's
+figure of €620 million by 45 percent. The Segment Result Margin came in at 15.5 percent
+(2014: 14.4 percent). Infineon thereby exceeded the target set for the 2015 fiscal year. The
+Segment Result Margin of International Rectifier's business units increased significantly com-
+pared to the three-month period ended December 31, 2014, the last quarter prior to the
+acquisition.
+Revenue up sharply on the back of organic growth, currency effects and acquisition
+of International Rectifier, resulting in better-than-expected Segment Result Margin
+Infineon generated revenue of €5,795 million in the 2015 fiscal year, a 34 percent increase
+on the previous year's figure of €4,320 million. The sharp rise primarily reflects strong sales
+performances across all segments. Of particular note is the organic growth of 35 percent
+achieved by the Chip Card & Security segment. Infineon's strong revenue performance was
+also influenced by currency factors, most notably the appreciation of the US dollar against
+the euro (see the chapter “The segments" P page 52 for further details on the sales performance
+of the individual segments). The higher revenue was also partly due to the acquisition of Inter-
+national Rectifier, which contributed €682 million to the revenue figure in the 2015 fiscal year.
+are already reaching grid parity. The next challenge we will then have to face with respect to
+the efficient use of renewable energy is the intermediate storage of electric energy, since electric
+power generation may fluctuate significantly during the day and over the year. Here too,
+power semiconductors will play a crucial part in providing the solution.
+Following a 99.5 percent majority vote by the shareholders of International Rectifier in
+November 2014 and receipt of approval from the responsible authorities in January 2015, the
+acquisition of International Rectifier was closed on January 13, 2015. Since then, excellent
+progress has been made in terms of integration. The vast majority of International Rectifier's
+former business was allocated to the Power Management & Multimarket segment, while
+smaller parts were also allocated to the Automotive and Industrial Power Control segments.
+Infineon closes deal to acquire International Rectifier
+Corporate and Eliminations: €13 million
+69%
+Despite the decrease described above, our capital structure target in terms of the
+gross cash
+position - namely maintaining a gross cash position of between 30 and 40 percent of revenue
+(see note 25 "Capital management" to the Consolidated Financial Statements for the 2015
+fiscal year) - was also maintained for the 2015 fiscal year. The actual figure at the end of the
+reporting period was 35 percent of revenue.
+6.4%
+2013
+1.6%
+Shipment Forecast", September 2015
+G see glossary, page 295
+Opportunities, objectives, strategy
+The challenges of the future are huge - but so too are the opportunities for Infineon. The path-
+ways described show how we can contribute to tackling these challenges. Our projects and
+solutions enable our customers to develop appropriate systems and offer them to consumers
+at affordable prices.
+As a profit-making enterprise, we are committed to creating value for our customers - and
+therefore also for our employees and shareholders. We understand how technical systems are
+becoming increasingly efficient through the use of semiconductors and providing solutions
+for the world of today and the future.
+Infineon differentiates itself most from the competition by offering many alternatives to solve
+challenges, first and foremost with market-leading technologies and products that offer added
+value. This has been the firm basis of our success in recent years.
+By adopting the strategic "Product to System" approach, we have taken the next step by looking
+at challenges from a new perspective, by assessing the factors that determine the success of a
+customer's product and its end application. System integration has always been the recipe for
+success in the world of semiconductors. In the past, we deployed individual transistors, simple
+ICs, software and sensors. Nowadays, all these components are integrated in a single chip.
+However, we are looking not only at how to achieve even greater integration, but also at how
+our customers' products can become better and cheaper, and at the challenges customers will
+have to face in the future. And once one system has been integrated, it is, of course, time to
+think about the integration of an even more complex system.
+To achieve success in the semiconductor market and a sustained increase in enterprise value,
+it is therefore no longer sufficient to differentiate oneself merely in terms of technological
+leadership. It is also necessary to focus on the right markets and be sufficiently well positioned
+in these markets to achieve economies of scale.
+With our segments, Automotive, Industrial Power Control, Power Management & Multimarket,
+and Chip Card & Security, we are operating in the most rapidly growing semiconductor target
+markets, in which we hold leading positions. Further details concerning the growth drivers for
+our four segments are provided in the next chapter.
+Our fundamental aim is to achieve a leading market position in each segment. The associated
+benefits from economies of scale enable us to make the necessary investments to maintain
+competitiveness in the long term. Only sufficient expertise in the respective segments places
+us in a position to develop the right system solutions and provide support for our customers.
+The acquisition of International Rectifier fits perfectly with the strategic principles stated above.
+The technologies and products offered by International Rectifier largely complement Infineon's
+existing portfolio. Combining the research and development activities and technologies of the
+two organizations will enable us to achieve continued high levels of growth and offer our cus-
+tomers as many new solutions as possible.
+To achieve a sustained increase in enterprise value, we naturally focus our attention in partic-
+ular on continually improving profitability. Our manufacturing strategy plays a key role in
+achieving this aim. In principle, we only wish to manufacture products ourselves if doing so
+gives us an advantage in terms of cost or differentiation. Our worldwide unique 300-millimeter
+thin-wafer manufacturing capability plays a crucial role in this respect.
+Our aim is to rely on multiple strengths: technological leadership, differentiating manufacturing
+technology, applications know-how and system understanding in our relevant target markets.
+We want to focus on our customers' success. We also wish to act as an agent of change, or in
+other words to change existing markets by means of innovation and/or to create new markets.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Energy and resource efficiency: In contrast to the situation many years ago, technologies are
+available today that enable electric power to be generated cost-efficiently from renewable
+sources. The aim is grid parity: If the generation of one kilowatt hour of electricity using a wind
+turbine or a solar module is no more expensive than through a gas- or coal-fired power plant,
+subsidies and feed-in tariffs are no longer necessary. Industry will then convert to renewable
+energy for both ecological and economic reasons. The first wind and solar farms in the USA
+Solutions
+Efficient use of global resources: The pivotal question is how to cope with increasing demand
+for resources without negatively impacting the climate. The current trend in climate change
+needs to be curbed or even reversed. Economic activity to date has put the climate and our
+environment under threat. In the absence of a further reduction in greenhouse gases, most
+notably of CO2 emissions, and in the absence of even more efficient vehicles, appliances and
+machinery going into the future, the constantly growing demand for energy cannot be cov-
+ered sustainably in either economic or ecological terms. Electricity and its consumption play a
+key role in this respect. The demand for electricity is continually growing, not only in devel-
+oped countries, but also an increasing number of households are being connected to the
+power grid, notably in emerging economies. Furthermore, electricity requirements per house-
+hold are also rising with better standards of living: first the fridge, then the TV, then the
+gaming console. In the absence of greater efficiency, the demand for electric power will grow
+exponentially. Recognizing that the best energy resource is energy-saving, boosting efficiency
+in the conversion of electric power makes a decisive contribution. Naturally, apart from saving
+energy, an increasing amount of energy needs to be generated from renewable sources rather
+than from fossil fuels.
+Not only machines, but vehicles too are becoming increasingly connected. They will commu-
+nicate both directly with one another (car-to-car) and with centralized systems (car-to-infra-
+structure). Vehicles will be able to contact control systems which, in turn, provide a real-time
+picture of the current traffic situation. It is therefore possible, for example, to be warned of an
+accident on the planned route, of a traffic jam just around a bend, or of extreme conditions
+such as black ice. Above all, however, active traffic management will improve the flow of traffic,
+which means that more vehicles will be able to move more quickly along the same roads and
+therefore produce fewer CO2 emissions, entirely in keeping with our motto "more out of less".
+The increasing connectivity of the machinery, appliances and IT systems operated by our
+respective business partners - in short, the “cyber-physical systems" - requires secure data
+exchange. The Industrial Internet will only succeed if process know-how can be reliably pro-
+tected from hacking attacks. Secure transmission of product- and manufacturing-related data
+throughout the supply and value-added chain within an open architecture is therefore of prime
+importance. The Industrial Internet will then enable new business models that extend across
+various industrial sectors. Confidence is therefore one of the most important prerequisites for
+the digitalization of the economy and the digital lifestyle in highly developed countries.
+Linking the real with the digital world will fundamentally change industrial processes.
+Semiconductors are the interface between the real and the digital worlds. Without semi-
+conductors, there would be no digitalization. Semiconductors are therefore the most
+important source of increased productivity and improved quality of life.
+The transformation towards more digital data in industry and the connectivity of billions of
+appliances is a radical change, possibly unequalled since the Industrial Revolution of the 18th
+and 19th centuries. The Chinese Government, for example, has adopted the "Made in China
+2025" program, , in which it has assigned top priority to the digitalization of its economy under
+its industrial policy. Likewise, Europe, and especially Germany, is pressing ahead with the
+value-added networks based on the Industrial Internet (Industry 4.0), whereby the aim is to
+achieve higher productivity through optimum capacity utilization, while keeping the use of
+resources and inventory levels to a minimum.
+G see glossary, page 292
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+34
+Finances
+Group strategy
+Rise of productivity, digitalization and connectivity: To raise living standards for as many
+people as possible, it is also necessary to boost productivity, in other words to make "more" out
+of "less". This is relevant not only for developed countries, but also for emerging economies,
+first and foremost China. Unit labor costs - measured in labor costs in relation to productivity -
+play an important role in terms of an economy's international competitiveness. Rising wages
+must be compensated by corresponding productivity advantages in order to guarantee compet-
+itiveness. Greater productivity is partly achieved through increased levels of automation.
+Productivity improvements are not limited to labor costs, but also influence the amount of
+the materials and energy consumed. These aspects are also particularly important for us.
+The digitalization process will largely determine what life, work and manufacturing will be
+like in the developed regions going forward. In tandem with continually advancing connectivity,
+further steps toward globalization will be achieved and productivity increases facilitated.
+Digitalization is also making its mark in industries in countries that previously had a low level of
+automation and relied on low-cost human labor. Nevertheless, rising wage costs are also forcing
+these countries to introduce structural changes. Digitalization can boost both productivity
+and efficiency and bring these countries a few steps further forward in the value-added chain.
+Sustainable mobility, both within conurbations (by metro and tram) and between conurbations
+(by high-speed and interurban trains), is the driving force for expanding public transportation
+systems. In addition to rail traffic, new concepts for private transportation are a must. The mere
+development of the road network generally fails to keep pace with the volume of traffic. Traffic
+density is increasing and so is the time spent in traffic jams as well as the risk of accidents.
+Easing the strain on drivers in monotonous stop-and-go traffic conditions is a highly desirable
+aim. Furthermore, 1.2 million people per year die in traffic accidents. It is a concern in all
+countries to bring about a steady decrease in the number of accident victims.
+Industrialization and urbanization: A consequence of industrialization is that more and more
+people are moving from rural areas to cities in order to reap the benefits of urban living and
+working. Today, more than half the world's population lives in towns and megacities. Each of
+these metropolitan areas is the growth engine for an entire region as well as a center of
+productivity. All metropolitan regions are, therefore, confronted with the problem of ever-
+growing traffic volumes on both road and rail.
+Source: IHS Inc., "Worldwide Semiconductor
+1 Source: IHS Inc., "Smart Cards Semiconductors",
+August 2015
+(0.2%)
+0.5%
+Factory automation and productivity increase: Approximately two thirds of industrial electric
+power consumption worldwide is attributable to electric drives. The scope for leveraging
+savings through improving efficiency is, therefore, quite substantial. One option to reduce the
+amount of energy consumed by an electric motor is to control its rotational speed electronically,
+thereby permitting low-loss adjustment of the output power to suit demands. Typical applica-
+tions here are pumps and fans. Market penetration of electronic motor controls for variable
+speed drives is, therefore, set to increase.
+We are at the dawn of a new, very exciting era of industrial automation, given the recent
+giant technological strides. Whereas robots have sometimes replaced people only for heavy,
+monotonous work, they are now becoming more sensitive and can therefore "feel" and carry
+out assembly work with haptic capabilities that otherwise only humans possess. They are also
+capable of responding to gestures. Moreover, robots can learn whilst "watching". A decades-old
+vision is, therefore, rapidly becoming reality, as practically anyone can use a robot and assign
+tasks to it. Man and machine will, in future, literally work "hand in hand". Robots will assist us
+not only in manufacturing, but also in nearly all aspects of our daily lives - a boon for the quality
+of life, especially for older people.
+Concepts for private transport: Sustainable, safe mobility is the aim of private transport
+going forward. The electrification of both main and auxiliary power units, such as steering,
+pumps and fans, enables output to be adjusted to suit demand, thereby increasing vehicle
+efficiency and reducing CO2 emissions.
+35
+For mid-range and premium carmakers, even these optimizations will not be sufficient to
+achieve emission targets. For this reason, a considerably larger number of vehicles will need
+to be fitted with a hybrid or purely electric drive system.
+Rear-end collisions caused by lack of concentration can be significantly reduced through
+technical assistance. Automated driving in traffic jams on highways or in stop-and-go conditions
+in urban areas during peak traffic hours is therefore high up on the wish list of many drivers, as
+it enables them to make better use of their time.
+The best argument in favor of computerized assistance systems is their speed. In traffic, an
+autonomous braking system reacts to an obstacle considerably faster than a human being,
+especially if that person is lacking concentration or experience. The long-term objective of
+automated mobility therefore also contributes towards improving the quality of urban life, with
+fewer accidents, improved traffic flow and far fewer traffic jams. Enhanced safety therefore
+also means greater physical comfort due to less traffic noise and lower particulate matter
+levels. Furthermore, automated driving also enables older people to remain independent for
+longer. A key point is that improved safety on roads benefits all road users, including cyclists
+and pedestrians.
+Driver-assisted systems will be launched in several stages on account of the more stringent
+requirements and associated complexity. Today, mass-produced vehicles already feature lane
+departure warning systems, adaptive cruise control, intelligent braking systems and parking
+assistance features. These vehicles are therefore partly automated. The next step is a higher
+degree of automation, in which the car takes control in certain situations up to a certain speed.
+The final step is full automation, in which mode the car is completely driverless. We can envisage
+that one day a fully automated car, acting as a driverless taxi, will pick up people and auto-
+nomously take them to their desired destination.
+Group strategy
+36
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+G06
+Compound annual growth rate
+The world population continues to grow. According to the World Health Organization's fore-
+casts, some nine billion people will be living on Earth in 2050. People everywhere are striving
+to improve their living standards, giving rise to a number of challenges, such as growing
+industrialization and urbanization, and the need for both a significant increase in productivity
+and the highly efficient use of our dwindling global resources.
+of the main semiconductor
+target markets, 2014 to 2019
+Automotive
+9.6%
+5.6%
+Chip
+Card ICs¹
+5.4%
+Total Semicon-
+2.3%
+ductor Market
+Communi-
+1.2%
+cations
+Data
+Processing
+Consumer
+Industrial
+#14
+Global changes and the associated challenges
+We can advise our customers in their endeavors to tackle challenges and propose solutions
+that will bring additional success. We reduce development costs for our customers and shorten
+the time-to-market for their products. “Product to System" is therefore a strategic concept,
+which we are employing to maximize the opportunities to improve existing products and to
+identify and subsequently enter markets with completely new products. In the best case,
+our products can help open up markets that are new even for our customers, thus creating
+added value for them.
+21%
+23%
+23%
+22%
+23%
+20%
+18%
+7%
+7%
+6%
+12%
+11%
+13%
+100%
+100%
+100%
+Infineon revenue by region
+G05
+Industrial structures in China and Germany differ considerably. The German industry is charac-
+terized by strong demand from the automotive and industrial electronics sectors, whereas
+the Chinese market is dominated by electronic manufacturing services, which focus mainly on
+supplying electronics products, mostly to Western customers. This business model plays a
+significant role in the fields of durable consumer goods on the one hand and information and
+telecommunications sector-related products such as servers, PCs, notebooks and cellular
+phones on the other.
+The growing importance of China is also reflected in the regional spread of Infineon's revenue.
+China became Infineon's best-selling market for the first time in the 2014 fiscal year. Revenue
+again increased at an above-average rate in the 2015 fiscal year, partly due to China's com-
+paratively high growth rate, but even more significantly due to the contribution made by
+International Rectifier. With a figure of €1,337 million, China accounted for 23 percent (2014:
+20 percent) of Infineon's revenue. Germany came in well behind in second place with revenue
+of €942 million, corresponding to a market share of 16 percent (2014: 20 percent).
+The picture is very different, however, when it comes to the regional split of semiconductor
+sales. China has been the largest market for a number of years, accounting for a share of
+41.2 percent (US$146 billion) in the 2014 calendar year. During the same period, 13.3 percent
+(US$47 billion) of all semiconductors were sold in Europe.
+Companies based in the Asia-Pacific region generate 27.1 percent of global semiconductor
+revenue. Korea is the most important Asian country with 16.5 percent of the worldwide
+production, followed by Taiwan with 6.5 percent. China (including Hong Kong) only plays a
+minor role with 2.6 percent.
+More than half of global semiconductor revenue (53.2 percent) is generated by US companies.
+Japanese companies account for a further 11.5 percent. Only 8.2 percent of global semicon-
+ductor revenue is generated by companies based in Europe. Infineon is Europe's second-largest
+semiconductor manufacturer, just behind STMicroelectronics.
+2.0%¹
+#10
+1.2%
+#18
+1.5%
+#14
+20%
+16%
+20%
+19%
+33
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Today's success is founded on past decisions. And now, we aspire to shape tomorrow's success.
+Achieving this aim entails identifying opportunities, going for them and successfully capitalizing
+on them. This can be achieved either by continuing to apply the concepts that have brought
+us success in the past, or by adopting new approaches based on well-proven products or new
+cutting-edge technologies. With our strategic approach "Product to System", we are seeking
+to extract the maximum benefit from our broad portfolio of technologies and products. This
+strategic approach enables us to put our wide-ranging know-how in product and process
+technologies to even better use on the market. Thinking in terms of "system" helps us under-
+stand the factors that fuel the success of our customers and their markets, and enables us to
+generate added value as well as identify new market trends at an early stage.
+Strategic "Product to System" approach
+These changes represent major challenges for society, but also provide us with excellent
+opportunities to achieve growth and success. Before we address the opportunities, we would
+like to explain how we aspire to be successful in this rapidly changing world.
+> Technological changes due to connectivity and digitalization
+> The associated demand for resources and
+> The demographic trend
+In the coming decades we will be confronted with serious global changes:
+The key questions we ask in our mission statement are "What is our contribution?" and "How
+can we achieve success?" In this respect, these questions address fundamental issues, such
+as megatrends, changes to the competitive environment, innovations, customer expectations
+and political trends, and explain what we are focusing on. Our aim is to apply our products
+and our business model to find the best solutions for our customers. Long-term success requires
+constant reorientation to ensure our products meet customer requirements as effectively
+as possible or to change markets through innovation. This can only work if we create a frame-
+work that allows our staff to develop their full potential and thus ultimately contribute to
+Infineon's success.
+We design our products with the aim of contributing towards a better life. The requirements
+for a "better life" may differ considerably and result from the varying conditions that prevail
+throughout society as well as from the expectations of individuals within it. In developed
+countries, the self-parking car or the smartphone may represent convenience. In emerging
+economies, the availability of solar power may lead to an improvement in living conditions.
+Young people find it easy to use new electronic products, whereas the older generation is often
+wary of them. For some, the latest trends must be obtainable at an affordable price, while
+others want technology which assists them in some way and is easy to use. With the help of
+modern assistance systems, such as applications for electronically controlled lighting and
+shutters, domestic robots, robotic nurses and driver assistance systems in vehicles, it is possible
+to retain a great deal of independence in old age.
+Guiding principles
+While the strategy Infineon pursues in its core markets remains unchanged, the new strategic
+approach "Product to System" introduced in the 2013 fiscal year is already bearing fruit. Based
+on this, we devised a new mission statement from an overall perspective. It picks up on the
+underlying approach previously followed and builds on it in the light of future requirements.
+Our aspiration is to develop products that make life easier, safer and greener.
+Business strategy
+With its broad product portfolio, Infineon is looking at different ways to find solutions that will
+help bring about the changes described above. These changes are of the utmost relevance and
+are irreversible. Precisely here lies the economic potential for Infineon. Microelectronics from
+Infineon are the key to a future worth living - achieved with products that improve the quality
+of life and help preserve natural resources. We fully intend to live up to this high aspiration.
+Group strategy
+32
+31
+excluding Japan)
+(excluding China,
+Asia-Pacific
+Germany
+Americas
+Middle East, Africa
+Japan
+China
+Europe (excluding
+Germany),
+2015
+2014
+19%
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+34
+2006
+710
+in US$
+338
+26.5%
+704
+ill
+plug-in pure electric
+vehicle
+internal
+combustion hybrid
+engine vehicle
+vehicle
+Source: Strategy Analytics, "Automotive Semi-
+conductor Demand Forecast 2013-2022", June 2015
+Apart from the total number of vehicles produced, their technical features and therefore
+the average semiconductor content per vehicle plays an important role in demand for semi-
+conductors. Individual mobility is no longer conceivable without sustainability, i.e. the lowest
+possible pollution of the environment and the highest possible level of safety for all road
+users. Together with the growing popularity of vehicle connectivity, a number of trends are
+emerging that are continually increasing the number of semiconductors used in each car:
+Reduction of CO2 emissions: Legislators worldwide have adopted regulatory targets aimed at
+reducing CO₂ emissions in various regions and countries. For example, a requirement adopted
+by the European Commission in October 2013 stipulates an average reduction of CO2 emissions
+per car fleet from currently 130 grams of CO2 per kilometer to 95 grams of CO2 per kilometer
+by the year 2021. These targets are unlikely to be met solely by improving the efficiency of
+the conventional combustion engine. In order to meet these targets, the electrical consumers
+installed in vehicles need to be made more efficient. Hydraulic, mechanical and electrome-
+chanical parts need to be replaced with more efficient electronic and therefore semiconductor-
+based solutions.
+Furthermore, it is essential to increase the number of electric and hybrid vehicles on the
+road, in order to lower the fleet averages of many automobile manufacturers to meet required
+target levels. Hybrid and electric vehicles require a far greater number of semiconductors than
+conventional models. Whereas the average vehicle powered by a conventional combustion
+engine is currently equipped with semiconductors worth around US$338 (approximately €300),
+average hybrid and electric vehicles have around US$700 (approximately €625) worth of semi-
+conductors installed in them respectively. Some three quarters of the additional value of
+semiconductors consists of power semiconductors. These components are crucial for operating
+powerful electric motors.
+Average semiconductor content
+of various types of vehicles
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Group strategy
+Exhaust gas testing procedures under more realistic conditions are currently the subject of
+intensive general debate. If legislators decide on regulations to introduce new, more realistic
+testing procedures, it will mean an implicit tightening of CO2 reduction targets, which would,
+in turn, additionally drive demand for semiconductors.
+Safety and driver assistance systems: An encouraging development is generally noticeable
+throughout the developed economies: The number of traffic fatalities has been steadily decreas-
+ing for many years and is now stagnating at a low level. This general trend is mainly thanks to
+the widespread use of safety systems. However, passive safety systems are gradually reaching
+the limits of their effectiveness. Firstly, their technical potential is practically exhausted and
+occupant protection has meanwhile achieved a very high standard. Secondly, passive safety
+systems have already reached a high degree of market penetration, even in light vehicles.
+The next major growth market is that of active safety systems, which are capable of either
+completely avoiding an accident or at least significantly minimizing its negative consequences
+through active intervention. Prime examples of active safety systems are pedestrian recogni-
+tion, adaptive speed control or blind spot detection. Although these functions are mostly only
+installed in premium-class vehicles at the present time, they are becoming increasingly com-
+mon in the medium range, too.
+Active safety systems are being expanded to create advanced driver assistance systems (ADAS),
+which are becoming ever more important in road safety because of the considerable help they
+provide to motorists while driving. For example, they assist in critical situations or even correct
+a driving error if necessary, thereby reducing the risk of an accident. If a vehicle is capable of
+semi- or even fully autonomous driving and relieves the driver accordingly, it also improves
+driving comfort, enabling drivers to make better use of the time saved to work, for entertain-
+ment, or simply to relax.
+A vehicle fitted with ADAS can also be viewed as a kind of robot, as a computer-controlled
+machine that reacts extremely quickly and precisely to external influences. The "fail safe"
+performance of the installed components and subsystems is therefore of utmost importance.
+They need to be continually available and for that reason the safety-critical components
+such as sensors, microcontrollers and power semiconductors are designed with multiple
+redundancy, thus fueling demand for semiconductors. One good example is the magnetic
+field sensor pictured on the front page of this Annual Report, which in principle contains two
+sensors that function independently of each other.
+Connectivity, data and IT security: The era of vehicle connectivity has begun. Whether for
+internet services, navigation purposes, traffic reports, the automatic recording of toll fees,
+when updating software at a vehicle service center and particularly for eCall systems, there is
+a constant exchange of communication between the vehicle itself and a communication net-
+work (car-to-infrastructure). Moreover, both semi-autonomous and fully autonomous driving
+require supportive communication between vehicles (car-to-car).
+This connectivity, however, also entails a certain risk, as it offers hackers the opportunity to
+intervene in data traffic within the vehicle and thus manipulate certain functions. Communi-
+cation between the various control units, including safety-critical functions such as brakes
+and steering systems, needs to operate with the utmost safety, protected from unauthorized
+access. The safety of the vehicle and its occupants on the one hand and IT security on the other
+hand can no longer be viewed as separate issues. Vehicles are rapidly becoming computer
+networks on wheels, again generating an increased need for data and IT security.
+We predict that by the end of this decade every new car produced will be equipped with
+augmented data and IT security features. Infineon sees itself ideally positioned to handle this
+development, as we have a wealth of experience in the fields of data and IT security stemming
+from the expertise of our Chip Card & Security segment. Based on this know-how, our range of
+products includes security solutions for both vehicle-integrated microcontrollers and discrete
+security technology that suit all relevant vehicle applications.
+40
+40
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Summary for the Automotive segment:
+39
+G 09
+Source: IHS Inc., "Annual Light Vehicle Production 2007-2020", October 2015
+1 CAGR = Compound Annual Growth Rate
+93.6
+6.6
+90.3
+87.4
+87.8
+5.8
+19.0
+17.0
+8.7
+9.2
+22.6
+12.6
+20.2
+29.6
+15.7
+22.9
+2014
+2015 e
+2016 e
+2017 e
+2018 e
+2019 e
+2020 e
+Europe
+Asia-Pacific (excl. China, excl. Japan)
+China
+Japan
+North America
+Other countries
+The number of electronic applications in vehicles is continually growing, due to the fact that
+around 80 percent of innovations are based on electronics. According to experts, this figure is
+unlikely to change in the foreseeable future. The total number of technical features | per vehicle
+is increasing perceptibly across all regions. Innovative solutions for security and comfort func-
+tions typically begin in premium vehicles and then migrate to the mid-range and compact
+classes, causing semiconductor content per vehicle to rise. Based on these factors, we expect
+our business in the field of semiconductors for automotive electronics to grow by an average
+of around 8 percent per annum.
+97.1
+Growth drivers for the Industrial Power Control segment
+The products developed and manufactured by the Industrial Power Control segment have an
+impact along the entire value-added chain of electric power: generation, transmission and
+consumption. In the opening section "Business Strategy" of this chapter we demonstrated
+how energy efficiency contributes towards greater productivity and efficiency in order to meet
+the global challenges of modern times. It is precisely these factors that are driving growing
+demand for our power semiconductors.
+The target applications in detail:
+AC-DC conversion: Growth in the field of power supply depends on performance, but even
+more from growth in the number of devices sold. For several years now, servers have experi-
+enced the highest growth in unit numbers and that is likely to remain so for the foreseeable
+future. Demand is being driven by the creation and expansion of data centers as well as the
+storage of all kinds of data on the internet. The demand for computing power and storage
+capacity is being primarily driven by the Internet of Things, the Industrial Internet and social
+networks. Moreover, we see opportunities to grow in the field of compact adapters for tablets
+and lightweight notebooks (“portables"). However, we do not expect growth with PCs and
+notebooks during the next few years.
+In addition to growth in unit numbers, the increasing scale of semiconductor content in appli-
+cations is also helping us grow, driven by demand for smaller, lighter, more efficient devices.
+Many years ago we made a major step possible with the introduction of our CoolMOSTM
+high-voltage power transistors (G) see glossary, page 290). Now, however, a new, innovative leap is
+emerging in the field of adapters for computers, tablets and televisions with the introduction
+of new control concepts and the utilization of new types of semiconductor materials.
+The transition from analog to digitally controlled power supply is a great step forward in terms
+of boosting efficiency. "Digital Power Management” is the buzzword here - which we call
+".dp digital power™M 2.0”. A large part of the intellectual property and know-how, and therefore
+an increasing contribution to added value, is based on the complex control ICs. We cover the
+power range between 30 and 300 watts with our ".dp digital powerTM 2.0” family of products,
+thereby addressing markets not only for computers and consumer electronics, but also for
+LED applications.
+True to our strategic approach "Product to System", we work closely together with our custom-
+ers - primarily in order to better understand their needs, but also with the aim of seeing
+potential for innovation that is either unknown to the customer or requires major changes in
+concept. This approach enables us to identify the best solution in terms of size, costs, efficiency
+and power density. Infineon is one of the few semiconductor manufacturers that develops
+and produces control ICs and driver ICs as well as power transistors in its own right. In future,
+increasingly fine-tuned adjustment between driver ICs and discrete power transistors will be
+necessary. Future generations of power transistors will display different physical properties,
+whether through further miniaturization or new semiconductor materials such as gallium
+nitride (GaN). Driver ICs therefore need to be developed to suit the power transistors if the
+system as a whole is to achieve maximum efficiency. Together with its special packaging
+technology for power semiconductors, Infineon produces the entire range under one roof.
+We regard this fact as a genuine advantage for our customers.
+In the field of consumer electronics, we focus on providing our customers with differentiating
+features, such as flat-screen televisions that are made possible by our extremely compact
+power supply units, which are still based on silicon components today. They will become even
+more compact in future through the use of GaN-based components (see paragraph on Gallium
+nitride in the chapter "Research and development”). GaN-based components enable faster
+switching with fewer losses, which decisively improves the overall efficiency, but above all result
+in a significant size reduction, particularly in coils and condensers, which determine the overall
+dimensions. In keeping with our "Product to System" approach, we have agreed on the first
+close strategic cooperations in the field of flat-screen televisions.
+G10
+Expected growth of the server
+market worldwide
+in millions of units
+CAGR (2014-2018):
++4.6%
+11.0 11.3
+11.7
+12.1
+Group strategy
+10.1
+2015e 2016e 2017e 2018 e
+1 CAGR Compound Annual Growth Rate
+Source: Gartner, "Forecast: Servers, All Countries",
+September 2015
+G see glossary, page 291
+P see page 76 f.
+44
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+G see glossary, page 290
+Battery-powered screwdriver with
+brushless DC motor
+J
+G see glossary, page 293
+G11
+Development of Infineon's market
+share for silicon microphone ICs
+from 2006 to 2014
+8.8%
+2014
+43
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Apart from its power components, Infineon also specializes in components which potentially
+provide significant differentiation in the fields of mobile devices and cellular network infra-
+structure. We focus on areas where we can offer our customers significant added value with
+our high degree of expertise, mostly in technology, but also in terms of application.
+We generate around one third of segment revenue through long-term infrastructure projects,
+mostly driven by multi-year government programs that are independent of changing eco-
+nomic conditions. Somewhat less than half of revenue is attributable to the capital goods
+industry, which is impacted to a much larger extent by macroeconomic conditions. We earn
+the remainder of our revenue in the consumer goods industry, which is primarily affected by
+consumer spending.
+Infrastructure
+Traction systems: Sustainable and optimally connected mobility within metropolitan areas as
+well as between cities is one of the key topics of the 21st Century. Fast, reliable public mass
+transit systems are becoming increasingly decisive factors determining standards of living and
+competitiveness in many regions and cities worldwide. Our components are deployed in both
+city and suburban rail systems, trams and metro trains, but also in high-speed trains.
+China has meanwhile become one of the largest traction markets in the world, operating
+high-speed trains, interurban trains and metro systems. We also see an upswing in the market
+for train systems in other parts of Asia, where there is currently a far greater demand for metro
+and regional trains than for high-speed trains. Other growth markets are South Africa, South
+America and the Middle East. With Bombardier Transportation, CSR Times and Siemens, our
+customer base includes some of the biggest traction manufacturers worldwide.
+Renewable energy: For both ecological and economic reasons, the growing demand for electric
+power can no longer be satisfied with fossil fuels to the degree seen in the past. For this reason,
+Europe, the USA, China and Japan have defined expansion targets for renewable energy with
+the aim of reducing CO2 emissions to their various targeted levels over the coming decades.
+At the G7 summit held in Elmau (Germany) in early June 2015, the seven leading industrialized
+nations pledged to completely forego the use of oil, gas and coal in the electric power, heating
+and transportation sectors by the end of the century, with the aim of reducing CO2 emissions to
+a net rate of zero in these sectors. By the year 2050 they are scheduled to be 40 to 70 percent
+lower than in 2010. The plan is to generate electric power exclusively from renewable sources.
+An all-embracing climate protection alliance is due to be forged at the climate summit to be
+held by the United Nations in Paris (France) in early December 2015.
+Infineon is benefitting from the increasing number of wind farms and photovoltaic power
+plants, as per gigawatt of electricity generated, these systems require a multiple of the number
+of power semiconductors otherwise needed for conventional power plants. Unlike coal, gas
+or nuclear power plants, wind farms and photovoltaic systems do not have turbines that need
+to perform smoothly to generate a constant 50-hertz alternating current that can be directly
+fed into the grid. The effort involved in converting the electrical energy is greater.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+41
+Wind: We expect to see sustainable growth in the field of wind power in the medium and long
+term. Both China and the USA are promoting this technology. The replacement of older, less
+efficient wind turbines with more powerful, state-of-the-art versions, known as repowering, is
+set to continue for a long time to come. Many years ago, the first wind turbines were installed
+at windy locations and generated around 100 kilowatts of electricity. Now, however, they are
+being replaced by new models that generate around three megawatts. The volume of power
+semiconductor content installed increases with turbine output.
+In first-time installations too, increasingly large generators are meanwhile being installed,
+which means a greater number of semiconductors are required per wind turbine. This devel-
+opment is particularly evident in China, where we have been cooperating with the Chinese
+wind turbine manufacturer Goldwind since 2011. Whereas most turbines used to be installed
+with a maximum output of 1.5 megawatts, a growing number of new systems now generate
+two to three megawatts.
+Photovoltaics: Here we notice that the market has been undergoing structural changes over
+the last few years. Whereas most of the demand for these products in the past 20 years came
+from the European market, the focus has meanwhile increasingly shifted to Asia and the USA.
+Infineon is very well positioned internationally and has cooperated with the world's leading
+manufacturers of PV inverters for a number of years. We profit to some degree from the
+growth of Chinese inverter manufacturers, partly due to the expansion of photovoltaic tech-
+nology in China itself, but also through the export of the inverters to other regions.
+Capital goods industry
+Automation: Industrial plants are being fitted with a growing number of electric motors. The
+fundamental driver behind this development is the necessity to raise productivity continually
+in order to secure a high standard of living for the population. In recent years the trend has
+led to greater automation in former low-cost regions where higher wages are now being paid.
+Where low-cost labor used to move the goods and carry out various types of work, robots and
+machines are now increasingly taking over these tasks. Furthermore, the stronger a company
+competes on a global basis, the greater the pressure to boost productivity. The next level of
+automation, and therefore higher productivity, will be achieved with the Industrial Internet
+(also referred to as "Industry 4.0"), which will not only initiate a further cycle of investment,
+but also contribute towards creating higher-quality jobs.
+Industrial motors are at the heart of manufacturing plants, wherever goods need to be moved
+or transported. Cranes, conveyor belts, robots and elevators are the typical fields of application.
+They are also deployed in the field of refrigeration and air conditioning as well as for simply
+generating compressed air. The strongest industrial electric motors work in sluices, cement mills,
+trains, in pumps for municipal waterworks, in air compressors for manufacturing technical
+gases and in compressors for gas pipelines.
+In industry alone, around 300 million electric motors are installed around the globe and use
+around two thirds of all commercially consumed electric power. The leverage for cutting costs
+is therefore correspondingly large if their effectiveness is improved.
+One way of reducing the amount of power an electric motor consumes is to use an electronic
+control system to regulate speed and thereby adjust performance to suit current needs. The
+market penetration of speed-regulating motor controls will therefore increase. At the present
+time, a good 15 percent of electric motors are controlled electronically and the trend is working
+in our favor, as the implementation of a variable speed drive system requires a large number
+of the power semiconductors we offer. The number of power semiconductors needed and their
+value depends on the performance class of the motor.
+Group strategy
+42
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+G see glossary, page 292
+G see glossary, page 289 and page 290
+Consumer goods industry
+Large household appliances: There have been a number of changes in this class of goods
+recently. To boost the efficiency of their appliances whether due to stricter efficiency regula-
+tions or to offer consumers better performance, a growing number of manufacturers are
+switching to electronically controlled motors. Whereas in the past it was only possible to switch
+a motor either on or off, motor controls now enable speed to be regulated to follow the current
+load. Examples of application are the water pumps in washing machines or dishwashers,
+refrigerator compressors, or ventilators in air conditioning systems.
+We benefit in particular from the demand for replacements. For example, around 1.4 billion
+refrigerators and freezers are currently in use worldwide, consuming around 650,000 gigawatt
+hours of electric power per year, equivalent to the annual consumption of Germany. If every
+consumer purchasing a new appliance were to select the most energy-efficient unit from now
+on, energy consumption could be slashed by more than 30 percent by the year 2030. This illus-
+trative calculation even takes into account the fact that around 60 percent more refrigerators
+and freezers will to be in use worldwide by 2030
+Compact modules with outputs between 100 and 2,000 watts are installed in household appli-
+ances. These integrated IGBT modules, known as IPMS (Integrated Power Modules), are the core
+business of the Korea-based LS Power Semitech Co., Ltd. (LSPS) and a core competence of
+International Rectifier. The complete takeover of LSPS in the 2015 fiscal year has enabled us to
+further bolster our presence in the important Korean market which is home to global home
+appliances champions such as Samsung and LG. Furthermore, the acquisition of International
+Rectifier with its complementary portfolio of small IPMS opens up new markets for us in Asia,
+South America and the USA.
+Apart from large home appliances, we also serve the market for induction cookers. In close
+cooperation with our leading customers, primarily in China, we have been developing IGBT
+power transistors for the specific needs of each application, such as single-field induction
+cookers and kitchen cookers with multiple cooking fields, for many years.
+Summary for the Industrial Power Control segment:
+The worldwide efforts to reduce CO2 emissions, firstly through the more efficient use of
+electric power and secondly through the increased use of renewable sources of energy, will
+lead to a further rise in demand for power semiconductor components. Moreover, the use
+of speed-regulated drives delivers significantly added value to functionality, an important
+aspect, particularly in the field of machine building. We expect our business with semi-
+conductors for industrial electronics to grow by an average of around 9 percent per annum.
+Growth drivers for the Power Management & Multimarket segment
+Our broadly diversified product portfolio in the Power Management & Multimarket segment
+addresses a wide variety of markets. We have been in the power supply business for decades
+with our power components. These include power supplies for converting alternating current
+to direct current (AC-DC conversion) and also DC-DC conversion for medium- and high-perfor-
+mance computers. This field includes high-performance PCs, servers, network computers,
+telecommunications equipment, gaming consoles and graphic cards. The acquisition of Inter-
+national Rectifier has additionally given Infineon access to the market for high-reliability
+power components, such as those required in the aerospace industry.
+34.3%
+102.5
+100.3
+CAGR (2014-2020): +2.7%
+Source: Cisco, "Visual Networking Index Forecast",
+May 2015
+1 CAGR = Compound Annual Growth Rate
+2015 e 2016e 2017e 2018 e 2019 e
+2014
+2,514
+4,163
+6,751
+10,650
+16,124
+24,221
+CAGR (2014-2019):
++57%
+in petabytes per month
+Development of global mobile data
+traffic 2014 to 2019
+G see glossary, page 289
+G12
+The classic fields of application in this sector - payment cards and government ID - remain the
+basis for future growth. Ensuring the integrity of computers against tampering represents a
+further field of application for our security chips, as is the highly diverse field of authentication
+for accessories and spare parts. SIM cards for machine-to-machine communication will play
+an ever-greater role as a consequence of the increasing interconnectivity of devices and
+promise high growth rates. The Internet of Things, with all its facets, promises further, and in
+the long term perhaps the greatest opportunities for growth.
+Growth drivers for the Chip Card & Security segment
+The target markets addressed by the Power Management & Multimarket segment are develop-
+ing in different ways. We predict more growth in business with mobile devices than with power
+components. We expect overall business in the Power Management & Multimarket segment to
+grow by an average of roughly 9 percent per annum.
+Summary for the Power Management & Multimarket segment:
+Whereas the downlink was the prevailing data direction at the beginning of the internet age,
+this has changed since the rapid spread of smartphones, the apps that run on them and above
+all the popularity of social media. The data stream in uplink mode has increased drastically
+with the uploading of images and videos as well as by message services. This data volume, which
+is meanwhile practically symmetrical, has also been taken into account in the new cellular
+network standards.
+Cellular network infrastructure: The transition to the next cellular network standard is not
+only affecting the mobile devices but also the cellular network infrastructure. Every time a
+new standard is introduced, it takes into account the increasing number of cellular users and
+the exponentially growing data volume. The radio cells are becoming smaller, which means
+that more network access nodes need to be installed.
+We are currently profiting considerably from the increasing number of Long-Term Evolution
+(LTE)-capable smartphones. This fourth-generation transmission standard is considerably
+more complex than the third generation (UMTS). LTE-capable smartphones contain a greater
+number of more highly integrated RF components than earlier generations.
+Another of our main focuses for mobile devices is in the field of radio-frequency components
+for wireless data transmission between cellular networks or satellite and mobile devices.
+During the transition from one cellular network standard to the next, the signal quality and
+consequently the RF characteristics of many components need to meet more exacting
+requirements. For instance, the frequency bands are closer together and need more precise
+frequency filters, more sensitive signal amplifiers and a greater number of faster antenna
+switches. For smartphones and tablets we offer radio-frequency CMOS switches for switching
+between various antennas.
+The functionality of smartphones is being constantly expanded, driving demand for continually
+new and better sensors. We are currently expanding our product range to include new types
+of sensor, beginning with the MEMS pressure sensors such as the DPS310 (see "Power Manage-
+ment & Multimarket" in the chapter "The segments"). Further types of sensor that register
+other physical parameters for use in smartphones are currently being developed. We see
+enormous growth opportunities in the field of sensor technology for applications such
+as consumer electronics, automotive electronics and the Internet of Things.
+Group strategy
+45
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+The outstanding characteristics of our silicon microphones have enabled us to continually
+increase market share over the last few years. At 34.3 percent, we are currently number two
+on the market.
+P see page 62 ff.
+3.5%
+46
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Authentication: In order to safeguard electronic systems, it is essential to connect only autho-
+rized devices. In view of the growing number of connected devices being used by both busi-
+nesses and consumers, this aspect is rapidly growing in importance. It is a matter of protecting
+the connected devices against piracy, data manipulation, hacking and cyber attacks. Security,
+therefore, needs to be introduced whenever possible at each critical end point.
+Infineon meanwhile supplies over 70 percent of all government ID projects in Europe. In
+addition, according to the US Government Printing Office, Infineon is one of the main suppliers
+of security technology for the USA's electronic passports. It is the largest electronic passport
+project in the world. Infineon has been supplying the US Government Printing Office since
+the project began in 2005.
+Government ID documents: Government identification documents include passports,
+national ID cards, driver's licenses and, in the wider sense, also healthcare cards. Such
+documents are increasingly equipped with a security chip.
+SIM cards for machine-to-machine (M2M) communication: SIM cards for M2M communication
+promise high growth rates, based on the fact that they are gaining in importance by virtue
+of the Internet of Things. M2M communication enables the automatic exchange of data from
+devices to other devices or service centers. Examples of M2M applications include vehicle-to-
+infrastructure communication, infotainment applications in vehicles, toll systems, smart
+meters in the energy sector and telematics systems for emergency calls, maintenance and
+navigation.
+Infineon provides the security chip for this purpose, the so-called Secure Element (SE). The
+SE can either be built into the smartphone, known as an "embedded SE" (eSE), integrated
+in the SIM/UICC card or incorporated in a microSD card. Infineon offers a suitable solution for
+all three alternatives. The chips need to be at least as secure as credit cards.
+Mobile payments: The mobile telephone is now also a wallet. With the development of smart-
+phones, the mobile internet and Near Field Communication (NFC) technology, numerous
+functions and applications can now be integrated, such as vouchers, tickets, loyalty points
+and payment services. People are now experiencing a new form of convenience with their
+mobile phones, such as travelling on public transport using mobile tickets rather than coins
+or physical tickets, using their smartphones to pay contactlessly while at the same time
+redeeming coupons and collecting loyalty points or making secure bank payments. As a
+result, demand is growing for the secure storage and protection of confidential information
+on mobile phones.
+Our technology enjoys a high level of acceptance, attributable not only to our many years of
+excellent customer support and relations, but also to our extensive, renewed and customized
+product portfolio. In recent years, we have secured orders from all the major card manufac-
+turers supplying the US markets. The success of our security technology is reflected in the
+above-average growth in revenue recorded for our payment business in the 2015 fiscal year
+compared to the previous fiscal year.
+Payment cards: Chip-based cards increase the security of cashless payment systems. Whereas
+Europe began the process of replacing magnetic strip-based cards with chip-based payment
+cards some years ago, the conversion process is now under way in the USA and China. These
+two countries currently offer the greatest market potential in the field of payment. Several
+billion chip-based payment cards will be shipped to customers over the next few years. For the
+period from 2015 to 2018 (calendar years), market researchers forecast the delivery of almost
+5 billion cards in the USA, China and India.
+1 CAGR = Compound Annual Growth Rate
+Source: IHS Inc., "Payment & Banking Cards
+Report 2015", October 2015
+Indien
+China
+USA
+2014 2015e 2016e 2017 e 2018 e
+46
+592
+1,051
+93
+1,203
+1,365
+1,292
+CAGR (2014-2018):
++20.8%
+223
+399
+18
+640
+in millions of cards
+Expected growth in chip-based
+payment cards in the USA, China
+and India
+G 13
+680
+Mobile devices: We serve the market for mobile devices primarily with sensors and radio-
+frequency components. Our most important product family in the field of sensors is MEMS-based
+silicon microphones, for which we supply two core components: the MEMS chip (a micro-
+electromechanical system) with the microphone membrane and the application-specific IC
+for signal conversion. The latest generation of mobile devices requires more microphones,
+sometimes in different versions, with a continually improving signal-to-noise ratio. These
+higher-quality microphones not only represent a differentiating feature for the smartphone
+manufacturer, they also open up completely new application options. For instance, additional
+microphones make voice control far easier, even in environments with high levels of back-
+ground noise. They also provide better quality for phone calls via the internet and the
+pave
+way for new applications. In addition, technologically state-of-the-art microphones are mean-
+while being installed right next to the camera, to achieve higher audio quality when making
+video recordings with a smartphone.
+Apart from growth in the number of devices sold and the increasing number of microphones
+per device, we benefit most from the fact that not only smartphones and tablets, but also
+notebooks are switching to silicon microphones. Moreover, completely new device categories
+are meanwhile becoming potential targets, such as smartwatches, activity trackers and gener-
+ally the "things" in the Internet of Things.
+DC motors: Due to the falling prices of lithium batteries and the lower cost of controls for
+brushless DC motors - which are stronger and more effective than conventional brush-type
+motors - new product categories are experiencing encouraging growth in unit numbers.
+Examples are efficient battery-powered homework tools, pedelecs and e-scooters. The latter
+are a big market, particularly in Asian cities, due to stricter emission regulations. Here too, we
+are profiting from International Rectifier, which enables us to complete our range of MOSFET
+power transistors in the low- to medium-voltage categories as well as providing us with estab-
+lished market access and sales channels in Asia.
+2000
+2001
+2002
+2003
+2004
+2005
+2007
+2008
+2009
+2010
+2011
+2012
+2013
+2014
+2015
+Revenue of Infineon based on today's portfolio (excl. Other Operating Segments and Corporate)
+Revenue International Rectifier
+Semiconductor world market (adjusted to the Infineon fiscal year)
+1 CAGR = Compound Annual Growth Rate
+2 Based on market development assumptions, the 1999 fiscal year's revenue figures for some smaller product categories have been derived from the 2000 fiscal year's revenue figures.
+Source: WSTS, November 2015
+In the following section we describe the main factors driving growth in our four segments in
+view of the megatrends described in the previous chapter.
+38
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Growth drivers for the Automotive segment
+Growing prosperity usually leads to the desire for greater individual mobility, a fact particularly
+evident in the emerging economies in Asia and above all in China. The middle classes in India
+and China each grow by around 10 million people per year. In Africa and Asia, the transition
+from the bicycle or moped to the car is an expression of growing prosperity among the popu-
+lation. A compound annual revenue growth rate of 2.7 percent has been calculated for auto-
+motive production worldwide between 2014 and 2020 (source: IHS Inc.).
+G08
+Worldwide light vehicle production by region
+in millions of vehicles
+1999
+High-reliability components: Ambient conditions are extreme in the aerospace industry
+and when mining natural resources, which means the electronic components used in these
+applications need to meet very tough requirements. International Rectifier has occupied a
+leading position in this small, but very stable market for many years. International Rectifier
+also has outstanding expertise in the respective packaging technologies. The combination of
+existing Infineon technologies and the special-purpose packagings provided by International
+Rectifier are creating viable opportunities. Moreover, market access is complementary, as
+International Rectifier naturally has a strong position on the North American market, while
+Infineon traditionally has good access to European customers in this segment.
+0
+~1,2002
+The acquisition of International Rectifier has enabled us to enter new markets. Whereas
+Infineon has concentrated on power supply for high-performance servers to date, now we
+can also offer solutions for the most powerful graphic cards, telecommunications facilities
+and gaming consoles.
+DC-DC conversion: In the field of DC-DC conversion, intelligent point-of-load power manage-
+ment is becoming increasingly important. Servers, PCs and communication devices are supplied
+with higher voltages, which are then reduced to the lower voltage required, directly at the
+processor. Firstly, it is more practical and secondly, direct supply with a lower voltage is not
+technically feasible. The outputs range from a few watts to over 100 watts. Here too, we provide
+solutions for digitally controlled power supply, coupled with leading power components.
+Source: IHS Inc., "MEMS Microphones Data",
+April 2014 and October 2015
+2006 2008 2010 2012 2014
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+37
+Group strategy
+Financial targets
+Based on our Group strategy, we want to achieve three financial targets:
+Target 1: Achieve a compound annual revenue growth rate of 8 percent.
+Target 2: Achieve a 15 percent Segment Result Margin over the economic cycle.
+Target 3: Limit our investment to 13 percent of revenue over the economic cycle.
+Infineon introduced an internal control system for implementing its corporate strategy and for
+achieving its financial targets (see the chapter "Internal Management System").
+Target 1: compound annual revenue growth rate of 8 percent
+Infineon achieved a compound annual revenue growth rate - not including the contribution
+from International Rectifier - of about 9 percent from fiscal year 1999 through 2015 with its
+current portfolio of products. We continue to operate in the same markets and, with our four
+segments, continue to focus on the megatrends described above. These focus areas are the
+source of the continued increase in demand for our products. Furthermore, International
+Rectifier's complementary sales and regional strongholds allow us access to new markets. We
+therefore expect to grow at around 8 percent per annum, essentially in line with our historic
+growth track record.
+G 07
+1,000
+Revenue in the fiscal years 1999 to 2015 compared to the global semiconductor market
+3,000
+126,895
+2,000
+296,383
+5,100
+682
+4,000
+5.2%
+5,000
+6,000
+P see page 88 ff.
+CAGR (1999-2015): +5.4%
+€ in millions
+CAGR (1999-2015): ~9% :
+1.69
+54
+1.43
+REVENUE
+€666 million
+SEGMENT RESULT
+REVENUE
+Automotive
+53
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The segments
+☐
+SEGMENT RESULT MARGIN
+Jo-o
+IIIII
+The segments
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+52
+P see page 92 ff.
+P see page 108 ff.
+10-0
+€2,351 million
+€300 million
+............ 13%
+Industrial
+Chip Card & Security
+20%
+€352 million
+€1,794 million
+SEGMENT RESULT MARGIN
+SEGMENT RESULT
+REVENUE
+& Multimarket
+Power Management
+SEGMENT RESULT MARGIN 13%
+€122 million
+€971 million
+SEGMENT RESULT
+REVENUE
+Power Control
+-
+In order to achieve lasting growth with adequate profitability, we also have to run our busi-
+ness on a sustainable basis and ensure that our economic targets are in line with social and
+ecological requirements. We do this by pursuing responsible business practices and taking the
+expectations of relevant stakeholders into account. We set great store in the prudent use of
+natural resources and provide solutions for major societal challenges: the efficient use of
+energy, environmentally compatible mobility, and security in an interconnected world. In the
+chapter "Sustainability at Infineon", we have explained in detail why and how sustainability -
+alongside the attainment of economic targets – is key to the way we run our business and
+what targets we have set in this area.
+We are well aware that our targets could not be met without the commitment and motivation
+of our highly qualified staff. In addition to pay commensurate with performance, other key
+factors are a strong leadership culture, the promotion of talent and a continuous commitment
+to our employees. You can read how we do this and about the relevant targets we have set in
+the chapter "Our employees".
+We are especially pleased that the integration of the new colleagues from International Rectifier
+has progressed so smoothly and that we have been able to add many new, complementary
+areas of expertise.
+50
+50
+Source: IHS Inc., several reports on power semiconductors 2004 to 2015
+2 The relative market share is defined as the proportion of market share held by the market leader (in all years presented for Infineon)
+compared to the market share of the second largest competitor in the relevant year.
+-Infineon relative market share²
+1 Including International Rectifier
+Infineon market share
+2.741
+1.71
+H
+IIIII
+SEGMENT RESULT
+€121 million
+SEGMENT RESULT MARGIN
+_
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+18%
+G see glossary, page 291
+Over the course of the coming years, we will transfer production of some of International
+Rectifier's products to Infineon plants, in particular to our 300-millimeter plant in Dresden.
+The most likely candidates are low-voltage MOSFET as well as IGBT power devices. We will
+increase utilization levels and therefore achieve lower unit costs at an earlier stage.
+The fast-moving semiconductor industry is characterized by ever-rising expectations in terms
+of technology, quality, speed and efficiency and is therefore a very challenging sector. Time
+and again, the dedication and great reliability of our entire staff have enabled us to successfully
+master these challenges. Men and women from more than 90 countries all contribute towards
+making Infineon a successful international company - with their skills, enthusiasm, and courage
+to question the status quo and forge new paths. We have been shaping the future, day by day,
+since the first semiconductors were invented.
+Highly qualified, highly motivated employees and sustainable business operations
+are the prerequisites for our success
+Sustainable business operations
+Investment volumes are structured to enable us to achieve our targeted compound revenue
+growth rate of 8 percent.
+Taking all these factors into consideration, including International Rectifier's business units,
+these various approaches allow us to achieve an average ratio of investments to revenue
+of 13 percent over the industry cycle.
+For a number of years International Rectifier has also pursued a consequent strategy of
+outsourcing manufacturing, which has resulted in a lower investment ratio. This fact will now
+also be factored into the overall figures.
+51
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Group strategy
+Last but not least, we are improving productivity across all manufacturing processes by
+achieving better yields. In conjunction with the "Next Level of Productivity" program, we have
+implemented a series of measures which have significantly increased both current and
+expected manufacturing productivity.
+We will also continue to expand cooperation arrangements with contract manufacturers for
+backend manufacturing, for which there are no major differentiating features from a manufac-
+turing perspective. The proportion of standard packaging manufactured on this basis will
+also be increased at a swift pace. Consequently, a correspondingly lower level of investment
+is also to be expected in this area.
+Infineon is in the early stages of a growth curve for products manufactured using standard
+CMOS-based technologies with 65-nanometer and smaller feature sizes. Since the main
+differentiating factor for these products lies in the design and less in the process technology,
+we will no longer use this technology for in-house manufacturing and, instead, outsource
+the relevant volumes to contract manufacturers. We develop the modifications needed for our
+products in collaboration with these contract manufacturers, for instance integrated Flash
+memory (embedded Flash), which will obviate the need in future to invest in frontend manu-
+facturing capacity. In the case of security controllers sold by the Chip Card & Security segment,
+we have already been able to realize a high proportion of outsourced manufacturing. Further
+CMOS-based products will follow in the coming years.
+Capital intensity at Infineon has been determined to date by the use of 200-millimeter tech-
+nology. The new 300-millimeter thin-wafer technology, however, requires a lower level of
+investment for comparable units of capacity compared to 200-millimeter manufacturing.
+The level of investment required to boost production capacities for power semiconductors
+in order to achieve the targeted growth rate is, therefore, decreasing.
+When deciding where to expand our manufacturing capacities, we primarily invest in our
+own facilities, where this significantly contributes towards differentiating our products from
+those of the competition. Power semiconductor components, radio frequency components
+and MEMS-based sensors in particular fall into this category. Where this is not the case, we are
+outsourcing an increasing volume of wafer processing and component packaging to manufac-
+turing partners.
+Target 3: Investment at 13 percent of revenue
+Infineon has invested heavily in recent years in manufacturing process technologies and
+capacities for 300-millimeter thin wafer technology, in research and development for product
+and process technologies and in sales and marketing structures. These investments provide
+solid foundation for us to realize economies of scale and economies of scope in the future, and
+thus improve profitability. The acquisition of International Rectifier fits perfectly with this
+strategy. We are, therefore, confident of achieving our target of an average 15 percent Segment
+Result Margin over the industry cycle.
+G see glossary, page 289
+田
+2005
+2013
+8.1%
+12.3%
+11.9% 11.8%
+11.2%
+10.7%
+10.2%
+9.7%
+8.4%
+9.4%
+€ in millions
+Development of Infineon's market share and relative market share for power semiconductors
+G15
+G see glossary, page 295
+We benefit from our comprehensive portfolio of power semiconductors that can be manufac-
+tured on 300-millimeter wafers: This includes low- and high-voltage MOSFET power devices
+on the one hand, and IGBT products used in discrete IGBT devices and IGBT modules on the
+other. We service a whole variety of sales markets in the industrial and automotive electronics
+sectors with these power semiconductor components. Our broad range of products enables
+us to manufacture in high volumes. It is for this very reason that we are confident of being
+able to achieve good utilization levels with the enormous capacities of a 300-millimeter plant
+within a reasonable time frame.
+2. Increasing productivity. We expect to achieve a 20 to 30 percent reduction in frontend unit
+costs when facilities are running at full capacity, thus ensuring long-term competitiveness.
+Technological change of this magnitude - in this case the move to larger wafer diameters -
+only takes place once every 10 to 15 years in the semiconductor industry particularly for
+power semiconductors. Only the largest providers will be able to achieve the high volumes
+required to operate such frontend manufacturing facilities at the scale and utilization levels
+necessary to secure unit cost advantages. As the undisputed market leader in the field of
+power semiconductors, Infineon is optimally positioned in this respect.
+1. Reducing the amount of capital employed per chip. Manufacturing capacities can be
+expanded with lower investment volumes using 300-millimeter technology. Our experience
+shows that it takes 30 percent less investment on average to build up additional manufac-
+turing capacity to a desired level on a 300-millimeter manufacturing line than it does on a
+200-millimeter line. There is also the advantage that less cleanroom space is required, due
+to the smaller number of machines required. The required investment volume per capacity
+unit is reduced, thus resulting in lower depreciation expense.
+19.2%¹
+so far with operations based on this manufacturing technology: in the manufacturing network
+located in Villach (Austria) and Dresden (Germany). This technology is contributing in the
+following ways to helping us achieve our margin target:
+8.5%
+1.08
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+2012
+2011
+2010
+2009
+2008
+2007
+1.01
+2006
+2003
+1.02
+1.65
+1.49
+1.50
+1.31
+1.31
+2004
+Pivotal in achieving these aims is our 300-millimeter thin-wafer manufacturing capability for
+power semiconductors. As a technology leader, Infineon is the only company in the world
+Group strategy
+49
+377
+€ in millions
+Segment Result and Segment Result
+Margin over the last three years
+G14
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+48
+Group strategy
+9.8%
+Security as an area of expertise overarching all segments: Infineon is increasingly leveraging
+its security know-how to broaden customer access to other areas of the business. Security
+expertise covering all areas of a business can be a good way of “opening doors" to our customers
+and may even be the decisive criterion for selecting Infineon as a supplier.
+Autonomous driving - including semi-autonomous driving systems already developed -
+is another manifestation of the Internet of Things. The things in this case are the vehicles that
+communicate directly with one another. Vehicles will be able to make contact with control
+systems, which will, in turn, provide a real-time picture of the current traffic situation. The use
+of web applications in vehicles will therefore increase sharply. The origin and correctness of
+the data must be proven, otherwise vehicles may be given the wrong commands.
+One interesting aspect of the "Internet of Things” is the role it plays in the Industrial Internet.
+In conjunction with Industrial Internet, production data or signals measured by sensors will
+be sent to a business partner or cloud computer via either wired or wireless connections.
+Connecting the supply and value-added chain in this way requires secure communication
+between business partners, as well as between the machines, devices and IT systems of the
+business partners involved. The Industrial Internet will only succeed if process know-how can
+be reliably protected against hacking attacks. Secure transmission of product- and produc-
+tion-related data within an open architecture will, therefore, be at the top of the agenda.
+Internet of Things: Depending on which market research report one reads, it is expected
+that between 50 and 100 billion devices will be connected via the internet in the coming
+10 to 15 years. The figure includes machines, robots, vehicles, containers and medical equip-
+ment, as well as everything that is meanwhile called “smart”: smart grid, smart factory,
+smart home, smart meter, smart car. The secure storage and transfer of data will be absolutely
+essential for many of these billions of connected “things”. If security is assured, these develop-
+ments will open up a whole new world of services which will ultimately change people's
+everyday lives.
+Following the introduction of Microsoft Windows® 10, which requires TPM functionality,
+the discrete TPM security chip is gaining in significance with respect to the operating system.
+Infineon's TPM security chips not only meet the hardware certification requirements of
+Microsoft Windows®, they are also recommended by Google for Chrome OS systems and
+supported by the major open-source operating systems such as Linux. A growing volume of
+computers with integrated TPM security chips have been sold in recent years. The Trusted
+Computing Group (TCG) puts the figure of PCs sold with TPM security chips at more than
+600 million units to date.
+With the OPTIGAT product family, Infineon supplies various security chips and security solu-
+tions for the authentication of electronic systems, from a complex IT infrastructure with
+numerous servers and computers to a system consisting of an end device and the appropriate
+accessories.
+47
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+Whether automation technology in production, logistics, traffic guidance systems, building
+or home automation, the same base technologies are required for all of these applications. In
+this context, we see good potential in hardware-based security similar to what we offer with
+our security controllers. This can take the form of an individual component or the incorpora-
+tion of the relevant function in our automotive or industrial microcontrollers.
+620
+14.4%
+897
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Finances and strategy
+› Creating more prominent areas of differentiation on the back of the strategic approach
+"Product to system", as well as striving for technological leadership in all relevant sectors.
+> Realizing economies of scale in research and development and in sales by achieving
+leading market positions in our target markets and
+> Realizing economies of scale in manufacturing, particularly from our 300-millimeter
+manufacturing capabilities and our 200-millimeter manufacturing site in Kulim (Malaysia)
+In order to achieve our margin target also in future, we will focus to a greater extent on the
+following aspects:
+For this reason, we are targeting a Segment Result Margin of 15 percent over the industry cycle.
+We are pleased to report that we were proceeding at a faster pace than originally anticipated
+to raise International Rectifier's business to the same level of Segment Result Margin as the
+Group as a whole. The contribution to the margin has already increased steadily during the
+2015 fiscal year and our goal has already been reached in the fourth quarter.
+Target 2: Segment Result Margin of 15 percent of revenue over the economic cycle
+Growth is only one of the prerequisites for attaining success on a sustainable basis - another is
+profitability. In this respect, the margin achieved by our products is an indicator of the added
+value they create for our customers. In order to work at viable levels of profitability, this means
+that we obviously direct our development efforts to the areas which generate the greatest
+benefits for our customers. Working profitably means putting our innovative strength to the
+most effective use in the best interests of customers and markets. In addition, we want to be
+able to maintain our development and sales efforts at the same level, even in more challenging
+phases of the industry cycle. We will also benefit in this respect from the acquisition of Inter-
+national Rectifier, given that the integration will enable us to generate synergies in manufac-
+turing as well as in development, sales and administration.
+Summary for target 1 (compound annual revenue growth rate of 8 percent)
+The major changes currently taking place are driving the growth of our four segments in
+different ways. Our target markets are growth markets that offer significantly greater opportu-
+nities for profitable growth than mature markets characterized by predatory competition.
+Overall, we expect a compound annual growth rate of approximately 8 percent for Infineon.
+The classical fields of application in this sector – payment cards and government ID - will
+continue to have the greatest impact on growth. At the same time, however, the fields of
+authentication and machine-to-machine communication are gaining in significance. We also
+expect a growing contribution from the Internet of Things in the coming years. We forecast
+a compound annual growth rate of 6 to 9 percent for our business with semiconductors for
+security solutions.
+Summary for the Chip Card & Security segment:
+Data requiring protection should be neither manipulated nor stolen. The fact that our leading
+security expertise is increasingly being called for chip card applications as well as for security-
+sensitive systems in vehicle and industrial applications can be seen in the following example:
+Security module incorporated in AURIX™: Vehicle manufacturers are interested in establishing
+increased protection to avoid their vehicles being tampered with as well as greater protection
+for their software and intellectual property relating to the microcontrollers within the vehicle.
+We have integrated the hardware security module (HSM) in our 32-bit multicore microcontrollers
+of our AURIX™ family, as a result of which the chip and the software installed on it are protected
+from unauthorized access and manipulation.
+15.5%
+Segment Result Margin
+Segment Result
+2015
+2014
+2013
+2014
+AURIX™M: part of Audi's driver
+Automotive
+At Audi, the central driver assistance system"zFAS" forms
+the core of future control systems for automated driving.
+A 32-bit multicore microcontroller of our AURIX™
+family ensures that the system is reliable.
+20%
+23%
+25%
+35%
+2013
+BEE
+17%
+24%
+40%
+17%
+15%
+100%
+100%
+100%
+Automotive Segment revenue
+by region
+G17
+38%
+The Segment Result followed the expected trend, in line with the increase in revenue. The first-
+time consolidation of International Rectifier had a slightly dilutive effect on the Segment Result.
+23%
+Europe (excluding
+Germany),
+Middle East, Africa
+Germany
+assistance systems
+However, in recent years, significant improvements have also been made for vehicles with
+combustion engines and this development is far from over. On the one hand, downsizing
+makes it possible to improve engine performance of smaller-capacity engines and at the
+same time reduce fuel consumption. A more sophisticated sensor system and more microcon-
+troller computing power are necessary for this purpose. On the other hand, the electrification
+of aggregates, such as water and gasoline pumps, and the transition from electromechanical
+and hydraulic power steering systems to electronic power steering are in progress. The elec-
+trical power of these units can be electronically controlled to suit the varying load, which
+boosts efficiency. The increasing market penetration of such applications and the electrifica-
+tion of further aggregates is contributing towards reducing CO2 emissions.
+CO2 reduction: A larger number of electric or hybrid vehicles is essential in order to meet
+CO2 reduction regulations. The present solutions - including 48-volt systems for start-stop
+systems, mild and plug-in hybrid vehicles and fully electric vehicles - convert the DC voltage
+from the battery to the AC voltage required for the drive motor. Infineon offers a wide range
+of power semiconductor components for these various systems: MOSFETs, discrete IGBTs,
+IGBT modules, silicon carbide components and driver ICs.
+Actuators are also safety-critical applications. For this reason, one of the most important
+requirements of semi-automated or fully automated driving is that, should an error occur,
+the system nevertheless continues to operate reliably. Infineon fulfills this requirement by
+additionally offering ISO 26262-certified solutions with redundancy in case of error for these
+applications.
+Host processors form the core of future automated driving control systems. One example is
+Audi's central driver assistance system, known as "zFAS". A 32-bit AURIXTM multicore microcon-
+troller ensures the reliability of the system. In its function as main controller, in automated
+driving mode it sends out the commands for the steering, brakes, engine and transmission
+systems. In addition to controlling actuators, the AURIXTM microcontroller has a further key
+role as safety anchor in that it safeguards the components not qualified according to automo-
+tive industry standards.
+Infineon is market leader for radar sensors with its 77/79 gigahertz silicon germanium
+technology (see the chapter "Research and Development"). For vehicle interiors, Infineon has
+developed the 3D image sensor REAL3TM for driver monitoring (see the chapter "Research and
+Development"). For external camera systems, Infineon offers 32-bit microcontrollers with
+special security concepts.
+Driver assistance systems: Active safety systems are currently developing to become advanced
+driver assistance systems (ADAS). ADAS for semi-automated or fully automated driving essen-
+tially consist of, firstly, sensors (for example, radar, interior and external cameras), secondly,
+a main host computer (the system intelligence, as it were) to analyze the sensor data and
+calculate the driving strategy, and thirdly, actuators (steering, brakes, engine control and
+transmission). Infineon provides solutions for all three of these most important areas of
+automated driving.
+2014
+Going forward, we see three main trends emerging, which will determine the development of
+automotive technology - and which we strongly support with our products:
+Business strategy and fields of application
+P see page 74
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+56
+Asia-Pacific,
+Japan
+Americas
+2015
+With more than 40 years of experience in automotive electronics, Infineon's product portfolio
+of sensors, microcontrollers and power semiconductors is one of the largest in the industry.
+A further distinctive feature is our strategic "Product to System” approach, through which we
+offer our customers solutions for the fields of application CO2 reduction, driver assistance
+systems, security, and comfort electronics.
+The Segment Result totaled €300 million (including International Rectifier's contribution to
+the Segment Result from January 13, 2015), 16 percent up on the €259 million recorded one
+year earlier. The Segment Result Margin amounted to 13 percent of revenue (2014: 13 percent).
+23%
+Slight shifts in the regional revenue split resulted from the acquisition of International Rectifier.
+In view of International Rectifier's comparatively high revenue in the Americas, the most
+significant change occurred in that region. The share attributable to the Americas rose by
+2 percentage points to 17 percent. Due to the strong growth in the Chinese automotive indus-
+try, the percentage attributable to Asia-Pacific (including Japan) rose slightly to 40 percent
+(2014: 38 percent). Germany now accounts for 20 percent of revenue (2014: 23 percent).
+259
+1,714
+1,965
+2,351
+€ in millions
+Revenue and Segment Result
+G16
+300
+The Automotive segment in the 2015 fiscal year
+Driver assistance systems, CO₂ reduction and connectivity are
+the major trends in the automotive sector
+€300 million
+SEGMENT RESULT
+€2,351 million
+REVENUE
+Segment Result
+In its function as primary controller it sends
+out the commands for the brake, steering,
+engine and transmission.
+Market share over 10 percent for the first time
+167
+of the Automotive segment
+55
+Buoyant demand was sustained for upper-range medium-sized vehicles, and especially for
+sports utility vehicles (SUVs), equipped with a broad array of additional safety and conve-
+nience features. Furthermore, the demand for semiconductor-based solutions to reduce CO2
+emissions and the rising demand for driver assistance systems contributed to the revenue
+increase. These trends were observed throughout all regions.
+Vehicles made in Germany, particularly premium brands, were in very high demand across all
+regions. On the other hand, sales figures fell noticeably in China in the second half of the fiscal
+year, reflected in the weaker pace of growth towards the end of the fiscal year.
+2013
+Audi piloted driving
+11976
+Az
+Automotive
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The segments
+A7 concept
+Segment Result
+Revenue
+The strong demand already emerging in North America at the beginning of the 2014 fiscal year
+continued throughout the 2015 fiscal year. The European automotive market grew moderately
+throughout the 2015 fiscal year, helped by perceptible recovery in Western Europe compared
+to recent years. The revival was prompted by a gradual economic upturn, pent-up demand for
+replacements and generally increased willingness to purchase a car.
+Infineon recorded revenue of €2,351 million (including International Rectifier's contribution
+from January 13, 2015) for the Automotive segment in the 2015 fiscal year, an improvement of
+20 percent on the previous year's figure of €1,965 million. The segment generated 41 percent
+of Group revenue.
+Revenue
+2015
+2014
+0000
+HVDC lines
+> Factory automation
+> Washing machines
+1 Including motors, compressors, pumps and fans
+› Drives
+> Elevators
+› Escalators
+> Robotics
+World discrete power semi-
+conductors and modules market
+share 2014
+> Hybrid buses
+Uninterruptible
+power supplies
+61
+This development allows functionalities to be achieved that would be impossible with exter-
+nally attached components. Examples for such functionalities include remote maintenance,
+early identification of failures or authentication (G see glossary, page 289) of original parts.
+Digitalization: The trend toward digitalization of control loops was set in motion years ago with
+MOSFET-based AC-DC and DC-DC converters. This trend is now also starting for IGBT-based
+control units, whereby the chain - comprising control IC, IGBT driver and IGBT switch - is digi-
+talized and referred to as "Digital Control Power". Functional integration and digitalization are
+the most important steps that have been taken to make drive controls and inverters compatible
+for the Industrial Internet.
+G22
+> Offshore wind farm
+> Rollers
+*****
+> Microwave ovens
+> Refrigerators
+> High-speed trains
+> Locomotives
+> Metro trains
+Infineon'
+Energy transmission > Induction cooking
+> FACTS (Flexible
+AC Transmission
+Systems)
+Industral drives¹
+> Automation
+technology
+> Climate technology
+> Conveyor technology
+› Cranes
+Industrial vehicles
+> Agricultural
+vehicles
+> Forklifts
+> Heavy construction
+vehicles
+Renewable energy
+generation
+> Photovoltaic
+systems
+> Wind turbines
+Traction
+› Trams
+Mitsubishi
+STMicro-
+electronics
+Fuji Electric
+Toshiba
+26.5%
+Mitsubishi
+21.6%
+Fuji Electric
+12.8%
+Semikron
+7.3%
+Infineon'
+4.3%
+1 Including International Rectifier
+Source: IHS Inc., "Power Semiconductor Discretes &
+Modules Report", September 2015
+G24
+World IPM (Intelligent Power Module)
+market share 2014
+Mitsubishi
+Home appliances
+for electric vehicles > Air conditioning
+> Dishwashers
+Semikron
+Fairchild
+World IGBT components market
+share 2014 (discrete IGBTs and
+IGBT modules)
+G23
+Source: IHS Inc., "Power Semiconductor Discretes &
+Modules Report", September 2015
+19.2%
+7.0%
+5.9%
+5.7%
+5.4%
+Market position
+World market for discrete power semiconductors and modules
+The world market for power semiconductors - including discrete power semiconductors and
+modules, but excluding power ICs - continued the upturn that began in mid-2013 during the
+2014 calendar year, rising by 6.3 percent from US$15.282 billion to US$16.239 billion (source:
+IHS Inc.). Infineon's market share (including International Rectifier) amounted to 19.2 percent.
+Its lead over its nearest competitor in this still highly fragmented market is now 12.2 percent-
+age points. The five largest competitors together held 43.2 percent of the market.
+World market for discrete IGBTs and IGBT modules
+In the 2014 calendar year, the combined world market for discrete IGBTs and IGBT modules
+clearly outperformed the overall market for power semiconductors and grew by 11.1 percent
+to US$4.449 billion (2013: US$4.003 billion). Infineon's market share (including International
+Rectifier) stood at 26.5 percent in 2014. The five largest competitors together held 72.5 percent
+of the market.
+World market for IPMS
+In the 2014 calendar year, the world market for IPMS (Intelligent Power Modules) grew by
+10.4 percent to US$1,260 million (2013: US$1,141 million). Infineon (including International
+Rectifier and LS Power Semitech Co., Ltd. (LSPS)) achieved 5th place, with a market share
+of 7.1 percent. The five largest competitors together held 83.2 percent of the market.
+1 Including International Rectifier.
+This market analysis covers not only components
+of the Industrial Power Control segment, but
+also components of the Automotive and the
+Power Management & Multimarket segments.
+Fairchild
+Fields of application
+Charging stations
+LED and conventional
+lighting systems
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Infineon recorded revenue of €971 million (including International Rectifier's contribution
+from January 13, 2015) in the Industrial Power Control segment in the 2015 fiscal year,
+24 percent up on the previous year's figure of €783 million. The segment generated 17 percent
+of Group revenue.
+The rise in revenue benefited in particular from the acquisition of International Rectifier.
+In addition, the Korean subsidiary, LS Power Semitech Co., Ltd. (LSPS) made a full year's
+contribution to revenue, compared to only four months in the previous year. Revenue growth
+was also attributable to favorable currency effects and increased demand in all major fields
+of application. In particular, business in the fields of home appliances and renewable energies
+recorded above-average growth.
+Revenue
+Segment Result
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The segments
+Industrial Power Control
+59
+Revenue
+The shift in the regional revenue split towards Asia continued. The Asia-Pacific region (includ-
+ing Japan), accounted for 54 percent in the 2015 fiscal year, compared to 50 percent one year
+earlier. The larger share is attributable on the one hand to the higher economic growth of China
+compared to the other regions, and on the other hand to the acquisitions of International
+Rectifier and LSPS. Europe's share declined as a result from 41 percent the previous year to
+39 percent. The share for the Americas region amounted to 7 percent (2014: 9 percent).
+The Segment Result amounted to €122 million (including International Rectifier's contribution
+to the Segment Result from January 13, 2015), a decrease of 15 percent compared to the
+previous year's €144 million. The Segment Result Margin amounted to 13 percent of revenue
+(2014: 18 percent).
+Cellular network infrastructure
+› Base stations
+DC motors
+> DIY appliances (power drills,
+cordless screwdrivers etc.)
+> Electric bicycles
+Segment Result
+2015
+2014
+2013
+REVENUE
+€971 million
+Growing importance of home appliance business
+Digitalization and functional integration the next major topics
+SEGMENT RESULT
+€122 million
+The Industrial Power Control segment in the 2015 fiscal year
+G20
+Revenue and Segment Result of the
+Industrial Power Control segment
+€ in millions
+971
+783
+651
+144
+122
+38
+› Pedelecs
+HiRel
+> Commercial aviation
+> Defense technology
+> Oil and gas exploration
+2015
+Europe, Middle East, Africa
+Asia-Pacific, Japan
+Americas
+60
+60
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+G see glossary, page 292
+The IGBT modules of our new
+XHP™ family are highly compact
+and offer maximum scalability
+combined with a simplified
+system design. They are used in
+trains and large industrial drives.
+Business strategy and fields of application
+Electric power needs to be generated, transmitted to the consumer and then converted. Each
+of these steps has to be carried out as efficiently as possible, using the appropriate high-
+and maximum-performance IGBT components. The Industrial Power Control segment offers
+a comprehensive array of products for this purpose, consisting of discrete IGBT devices,
+IGBT modules, IGBT stacks, as well as driver ICs and driver boards for controlling IGBT modules.
+These products enable us to cover almost the entire power range from a few hundred watts
+to several megawatts.
+As a result of the acquisition of International Rectifier and the takeover of the remainder of
+Korean LS Power Semitech Co., Ltd. (LSPS), we have strengthened our position especially in
+the 100 to 2,000 watt power range. These two acquisitions enable us to benefit in particular
+from the compact IPMS (Intelligent Power Modules) of both companies and also from Interna-
+tional Rectifier's IGBT driver portfolio, which is complementary to Infineon's portfolio.
+LSPS has operated first and foremost in Korea. Due to LSPS we increased our access to the
+Korean market, and especially to major home appliance manufacturers operating internation-
+ally namely Samsung and LG. Going forward, we will use our worldwide sales infrastructure
+to market LSPS products - which are also compact IGBT modules with a power range of up to
+5,000 watts - in other countries and regions too.
+IGBT power components are to be found in a vast array of applications: for example, in indus-
+trial drives, such as pumps, fans and elevators, but also in wind power plants, photovoltaic
+systems, trains, home appliances, emergency power supplies and robots. In the course of this
+century, the importance of electricity controlled by semiconductors will continue to grow,
+especially in the field of electricity generation from renewable sources of energy which are
+supplanting fossil fuels. Electricity is becoming the most important energy carrier of the
+21st Century.
+Power semiconductors are often not only the determining factor for the functioning of our
+customers' products and systems, but also have a decisive impact on efficiency, size, weight
+and cost. In particular, the increase in power density - i.e. the electrical power converted
+within a certain volume - is the driving force behind the development of IGBT power devices.
+Together with our customers, we develop solutions for the following market trends:
+Maximum power density: Compact, lightweight control systems are achievable only with
+technologically leading products. It is often not feasible to make any further significant
+improvements by optimizing individual products. Based on our innovations and our under-
+standing of applications, we are taking the decisive step with our strategic "Product to
+System" approach.
+Examples include our technological leadership in the field of IGBT components for fifth-gener-
+ation technology, with an extended temperature range, silicon carbide (SiC) hybrid modules
+as well as the highly compact, scalable XHPT IGBT modules deployed in the three-digit kilowatt
+to megawatt range.
+Energy efficiency: The greatest scope for leveraging energy savings lies in improving efficiency
+in consumption. The savings potential from several hundred million industrial drives and
+billions of home appliances is vast. As a result of the introduction of new and/or stricter effi-
+ciency directives, there is a growing market for products such as industrial variable speed
+drives or speed-controlled refrigerator compressors.
+Functional integration: Whereas in the past the development of power modules focused
+mainly on increasing the ampacity, a new dimension is now coming into play, namely the
+integration of further functions in addition to the actual power semiconductor components
+themselves. In future, an ever-growing number of components will be directly integrated in
+IGBT modules, such as sensors, security ICs, supporting microcontrollers and interfaces.
+2014
+The segments
+Industrial Power Control
+2013
+41%
+› Space systems
+> Submarine telecommuni-
+cations cables
+ON Semi-
+Mobile devices
+The Segment Result was positively impacted by the higher contribution from increased revenue
+and favorable exchange rate effects. On the other hand, there was a rise in operating expenses,
+especially for research and development, as well as a shift in demand from very high-end com-
+ponents to standard components, which are subject to greater price pressure.
+G21
+Industrial Power Control segment
+revenue by region
+100%
+100%
+100%
+12%
+9%
+7%
+44%
+50%
+54%
+44%
+39%
+conductor
+2014
+46.1%
+1 Including International Rectifier.
+27.8%
+10.5%
+9.2%
+8.6%
+7.7%
+This market analysis covers not only components
+of the Power Management & Multimarket segment,
+but also components of the Automotive segment.
+Source: IHS Inc., "Power Semiconductor Discretes &
+Modules Report", September 2015
+STMicro-
+electronics
+Toshiba
+G28
+Knowles
+Infineon
+Omron
+NRJC
+NeoMEMS
+47.4%
+34.3%
+World silicon microphone ICS
+market share 2014 by units
+Fairchild
+Renesas
+Infineon'
+> Smartphones
+> Tablets
+P see page 73
+Power management for:
+› Consumer electronics
+> Home appliances
+> IT and telecommunications
+> PCs and notebooks
+> Servers
+> Smartphones
+> Tablets
+Market position
+Standard power MOSFET devices
+The world market for standard MOSFET power transistors (low-voltage and high-voltage
+MOSFETs) totaled US$5.829 billion in the 2014 calendar year, an increase of 7.1 percent com-
+pared to the previous year's figure of US$5.441 billion (source: IHS Inc.). With a market share
+of 27.8 percent, Infineon (including International Rectifier) is the clear market leader in this
+field, 17.3 percentage points ahead of its nearest competitor. The five largest competitors
+together held 63.8 percent of the market.
+Chips for silicon microphones
+3.283 billion chips for silicon microphones were sold worldwide in the 2014 calendar year
+(source: IHS Inc.), compared with 2.680 billion chips one year earlier, a growth rate of 22.5 per-
+cent. Infineon again succeeded in increasing its sales volume at an above-average rate of
+46.2 percent from 770 million chips to 1.126 billion chips, thus adding a further 5.6 percentage
+points to our market share, which therefore increased from 28.7 percent in 2013 to 34.3 percent
+in 2014. The five largest competitors together held 95.7 percent of the market.
+G27
+World standard power MOSFET
+market share 2014
+8.4%
+4.1%
+1.5%
+Source: IHS Inc., "MEMS Microphones Report - 2015",
+October 2015
+463
+121
+39
+43
+2013
+2014
+2015
+Revenue
+The Chip Card & Security segment generated revenue totaling €666 million in the 2015 fiscal
+year, with no contribution coming from the acquisition of International Rectifier. The
+35 percent increase over the previous year's figure of €494 million was therefore purely
+organic growth. The segment generated 11 percent of Group revenue.
+Strong revenue growth was recorded in the second quarter of the 2015 fiscal year and remained
+at the higher level in the following two quarters. Practically all lines of business contributed
+to revenue growth: high-end SIM cards with mobile payment functionality, government identi-
+fication as well as authentication solutions. Furthermore, the market launch of Samsung's
+flagship smartphone models Galaxy S6 and Galaxy S6 edge had a positive impact. Both models
+Revenue
+Segment Result
+Industrial Power Control
+leading MEMS technology for many years. Following on from the barometric pressure sensor,
+sensors are currently being developed to measure further physical parameters (see also the
+chapter "Research and Development”). MEMS-based sensors are only a few millimeters in size
+and deliver considerable energy savings. These sensors are leading to the creation of new
+product categories, such as smartwatches and activity trackers.
+55
+65
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The segments
+Power Management & Multimarket
+494
+> Navigation devices
+666
+of the Chip Card & Security segment
+99
+66
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Security chip in Samsung smartphones
+Infineon provides security chips for a large
+number of mobile devices, thereby safeguarding
+the security of both confidential data, such as
+the user's bank details, and security-relevant
+transactions, such as payments.
+The Samsung flagship models Galaxy S6 and
+Galaxy S6 edge are equipped with our embedded
+Secure Element (eSE) security chip.
+IIIII
+IIIII
+Chip Card & Security
+REVENUE
+€666 million
+SEGMENT RESULT
+€121 million
+Significant jump in revenue and earnings
+Continued growth in the field of chip-based payment cards
+and governmental identification documents
+The Chip Card & Security segment in the 2015 fiscal year
+G 29
+Revenue and Segment Result
+€ in millions
+Infineon'
+› Activity trackers
+Our solutions are based on highly efficient power transistors and diodes, partly manufactured
+from innovative materials such as silicon carbide and gallium nitride, driver ICs and control
+ICs. Furthermore, we provide support for our customers with our excellent application under-
+standing.
+€352 million
+Portfolio and market access strategically improved by means of
+integration of International Rectifier
+MEMS sensor product portfolio expanded
+The Power Management & Multimarket segment
+in the 2015 fiscal year
+G25
+Revenue and Segment Result
+of the Power Management &
+Multimarket segment
+SEGMENT RESULT
+€ in millions
+1,061
+144
+172
+1,794
+352
+2013
+2015
+987
+€1,794 million
+REVENUE
+Power Management & Multimarket
+11.9%
+9.5%
+8.6%
+7.1%
+1 Including International Rectifier and LSPS
+Source: IHS Inc., "Power Semiconductor Discretes &
+Modules Report", September 2015
+62
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Infineon
+DPS310
+Height measurement with a
+DPS310 pressure sensor
+Infineon expands its portfolio of sensors.
+Thanks to the highly-accurate digital
+barometric pressure sensor DPS310, the
+exact height can be determined with only
+a few centimeters tolerance. It can be
+used to determine the floor level in build-
+ings or parking garages. Or the altitude
+covered when crossing the Alps.
+1.0 mm
+2.5 mm
+2.0 mm
+☐
+Revenue
+The Power Management & Multimarket segment generated revenue totaling €1,794 million
+in the 2015 fiscal year (including International Rectifier's contribution from January 13, 2015),
+69 percent up on the previous year's figure of €1,061 million. The segment accounted for
+31 percent of Infineon's total revenue.
+The growth in revenue is essentially due to six factors. First, the acquisition of International
+Rectifier. Approximately 70 percent of International Rectifier's revenue is attributable to the
+Power Management & Multimarket segment. Second, we benefited from favorable currency
+effects. Third, the breakthrough occurred in digital conversion concepts for DC-DC power
+management in servers, leading to a rise in demand for our controller ICs, driver ICs and low-
+voltage power MOSFET transistors. Fourth, the worldwide introduction of the fourth generation
+of cellular network infrastructure (LTE), especially in China, led to revenue growth for our
+■Revenue
+19%
+22%
+19%
+2014
+2015
+Europe, Middle East, Africa
+Asia-Pacific, Japan
+Americas
+64
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+G see glossary, page 293
+G see glossary, page 290
+Business strategy and fields of application
+Power management is one of the keys to the Power Management & Multimarket segment.
+The power range addressed by the segment spans from 10 watts for a smartphone charger
+to 3,000 watts for the power supply of a server. (Higher power output is addressed by the
+Industrial Power Control segment.) Approximately two thirds of segment revenue is attribut-
+able to power MOSFETs: low- and medium-voltage OptiMOS™ power transistors, high-voltage
+CoolMOST power transistors, driver ICs and control ICs. Approximately one quarter of revenue
+is generated by mobile devices (essentially sensors, radio frequency (RF) antenna switches,
+low-noise amplifiers and diodes). The remainder stems from business in cellular network
+infrastructure (RF power transistors for base stations).
+The factors driving our success in the Power Management & Multimarket segment are our
+leading core technologies and the ability to offer both differentiated solutions through our
+strategic approach "Product to System" and through our standard products for the mass
+market. International Rectifier complements us especially with respect to accessing the mass
+market. As a further aspect of our strategic approach "Product to System", we have stepped
+up relations with our lead customers in recent years, and we operate joint development
+laboratories with some of them. We offer development support for a series of other customers
+or carry out full development services on their behalf, enabling us to put our products to
+optimum use in customer applications and thereby achieve maximum efficiency as well as
+faster time-to-market.
+Through the acquisition of International Rectifier, we have extended our product and packaging
+portfolio towards low-voltage (up to 40 volts), but above all medium-voltage power transistors
+(40 to 150 volts). The latter are used in growth areas such as in solutions for DC-DC conversion,
+power tools, and in electric drives for pedelecs and e-scooters. Through International Rectifier
+we have also gained access to new direct and distribution customers, especially in the growth
+markets of Asia.
+An additional, entirely new product category resulting from the acquisition is that of compo-
+nents with highest reliability ("HiRel") for applications such as commercial aviation, aerospace
+and oil exploration. This business is more or less immune to macroeconomic cycles and
+seasonal effects.
+We develop solutions together with our customers for the following market trends:
+Increase of power density and digital power electronics: In energy converters there is a
+clear trend towards higher efficiency and greater compactness. Two factors are relevant with
+regard to power density: first, more output for the same size (for example, in power supplies
+for servers) and second, the same output in a smaller form factor (for example, power supplies
+for flat-screen televisions or chargers and adapters for mobile devices). Control ICs based on
+digital conversion (also known as "digital power management”) enable these requirements to
+be met faster and more effectively.
+2013
+Sensors: A key aspect of the Internet of Things is the "environmental sensing” of these things
+and the transmission of measurements to data centers. The trend is towards ever smaller
+and more accurate sensors and new types of sensor capable of recording further physical
+parameters. Infineon has been represented on the market with microphones based on its
+BEF
+72%
+Segment Result
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+63
+The segments
+Power Management & Multimarket
+radio-frequency (RF) power transistors. Fifth, with each new generation of mobile telephony,
+the semiconductor content in smartphones rises. The increasing number of frequency bands
+and modulation concepts requires a growing number of RF components. Sixth, as a result of
+the growing market acceptance of silicon microphones and through gains in market share, our
+revenue from these products has risen.
+Shifts occurred in the regional revenue split as a result of the acquisition of International
+Rectifier. Due to the comparatively high level of revenue generated in the Americas and the
+comparatively low revenue generated in Europe, the main changes in this split occurred in
+these regions. Europe now accounts for only 19 percent of revenue (2014: 22 percent). The
+percentage attributable to the Americas rose by 4 percentage points to 10 percent. The share
+attributable to Asia-Pacific (including Japan) remained virtually unchanged at 71 percent
+(2014: 72 percent). The most significant country in the Asia-Pacific region is China. The high
+percentage of revenue generated in this market is due to the fact that major contract manu-
+facturers of devices for brand manufacturers (so-called Electronic Manufacturing Services,
+EMS) are established there. The brand manufacturers which place orders for such projects with
+Infineon, on the other hand, have their headquarters and product development centers
+located mostly in the USA or Europe.
+Segment Result
+The Segment Result totaled €352 million (including International Rectifier's contribution
+to the Segment Result from January 13, 2015), 105 percent up on the figure of €172 million
+recorded one year earlier. The Segment Result Margin amounted to 20 percent of revenue
+(2014: 16 percent).
+The improvement in the Segment Result was mainly driven by the increase in revenue.
+Furthermore, favorable currency effects also had a positive impact on the result.
+G26
+Power Management & Multimarket
+segment revenue by region
+100%
+7%
+100%
+6%
+100%
+10%
+74%
+71%
+International Rectifier's Driver IC and discrete
+IGBTs are part of the compressor's control unit
+Importance of mobile devices: Mobile devices are used ever more frequently for internet access
+and especially media consumption. In addition, the volume of data transmitted via the cellular
+network infrastructure is growing rapidly. Ever more base stations as network access points and
+new transmission standards take account of the growing number of users of mobile devices
+and the increasing volume of data traffic. Each new generation of smartphones calls for more
+frequency bands to be supported. Furthermore, requirements on RF characteristics increase
+with each new transmission standard. The complexity of RF components is therefore growing,
+which calls for more, but also ever higher integrated, RF components.
+SSSS
+> Windshield wipers
+> Suspension
+> Sunroof
+> Steering
+> Power windows
+› Lighting
+> Hatchback
+> Electronic seat adjustment
+> Electronic control units
+> Door electronics
+> Air conditioning
+Driver assistance systems
+> ABS
+Comfort electronics
+> Start-stop system
+> Motor control
+electric engines
+> Control for combustion and
+› Battery management
+> Battery charging control
+> Alternator control
+CO₂ reduction
+Fields of application
+We see our security know-how as essential for providing added value to our customers. In
+order to guarantee the functioning of the above-mentioned safety applications in increasingly
+connected vehicles under the present communication standards, encryption technologies are
+required. In this respect, we rely on the globally leading security expertise provided by our
+Chip Card & Security segment and use it in the fields of infotainment, emergency call systems,
+digital tachographs and vehicle communication. Furthermore, special hardware solutions
+integrated in microcontrollers help to safeguard the intellectual property of our customers,
+such as the program code for an engine control system.
+Connectivity and security: In future, a growing number of vehicles will be permanently con-
+nected to the internet. This connectivity serves, for example, to upload software updates or to
+provide the driver with access to specific services. Vehicles will also communicate with one
+another to an increasing extent. The technologies for the wireless communication coming into
+use are based on industry standards, making differentiation on a product level virtually
+impossible.
+> Transmission control
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The segments
+Automotive
+› Airbag
+> Electronically controlled
+1 Including International Rectifier
+NXP
+Freescale
+STMicro-
+electronics
+Infineon'
+Renesas
+World automotive semiconductor
+market share 2014
+G18
+In terms of market share by product category in the automotive semiconductor market,
+Infineon remained in second place for sensors, with 11.5 percent of the market, and in third
+place for microcontrollers with 8.7 percent of the market. Infineon remained the market
+leader for power semiconductors, increasing its market share to 24.8 percent on the back of
+organic growth and the acquisition of International Rectifier.
+With a market volume of US$9.268 billion, Europe is still by far the most important region for
+automotive semiconductors worldwide. Infineon remained market leader in Europe with
+14.1 percent market share. In Japan, the initiatives launched a few years ago have meanwhile
+paid off with above-average growth. In this country, which is heavily dominated by local sup-
+pliers, Infineon achieved its highest market share so far of 5.2 percent, making it the largest
+non-Japanese supplier on the market. The fastest growing region was China, where Infineon
+advanced to third place for the first time with a market share of 8.9 percent. In Korea, Infineon
+remained market leader by far, with a market share of 14.6 percent.
+According to analyses performed by the market research firm Strategy Analytics, the world
+market for automotive semiconductors grew by 9.4 percent, from US$25.177 billion in the
+2013 calendar year to US$27.537 billion in 2014. At 10.5 percent (including International
+Rectifier), Infineon's market share exceeded the 10 percent threshold for the first time. The
+five largest competitors together held 44.6 percent of the market.
+› Blind spot detection
+Market position
+(e.g. tachometer)
+> Manipulation protection
+› Digital tachograph
+IOR
+IGBT
+› Communication (car-to-car,
+car-to-infrastructure)
+Security
+> Tire pressure monitoring system
+> Lane departure warning system
+> Radar-based distance warning
+> ESC (Electronic Stability Control)
+> Electronic power steering
+chassis suspension
+> Original spare parts
+authentication
+Fields of application
+57
+7.5%
+Source: Strategy Analytics, "Automotive Semi-
+conductor Vendor Market Shares", April 2015
+G19
+12.0%
+10.5%
+7.8%
+6.8%
+in third place for the first time
+NXP
+Freescale
+Infineon'
+Renesas
+STMicro-
+electronics
+1 Including International Rectifier
+China automotive semiconductor
+market share 2014; Infineon
+10.4%
+Source: Strategy Analytics, "Automotive Semi-
+conductor Vendor Market Shares", April 2015
+Treiber-IC
+IR
+J0-0
+Lo-i
+For a long time, the compressor of a refrigerator only
+had two operating states: "off" and "full speed until
+reaching the target temperature."
+A motor control unit allows the performance of the
+compressor to be regulated as needed: high perfor-
+mance if the refrigerator is used frequently and
+a lower speed at night. This not only saves
+energy but also extends the lifespan
+and reduces disruptive noises.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+58
+8.4%
+8.6%
+8.9%
+10.1%
+Driver ICs and power switches for demand-based
+compressor control
+The position of the 49 reference
+points is determined using the Kostal
+image recognition software.
+Our REAL3™ 3D image sensor also plays an important part in Google's "Tango” research project,
+which takes a new approach to giving mobile devices the ability to sense and understand their
+surroundings and to implement a variety of new and innovative applications based on this
+ability. The merging of sensor and computer technology will make smartphones and tablets
+capable of measuring space and movement more quickly and realistically. This innovation
+is therefore set to create a completely new user experience, such as for navigating in closed
+areas or for highly realistic gaming experiences.
+The ideal power transistor needs to be small, sufficiently robust to withstand high tempera-
+tures and transient voltage, and exhibit very little electrical resistance when turned on as well
+as minimal switching losses. It should also be capable of handling high switching frequencies,
+as this means the passive components used in the circuit (such as capacitors and inductors)
+can be made even smaller. These factors not only reduce costs for the customer, but also the
+size and weight of the systems, which, in turn, means savings on expensive raw materials.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Research & development
+75
+MEMS-based sensor chips: In addition to our range of silicon microphone chips, at the Mobile
+World Congress in Barcelona (Spain) in February 2015 we presented the first barometric pressure
+sensor for the consumer goods market (see the opening page of "Power Management & Multi-
+market" in the chapter "The segments"). It is capable of precisely measuring the air pressure,
+making it possible, for example, to record the altitude covered when crossing the Alps or to
+navigate within buildings with the help of a smartphone. Moreover, we are researching further
+types of MEMS-based sensor types that are capable of measuring other physical variables for
+future use in smartphones.
+"More out of less": More compact power supplies and motor controls through
+new materials for power semiconductors
+In the continuous search for even more efficient power semiconductors for increasingly com-
+pact power supplies and controls, particularly silicon carbide (SiC, a combination of silicon
+and carbon) and gallium nitride (GaN, a combination of gallium and nitrogen) have proven to
+be the materials of choice. These new semiconductor materials are capable of switching
+higher voltages and currents than silicon-based components with smaller dimensions, while
+offering fewer losses.
++
+G see glossary, page 293
+P see page 62 ff.
+G34
+"More out of less": the ampacity of silicon carbide (SiC) is far higher than that of silicon (Si).
+One 150-millimeter SiC wafer is able to switch the same amount of current as
+two 200-millimeter silicon wafers.
+Si
+(~314 cm²)
+Si
+(~314 cm²)
+The German automotive supplier Kostal has developed a 3D camera for driver monitoring (see picture on right) as a pre-series
+prototype with integrated image processing, based on Infineon's 3D image sensor chip REAL3TM. The camera is capable of measuring
+the driver's facial contours by means of 49 reference points (see picture on left), even when light conditions are constantly changing.
+Together with the 3D depth data, the camera recognizes the head position, the direction in which he/she is looking and the closing
+of the eyelids. The camera is located behind the steering wheel and senses objects at a distance of up to 1.5 meters.
+The ampacity of SiC components, for example, is incomparably higher than that of silicon
+components. Less than one third of the semiconductor area is required for a given amperage.
+This is a good example of how to make more out of less.
+> We are currently working on completely new fields of application together with the US
+technology company Google as part of its "Project Soli" research project, with the aim of
+developing special-purpose radar sensor solutions for gesture and presence recognition.
+Google already presented the first application examples at its developer conference in
+San Francisco (California, USA) in May 2015. Gesture recognition will make it possible, for
+example, to control various devices through simple gestures. Finger movements in the air
+will make control knobs and touch-sensitive displays obsolete. Our radar chip employs
+a 60-gigahertz technology and combines the transceiver and the antenna in one package.
+3D image sensor chips: The first version of this type of sensor, which measures distances
+based on the runtime of a beam of infrared light, has meanwhile reached market maturity.
+In September 2015 at the IAA International Motor Show in Frankfurt (Germany), the German
+automotive supplier Kostal presented a 3D camera system designed to monitor people while
+driving, based on our 3D image sensor REAL3TM. The camera system is capable of measuring
+the exact position of the driver's head and measures the blinking of an eye even through
+glasses or sunglasses. The system is therefore capable of recognizing whether the driver is
+showing signs of fatigue (such as momentarily nodding off) or is distracted.
+magnetic field
+Radar chips: Our chips for radar-based sensors are used in consumer goods, in vehicle safety
+applications and in industrial and commercial machinery both individually and as system
+solutions. Two examples:
+In October 2014, for example, we presented a new type of package featuring two sensor chips,
+i.e. two dies, placed on top of each other (see cover picture of this Annual Report). Whereas
+an electric power steering system had previously required two separate sensors (including
+one sensor chip each) to reliably and precisely measure the torque of the steering axle, the
+dual Hall sensor package developed at our Regensburg site now only needs one sensor (includ-
+ing two sensor chips). Using a patented flip-chip process, the chips are now placed on top of
+each other and therefore occupy the same space as versions designed with only one sensor chip.
+The innovation saves valuable space and cuts system costs in safety-critical applications, which
+include not only the power steering system, but also the accelerator and brake pedals as
+well as the brushless DC motors built into the transmission and clutch systems. Safety-critical
+applications need to meet stringent requirements in accordance with ISO 26262 standards.
+Sensor redundancy plays a key role, which was solved with the integration of two sensor chips
+in the dual Hall sensor package as a particularly low-cost, space-saving solution.
+G33
+In May 2015, we presented another magnetic field sensor: a 3D magnetic field sensor. One
+of the most important development goals when designing this sensor was to keep power con-
+sumption as low as possible, with the aim of installing it in battery-powered consumer goods
+and industrial applications. Our 3D magnetic field sensor measures three-dimensional, linear
+and rotating movements with great precision. Joysticks, control components in household
+appliances, multi-functional switches and smart meters, for example, all require this type of
+measurement. The electricity meters are currently fitted with three one-way magnetic sensors
+in order to detect manipulation by means of large magnets; one one-way magnetic field sensor
+for each direction of the external magnetic field. Electronic electricity meters can now be made
+much smaller and also consume far less power, as our 3D magnetic field sensor is capable of
+replacing all three of the previous sensors. Our family of 3D magnetic sensors will be enlarged.
+Interior design of the dual Hall
+sensor. The two sensor chips are
+placed exactly on top of each other.
+SiC
+(~177 cm²)
+sensor chip 1
+sensor chip 2
+Dual Hall sensor as packaged
+component
+> We have already been successfully selling our 77-gigahertz silicon-germanium radar chips
+to automotive suppliers for around ten years (see the acknowledgement of Bosch in the
+chapter "Awards"). These sensor chips are used for measuring distances between 50 and
+250 meters. We also offer a 24-gigahertz radar chip to measure short distances.
+Я Infineon
+74
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+P see page 123
+Infineon's 60-gigahertz radar IC
+for controlling mobile devices via
+gesture recognition. It is possible
+to adjust the demonstration
+wristwatch featured in Google's
+"Project Soli❞ research project by
+"virtually" turning the winder, i.e.
+without touching the watch itself.
+18
+19:15
+20
+By the end of the 2015 calendar year, the industrial version will be followed by a version
+designed for automotive applications, for use as a gearshift position sensor as well as in the
+steering column controls to measure the applications located there, such as the indicators,
+lights, high beam and windshield wiper controls.
+TLE 4998x8D
+200 mm →
+We also see the inductive charging of electric vehicles as a likely future application. Here,
+very high currents need to be switched with great precision in order to minimize inductive
+dispersion losses. Moreover, electrically powered vehicles themselves are another possible
+field of application for SiC components, where they are likely to be initially installed in
+on-board battery chargers for electric and plug-in hybrid vehicles. At a somewhat later point
+we expect to see SiC transistors installed in the powertrain, i.e. in the electric motor control
+system. The field of traction is yet another potential sales market, although due to the long
+development and qualification cycles in the traction industry, demand on this market is only
+likely to grow appreciably in a number of years.
+< 150 mm →
+100%
+8%
+9%
+100%
+Chip Card & Security segment
+revenue by region
+G30
+Alongside favorable exchange rate factors, the sharp rise in revenue and productivity improve-
+ments in all product categories contributed to the higher gross profit. Operating expenses
+rose less rapidly than revenue. As a result of the increasing scope of outsourcing to manufac-
+turing partners, some development expenses for manufacturing technologies were no longer
+incurred. Our ambitious “shrink strategy" - i.e. the early transfer to 90 nanometer and to
+65 nanometer manufacturing technology - is paying off.
+The Segment Result amounted to €121 million, a jump of 181 percent compared to the
+previous year's €43 million. The Segment Result Margin amounted to 18 percent of revenue
+(2014: 9 percent), the highest level ever since the foundation of Infineon.
+Segment Result
+100%
+The trend in the regional revenue split continued, with faster growth in the Asia-Pacific region
+(including Japan) compared to the other regions, resulting in a further increase in the percent-
+age attributable to this region to 51 percent (2014: 48 percent). There were several reasons
+for this: firstly, sustained demand for chip-based credit cards in China, secondly, the positive
+business trend in high-end SIM cards with mobile payment functionality in China, thirdly,
+the demand for eSE security chips in Korea and China, and, fourthly, new projects in the field
+of government identification in several Asian countries. Accordingly, Europe's 44 percent
+share in revenue recorded one year earlier fell to 41 percent. The share of the Americas region
+remained constant at 8 percent. The two largest projects in the USA are the electronic passport
+and chip-based credit cards.
+eSE
+Infineon
+2.55 mm
+2.72 mm
+The segments
+Chip Card & Security
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+0.70 mm
+44%
+are equipped with our embedded Secure Element (eSE) security chip. At nearly 50 percent,
+the most significant revenue increase year-on-year was in payment cards business, the decisive
+factor being the increasing market penetration of chip-based credit cards in the USA and
+China, where the Chip Card & Security segment had previously established an optimal position.
+200 mm
+8%
+48%
+Due to their material properties, SiC and GaN components are addressing different voltage
+classes. Whereas SiC technology is used in applications over 1,000 volts, GaN technology is
+better suited for use at 650 volts and below.
+Silicon carbide: Focus on best-value solutions for the customer; product portfolio
+expanded to include SiC MOSFETS
+As the market participant offering the most comprehensive range of power semiconductors,
+Infineon's focus is on understanding our customers' applications. We aim to provide our
+customers with best-value solutions. Nowadays, solutions of this nature often rely on a
+coordinated combination of silicon and silicon carbide (SiC) components. It is the balance
+between the cost and performance benefits of the various components that ultimately leads
+to a sustainable improvement in customers' systems. These can relate to efficiency, costs,
+size, weight or time-to-market.
+Back in 2001, Infineon was the first semiconductor manufacturer worldwide to market a SiC
+diode. In May 2014 we presented what is meanwhile the fifth generation of our 1,200-volt SiC
+diode and in the 2015 fiscal year we expanded our package portfolio to include a flat package
+76
+नै
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+Silicon carbide diode in a package
+for surface-mounted assembly on
+printed circuit boards
+41%
+Infineon
+DPAK real2pin
+We are also expanding our portfolio of SiC transistors in line with market requirements. In
+the 2014 fiscal year we introduced the first SiC transistor, a "SiC-JFET" (Junction Field Effect
+Transistor). Apart from this normally-on version, future generations of transistors will also
+be based on normally-off concepts.
+Today's main areas of application for SiC components, i.e. SiC diodes, SiC transistors and SiC
+modules, are photovoltaic inverters and power supplies. In photovoltaic inverters, the high
+switching frequencies result in smaller passive components, which help reduce both size and
+weight, a crucial aspect in the final installation. SiC-based inverters of a given performance
+class can be installed by one single technician compared with two technicians for larger and
+heavier silicon-based inverters.
+Going forward, we see controls for variable speed drives in particular as a potential field of
+application for our SiC components. This diverse market, which includes a broad variety of
+motor types and operating modes (stepper motors, robotics, high speed, high torque, etc.),
+is likely to constitute the largest field of application.
+Sensors: Measuring the environment with widely differing types of sensor
+Magnetic field sensors: Magnetic field sensors can be used in a highly diverse range of appli-
+cations. They are used to measure position, speed and torque. According to the requirements
+of new applications, we are continually launching new types of magnetic field sensor that
+feature innovations in terms of packaging and configuration.
+SiC components are also ideal for use in energy storage units, as in this application the battery
+needs to both charge and discharge with exceptional efficiency. Battery-backed photovoltaic
+systems are already making practical use of this technology and long-term potential exists for
+larger systems in the field of grid stabilization. Ultimately, we see the long-term possibility of
+strengthening the HiRel business (including high-reliability components) acquired through the
+acquisition of International Rectifier through the use of Infineon's SiC technology. Particularly
+high-temperature applications such as oil exploration could benefit from our SiC components.
+A special feature of our SiC manufacturing strategy is that, supplemented by a number of specific
+manufacturing tools, we are capable of manufacturing SiC components in the same produc-
+tion line as our silicon components, which means the same standards and quality requirements
+apply. In the course of converting SiC manufacturing to 150-millimeter wafers, we are already
+planning on preparing the first SiC technologies for qualification for automotive applications.
+This manufacturing concept will, of course, lead to a more competitive cost position.
+Gallium nitride: Infineon and International Rectifier developer teams merged within
+only three months, creating a technology and patent portfolio unique worldwide
+Gallium nitride (GaN) transistors also offer completely new, interesting properties compared
+with silicon transistors, making them suitable for future use in power supplies, for example.
+GaN transistors combine extremely low on-state resistance with minimal switching losses.
+Consequently, they allow for much higher frequencies than those possible with silicon tech-
+nologies, a fact that can be exploited to reduce the size of the overall system. However, this
+does not mean that an existing silicon power transistor will be simply replaced by a GaN
+power transistor. The full benefit will only be achieved when used with completely new power
+50%
+51%
+for surface-mounted assembly on printed circuit boards. The fifth generation of SiC diodes
+features improved characteristics in terms of both static and switching losses. Apart from our
+range of SiC diodes, which has been continually expanded over the last few years, our SiC
+hybrid modules have also enjoyed market success for several years.
+A further focus of our R&D activities is the digitization of controls for | power semiconductors.
+We are currently in the transitional stage between analog and digital controls for power
+switches. For MOSFET-based controls, the transition already began several years ago and this
+trend is now starting for IGBT-based controls. Infineon is promoting digitization along the
+entire chain, which consists of control IC, driver ICs and power switches.
+41%
+Sensor technology is one of the main focuses of our research. Sensors measure the real, analog
+world. The signals measured are firstly digitized and then processed, transmitted and stored
+as digital values, in accordance with the requirements of the application. Infineon has almost
+40 years of experience in the design and manufacture of sensors and offers the most compre-
+hensive range of pressure and magnetic field sensors for automotive applications. Every day,
+Infineon supplies over one million of these sensors to the automotive industry and more than
+three million to smartphone manufacturers. Moreover, Infineon is researching and developing
+widely varying types of sensors; see the following sections about our activities in this field
+from the 2015 fiscal year.
+> Games consoles
+> Industrial controllers
+› Spare parts
+Automotive
+› Connected vehicles
+(e.g. eCall, car-to-car,
+car-to-infrastructure)
+> Electronic tolls (toll collect)
+> Manipulation protection
+(e.g. digital tachometer)
+Governmental
+identification documents
+> Driver's licenses
+> ID cards
+› Passports
+Healthcare cards
+Internet of Things
+> Connected driving
+> Industrial Internet
+(Industry 4.0)
+> IT
+> Smart Home
+Mobile communications
+› Conventional SIM cards
+> High-end SIM cards
+> Machine-to-machine
+communication
+Payment systems
+> Credit/debit cards
+> Mobile payments
+> NFC-based contact-
+less payments
+Secure NFC (Near
+Field Communication)
+transactions
+Ticketing,
+> Accessories
+Authentication
+Fields of application
+The segments
+Chip Card & Security
+Contactless technologies: Such technologies are becoming increasingly important. Reliable
+and high-speed processing enhances ease of use for consumers and, with it, acceptance of the
+contactless use of payment cards and/or multifunctional chip cards. Enterprises and consumers
+both appreciate the advantages over contact-based systems.
+Our R&D activities additionally focus on manufacturing technologies and transistor architec-
+tures for power semiconductor components based on new materials. In the following sections
+we will introduce you to the advantages and ranges of application for power semiconductors
+based on silicon carbide and gallium nitride.
+Internet of Things: In an increasingly connected world where literally everything is getting
+connected, the role of security is growing constantly. Security is not an option; it is a must.
+This increasing need for security is visible not only in the traditional applications like mobile
+communication, payment or government identification applications. Security is fast becoming
+a key aspect in existing and emerging applications in the areas of embedded systems and
+Internet of Things. Increasing frequency of security breaches is generating greater awareness
+of the need for security. Infineon is well positioned for future developments that are related to
+the Internet of Things and is already present on the market with security solutions, for
+example, in the field of connected vehicles.
+Together with customers, the Chip Card & Security segment is developing solutions relating
+to the following market trends:
+> Embedded control: that is the ability to combine memory technologies to the security
+controllers optimally depending on the specific application
+› Contactless excellence: the demand is for secure, fast transactions; the key points are a high
+level of security, high data-transmission rates and rapid write-to-memory operations
+> Tailored security: we provide the appropriate level of security for the target application
+Nearly 30 years of experience in the largest and most sophisticated security projects in the
+world has enabled Infineon to become a leader in security solutions. The Chip Card & Security
+segment's core competencies lie mainly in the fields of tailor-made security, contactless com-
+munication and embedded microcontroller solutions (embedded control). We have created
+innovations in each of the three core competencies: Integrity Guard for security, Coil on Module
+for contactless communication and SOLID FLASH™ for integrated security controller solutions.
+With these three technologies and further security solutions, we offer a broad portfolio of
+semiconductor-based security products for a wide range of chip card and security applications.
+"Easy-to-implement” is decisive for the market success of hardware-based security technology.
+Infineon has therefore developed special competence in the following aspects, which differen-
+tiate it from its competitors:
+Business strategy and fields of application
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+68
+access control
+69
+Europe, Middle East, Africa
+Asia-Pacific, Japan
+Americas
+2015
+2014
+2013
+Chip-based credit cards: The transition from magnetic-strip-based payment cards to chip-based
+payment cards is continuing, especially in the key markets USA and China.
+Safeguarding mobile devices: Authentication solutions, such as embedded Secure Element
+or Trusted Platform Modules, are bringing new applications, such as mobile payment or
+platform integrity, to the mass market.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+69
+60
+Alongside major projects in the payment cards and governmental identification documents
+sectors, we see growth potential increasingly in smaller and regional security projects. We are
+therefore diversifying our customer portfolio and expanding our sales structures, which have
+focused more on large-scale customers in the past. We see good potential to gain a growing
+percentage of smaller regional customers on the one hand and in strengthening the distribution
+channel on the other. We are also building up our presence in the regions in order to improve
+our service to locally based customers and better cater to their specific requirements. Our aim
+is to obtain an even better understanding of the factors that make our customers successful in
+each of their regions. Often it is not a technically superior product which is required, but rather
+a solution that offers the best value for money, i.e. it fulfills the specific security requirements
+for the application at the lowest possible system cost and can be implemented simply and
+quickly by the customer.
+In addition to our traditional, internationally operating card customers and the smaller-scale
+customers operating more regionally, we are also focusing on globally operating large-scale
+customers in new markets for embedded control. These customers typically operate in the
+fields of the internet, the Internet of Things, smartphones or other mobile devices.
+Finally, we are extending our range to include software and services in order to satisfy the
+different requirements of our customers in a broad range of countries. We offer support for
+certifying security solutions, provide reference designs and offer software closely related to
+our security controllers (such as firmware, driver software, and hardware-related application
+software). These services help reduce development costs and minimize our customers'
+time-to-market.
+67
+Trusted Computing
+Electronic governmental documents: The market penetration of chip-based official docu-
+ments, such as passports, national ID cards and driver's licenses, is increasing steadily. A grow-
+ing number of countries are converting for the first time or introducing further chip-based
+documents.
+In the 2014 calendar year, Infineon held a 23.9 percent share of the world market for micro-
+controller-based chip card ICs (source: IHS Inc.). This market comprises contact-based and
+contactless microcontroller-based chip card ICs for applications in SIM cards, payment cards,
+government ID, access control, transport, and machine-to-machine communication.
+R&D expenses
+€ in millions
+13.7%
+525
+550
+12.7%
+717
+|||
+2013
+2014
+2015
+R&D expenses
+G 32
+Percentage of revenue
+G see glossary, page 294 and page 291
+Research and development expenses (R&D expenses) totaled €717 million in the 2015 fiscal
+year, compared with €550 million in 2014; an increase of €167 million or 30 percent and there-
+fore slightly disproportionally lower than the revenue increase of 34 percent. The increase in
+absolute terms primarily results from the integration of International Rectifier. As a percent-
+age of revenue, we spent 12.4 percent on R&D during the 2015 fiscal year, compared with
+12.7 percent one year earlier and therefore remain within our desired target corridor of a
+low- to mid-teens percentage.
+Market position
+Capitalized development costs totaled €100 million in the 2015 fiscal year (2014: €92 million).
+Amortization of capitalized development costs totaled €29 million (2014: €25 million).
+Subsidies and grants for R&D decreased year-on-year from €66 million to €59 million in the
+2015 fiscal year.
+R&D expenses are not only incurred for the development of new products, but also increas-
+ingly for entire platforms and new product families. These include, for example, digital power
+supply control, technology platforms for low- and high-voltage power switches, power semi-
+conductors based on the new materials silicon carbide and gallium nitride (see the section
+further below in this chapter) as well as new types of sensor, particularly those based on our
+magnetic field, radar, and MEMS technologies.
+Whereas in the past both research and development were mostly either technology- or com-
+ponent-oriented, the systems in which the components are used are meanwhile playing an
+increasingly vital role. Innovative system solutions are developed with the aim of improving
+system functionality. Although the semiconductor components may well cost more than
+previously, savings and improvements in other areas create added value for the user. In many
+cases, conventional digital microelectronics are supplemented with non-digital components
+such as radio-frequency electronics, power electronics, sensor technology, actuators or software.
+Patents
+Infineon's innovative strength and long-term competitiveness are also apparent in both the
+quantity and the quality of our patents. We applied for some 2,200 patents worldwide in the
+course of the 2015 fiscal year (including International Rectifier as of January 13, 2015), com-
+pared with around 2,100 applications one year earlier. Infineon's patent portfolio worldwide
+comprised approximately 25,000 patents and patent applications at the end of the 2015 fiscal
+year, compared with around 21,000 patents and applications at the end of the previous year,
+not including International Rectifier. The figure includes some 2,100 patents and applications
+that we acquired through the acquisition of International Rectifier.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Research & development
+73
+In conjunction with the partial settlement reached with the insolvency administrator of
+Qimonda AG in September 2014, in October 2014 Infineon acquired, among other things,
+approximately 8,800 patents and patent applications. In July 2015, these patents and patent
+applications were practically all sold to Polaris Innovations Limited, based in Ottawa
+(Canada), and Samsung Electronics Ltd., based in Seoul (Korea).
+Principal research and development activities
+12.4%
+> Sensor technology a primary focus of our technology
+and product development
+At the end of the 2015 fiscal year, 5,778 people (or 16 percent of Infineon's total workforce)
+were employed in our research and innovation sites worldwide. At the end of the 2014 fiscal
+year, Infineon employed 4,822 people in that field, 16 percent of the total workforce. Again
+here, the increase is mainly attributable to the integration of International Rectifier, which
+brought an additional 11 R&D sites into the network. Infineon now maintains R&D depart-
+ments at 32 sites in 13 countries (see map at the end of this chapter).
+> Research and development expenses in the 2015 fiscal year
+increased to €717 million
+Source: IHS Inc., "Smart Cards Semiconductors",
+July 2015
+6.7%
+15.2%
+16.0%
+23.9%
+30.5%
+১
+SHHIC
+Samsung
+Infineon
+NXP
+World microcontroller-based
+chip card ICs market share 2014
+> Developer teams from Infineon and International Rectifier
+merged to form global research network
+G31
+STMicro-
+electronics
+This market grew by 4.4 percent from US$2.52 billion in 2013 to US$2.63 billion in 2014. With
+growth well above market average, Infineon increased its market share by 2.6 percentage
+points. In contrast, all other major market players increased their revenue over the same period
+by less than the market average, thereby losing market share. The distance to the market
+leader decreased to 6.6 percentage points (2014: 10.4 percentage points). The five largest
+competitors together held 92.3 percent of the market.
+70
+32 sites in 13 countries.
+At Infineon, about
+5,800 people are
+employed in research
+and development at
+Combined Management Report - Our Group
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+72
+71
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Research &
+development
+Combined Management Report - Our Group
+Combined Management Report - Our Group
+€ in millions
+Investments¹
+Operations
+G35
+gh
+› Investments: €785 million
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Operations
+Infineon's manufacturing
+> International Rectifier manufacturing sites integrated
+in the Infineon manufacturing network
+82
+> First product for automotive applications qualified
+on 300-millimeter thin-wafer manufacturing technology
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+81
+sites employed a workforce
+of about 26,000 people -
+at 19 manufacturing sites
+in 11 countries.
+> Application development
+Shanghai
+> RF technology for cellular
+infrastructure
+Ipoh
+> Development of package
+derivatives
+> NPI (new product intro-
+duction) qualification
+Malacca
+› Package technology
+Singapore
+> IC, software and
+> Design flow and library
+development
+› Package technology
+> Test concepts
+80
+808
+› Software and system
+development for auto-
+motive, industrial and
+chip card applications
+378
+Bangalore
+> Development center for
+Industrial Internet
+› Competence center for
+compound semiconductor
+technologies
+› Competence center for
+thin-wafer technology
+> Technology development
+for sensors
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+9.8%
+Investments expressed as a percentage of revenue decreased from 15.5 percent in the 2014
+fiscal year to 13.5 percent in the 2015 fiscal year. Of the total investments, €646 million related
+to property, plant and equipment (2014 fiscal year: €567 million) and €139 million to intangible
+assets, including capitalized R&D costs (2014: €101 million).
+668
+The analysis of the optimization potential of the manufacturing infrastructure led to the
+decision to close the "Singapore Techview" site, where wafers are thinned. We also intend to
+relocate manufacturing capacities from the frontend site in Newport (Wales, UK) by the end
+of the 2017 calendar year and sell the property. The Mesa site (Arizona, USA), however, offers
+additional manufacturing capacity for epitaxy processes as well as know-how. We intend to
+expand this site to make better use of the existing capacities there with a view to fully utilizing
+them in the foreseeable future.
+83
+3
+84
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+G see glossary, page 293
+G see glossary, page 290
+First volume production of auto-
+motive-qualified products on
+300-millimeter thin-wafers world-
+wide: the 40-volt OptiMOS™ 5
+Infineon
+40-Volt
+OptiMOS™ 5
+Product portfolio for 300-millimeter thin-wafer manufacturing expanded
+Towards the end of the 2014 fiscal year, we began manufacturing various types of products of
+low-voltage power semiconductors from our OptiMOST family, high-voltage power transistors
+from our CoolMOSTM family and also IGBT power transistors within our 300-millimeter frontend
+network, consisting of the sites in Dresden (Germany) and Villach (Austria). In the 2015 fiscal
+year we began manufacturing higher quantities of these products and thereby improving the
+utilization of these two fabs.
+Moreover, in the 2015 fiscal year the first product for automotive applications was granted
+customer approval: the 40-volt OptiMOSTM 5, for which volume production began during
+the 2015 fiscal year. Infineon is therefore the first semiconductor manufacturer worldwide
+to begin the volume production of automotive-qualified power semiconductors on 300-milli-
+meter thin-wafers (G see glossary, page 295). The 40-volt OptiMOST 5 is installed in a wide range
+of brushless DC motors and half-bridge automotive applications, such as power windows,
+sunroofs, hatchbacks, central locking systems, gasoline pumps, solenoid valves and DC-DC
+converters.
+Apart from transferring Infineon's own 200-millimeter manufacturing technologies to 300-milli-
+meter technologies, we also plan to transfer a number of International Rectifier products
+to Infineon sites, preferably to the 300-millimeter manufacturing site at Dresden. Low-voltage
+MOSFET and IGBT power transistors in particular will be considered for relocation. Primarily
+due to the planned phasing out of the Newport (Wales, UK) site (see previous section), manu-
+facturing capacities will be either relocated to Dresden or outsourced to manufacturing
+partners by the end of the 2017 calendar year.
+Infineon and UMC sign manufacturing contract for automotive applications
+In December 2014, Infineon and the Taiwan-based United Microelectronics Corporation (UMC),
+one of the world's leading semiconductor contract manufacturers, expanded their existing
+research and manufacturing partnership to include power semiconductors for automotive
+applications. Under the terms of the new contract, Infineon is transferring its Smart Power
+Technology (SPT9) to UMC. Manufacturing is scheduled to start at UMC's 300-millimeter fab in
+Taiwan in 2018. Thanks to its outstanding manufacturing expertise, UMC is capable of meeting
+the automotive quality requirements which are the highest across all industries.
+Automotive applications require an ever-increasing level of functionality and safety as well as
+cost-optimized solutions. In order to fulfill these requirements, power semiconductors need
+more and more digital logic capability. In the 2009 fiscal year, with SPT9, Infineon became the
+first semiconductor manufacturer worldwide to introduce a 130-nanometer manufacturing
+process qualified for automotive applications that combined complex digital logic circuits,
+microcontrollers, sensor interfaces and power electronics. It is therefore now possible to
+integrate numerous functions in one single chip that had previously been manufactured in
+several chips using various manufacturing technologies, thereby reducing the total number
+of components as well as the error rate in vehicles. Moreover, the use of SPT9 means the chip
+size is considerably smaller, which not only improves functionality, it also significantly increases
+productivity. The versatility of SPT9 automotive applications include the controlling of small
+electric motors such as those for power windows, windshield wipers, sunroofs, electronic seat
+adjustment, ventilation, oil pumps, water pumps and airbags.
+> Power semiconductors,
+analog and mixed-signal
+ICs for automotive and
+industrial applications
+In order to boost the productivity of our in-house manufacturing capability, we have put even
+more emphasis on our automation efforts in recent years. In the process, we have increased
+the productivity of our plant in Dresden (Germany) by roughly 10 percent through automation.
+Based on these positive experiences, we have also begun to increase the degree of automation
+at our sites in Kulim, Regensburg (Germany) and Villach (Austria), adapting our approach to
+suit the specific conditions at each site.
+The Kulim (Malaysia) site. The first manufacturing building (left) was opened in 2006.
+The second manufacturing building is to be equipped with cleanroom manufacturing
+machinery as of spring 2016.
+Continued brisk demand for power semiconductors for automotive applications and the
+planned medium-term transfer of manufacturing from International Rectifier sites to Infineon
+sites led to the further expansion of the second manufacturing building at the 200-millimeter
+frontend site at Kulim (Malaysia), known as “Kulim 2”. The installation of the final infrastructural
+facilities started during the 2015 fiscal year. The "Ready for Equipment” milestone, i.e. the
+beginning of equipping the cleanroom, is scheduled for spring 2016.
+The main areas of investment in the 2015 fiscal year
+15.5%
+2013
+2014
+2015
+Investments
+13.5%
+Percentage of revenue
+1 Property, plant and equipment and intangible assets
+785
+Our investments during the 2015 fiscal year totaled €785 million, an increase of €117 million
+or 18 percent on the previous year's investment figure of €668 million. The investments included
+€21 million for the purchase of the Qimonda patents and €54 million for the expansion of the
+Kulim site (Malaysia). International Rectifier's investments are included from the date of first-
+time consolidation. Apart from the cost of expanding manufacturing capacity, the increased
+value of the US dollar led to higher investment figures.
+> Expansion of 300-millimeter frontend capacity
+> Expansion of 200-millimeter frontend capacity in differentiating manufacturing technologies,
+such as power semiconductors and magnetic field sensors for automotive applications,
+MEMS sensors and radio frequency components
+> Increased level of automation, expansion of Industrial Internet ("Industry 4.0") manufacturing
+> Expansion of backend manufacturing capacity
+› Adaptation and re-equipping of manufacturing lines to accommodate changes in the product
+portfolio, especially the ramp of volume production of new technologies and products
+Since the integration of International Rectifier and the complete takeover of LS Power Semitech
+Co., Ltd. we now operate a total of 19 manufacturing sites in 11 countries: Dresden, Regensburg
+and Warstein (all in Germany); Villach (Austria); Newport (Wales, UK); Cegléd (Hungary);
+Morgan Hill, Temecula, San Jose, Leominster, Mesa (all in the USA), Tijuana (Mexico); Beijing
+and Wuxi (both in China); Malacca and Kulim (both in Malaysia); Cheonan (Korea); Batam
+(Indonesia) and Singapore (see map at the end of this chapter). As of September 30, 2015,
+these manufacturing sites employed a workforce of 25,909 people in manufacturing functions
+(September 30, 2014: 21,959 people at the Infineon sites at that date).
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Operations
+85
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+By far the largest share of the investments in property, plant and equipment were made in
+manufacturing sites. Of those, around two thirds related to frontend sites and the majority
+of the remainder to backend sites. Most of the investments made at our frontend and backend
+sites were attributable to the following:
+Villach
+79
+> Power semiconductors
+> Transistor development for
+GaN-on-Si technology
+> Development of radiation-
+hardened components as
+well as components for
+medical applications
+> Development of package
+platforms
+Torrance
+› Control ICs for digital
+power management
+Irvine
+> DC-DC point-of-load ICs for
+server, telecommunications
+and router
+Chandler
+> Development and
+characterization of gallium
+nitride components
+> Epitaxy for gallium nitride
+technology
+Leominster
+> HiRel package development
+> HiRel power components
+> HiRel power modules
+Reigate
+› Package concept
+development
+> Package pathfinding
+› Thermal and electrical
+modeling
+El Segundo
+cellular infrastructure
+> RF power transistors for
+Morgan Hill
+Operations
+Research & development
+supply topologies, where the GaN components provide a maximum of added efficiency and
+greater compactness for the system as a whole. One example from our daily lives emphasizes
+the advantage of GaN for consumers, as this technology makes it possible to manufacture
+notebook adapters four times smaller and lighter than those currently on the market, i.e.
+about the size of a matchbox.
+We see two applications where the advantages of GaN technology over silicon technology
+offer the greatest customer benefit and therefore where the broadest market acceptance can
+be expected: firstly, in power supplies for servers, due to the stricter requirements in terms
+of efficiency, and secondly in power supplies for extremely thin televisions, due to the more
+compact design. When it comes to servers and telecommunications equipment that run
+around the clock, day in day out, every improvement in the efficiency of the power supply has
+a particularly high impact on power consumption and therefore on the electricity bill. Premium
+televisions, on the other hand, are becoming increasingly flat. Meanwhile, every millimeter
+of height is important. These days, the measurements of the power supply are largely deter-
+mined by the size of the passive components. With GaN transistors, these components are
+significantly smaller due to the higher switching frequencies, and the additionally reduced
+losses allow the use of far smaller heat sinks.
+The acquisition of International Rectifier has significantly strengthened our position in the field
+of GaN power semiconductors. Our combined know-how now enables us to develop products
+more quickly and therefore reduce time-to-market. Particularly important is our expertise in
+growing mono-crystalline layers of GaN on a silicon wafer substrate. These epitaxy processes
+are both difficult and important in mastering the so-called GaN-on-silicon technology: difficult
+because of the fact that silicon and GaN have different crystalline structures. Via multiples
+of intermediate layers of certain materials, each of which is only a few atomic layers thick, the
+geometry of the silicon crystal lattice is transferred to the geometry of the GaN crystal lattice.
+And important because the low-cost GaN-on-silicon wafers are the basis for competitively
+pricing the GaN components. All other alternative substrates are more expensive than the
+standard silicon wafer which is manufactured in high volumes.
+Our GaN development network includes sites in both Europe and the USA. At our site in Villach
+(Austria), our competence center for power electronics of all technologies and therefore
+also responsible for developing GaN technology, we have already implemented a complete
+frontend pilot line for processing 150-millimeter GaN wafers. Some of the development and
+characterization work on GaN components as well as the above-mentioned epitaxy processes
+are performed at sites in the USA. It is remarkable how quickly the various R&D activities have
+been able to merge. Teams that were previously in competition with one another have suc-
+cessfully united to form a cohesive unit within only a few months.
+In addition to strengthening our GaN expertise through the acquisition of International Rectifier,
+during the 2015 fiscal year we were successful in expanding our GaN product portfolio by
+licensing a key type of transistor. Infineon and the Japanese company Panasonic have signed
+an agreement covering the joint development of GaN components. In this context, Panasonic
+gave Infineon a license for normally-off GaN transistors.
+Furthermore, Infineon is expanding its range of products to include specific drivers and control
+ICs that enable the corresponding topologies and higher frequencies, allowing the advantages
+of GaN to be fully exploited. Infineon's GaN-on-silicon portfolio, combined with the GaN plat-
+form as part of the acquisition of International Rectifier and the partnership with Panasonic,
+positions Infineon as technology leader in the highly promising GaN market.
+The existing expertise in the field of power semiconductors at the Villach site and particularly
+the GaN manufacturing expertise were the reasons why Infineon Technologies Austria AG is both
+partner and head of the European "PowerBase" research project. The kick-off event was held
+at the Villach site in May 2015. The project, which continues until 2018, is focusing on devel-
+oping the next generation of GaN components and establishing a pilot line for GaN wafers in
+an industrial manufacturing environment with a view to achieving volume production.
+GaN transistors make it possible
+to manufacture highly compact
+power supplies, such as those
+required for flat-screen televisions
+Bristol
+G see glossary, page 291
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+R&D sites
+Warwick
+Tewksbury
+> Development of DC-DC
+converter, driver ICs and
+power ICs
+› Digital power managment
+for DC-DC power stages
+San Jose
+> Development of power
+semiconductors for space,
+aerospace, defense, and
+high-temperature appli-
+cations, e.g. hybrid DC-DC
+converter
+78
+> Mixed-signal components
+› Microcontroller systems for
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Graz
+> Chip card applications
+› Contactless systems
+> Automotive power
+semiconductors
+> Sensor applications
+Bucharest
+> Power semiconductors
+> Mixed-signal and RF ICs
+> Chip card ICs
+Beijing
+> Application development
+Seoul
+> Automotive electronics
+system solutions
+> System integration for
+power semiconductors
+Le Puy-Sainte-Réparade
+> Automotive applications:
+driver ICs and half-bridge
+driver for brushless
+DC motors
+Pavia
+> Driver ICs for motion control
+Padova
+› Software development for
+sensor products
+> RF ICs, especially radar ICS
+Linz
+> Manufacturing processes
+R&D sites
+Duisburg
+> Technology development
+> ASIC development
+Warstein
+> Product development IGBT
+modules
+> Assembly and package
+technology for IGBT
+modules and IGBT stacks
+Skovlunde
+> HiRel DC-DC converter
+> HiRel high-level power
+management solutions
+Augsburg
+automotive applications
+> Software for chip card
+applications
+> Highly-integrated and
+multi-functional CMOS
+technologies for RF, sensors
+and MEMS, among others
+> Discrete and integrated
+power semiconductors
+> Development center for
+Industrial Internet
+Regensburg
+› Competence center for
+technology, preassembly
+and package development
+› Competence center for
+manufacturing innovation
+> Product and technology
+development for sensors
+Neubiberg near Munich
+> Technology integration
+> Design flow and library
+development
+> IC, software and system
+development for micro-
+controllers, ASICs, sensors
+and chip card ICs
+> Power electronics for
+automotive and industrial
+applications
+Dresden
+Strategic manufacturing approach bears fruit: The Chip Card & Security segment
+is benefiting from increased foundry share
+system development for
+automotive and industrial
+applications
+One facet of our manufacturing strategy has therefore proved to be right, i.e. the outsourcing
+of manufacturing of products in non-differentiating technologies to foundries. We also imple-
+ment this strategy - outsourcing to subcontractors - in the area of backend manufacturing,
+such as for the standard packaging of high-voltage MOSFET power transistors.
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+The continuously increased manufacturing share outsourced to foundries in the course of
+the 2015 fiscal year has also led to a noticeable improvement in profitability. The Segment
+Result Margin of 18 percent in the Chip Card & Security segment is partly due to the lower rate
+of investment in in-house manufacturing and certain cost savings for developing the corre-
+sponding process technologies.
+> Epitaxy for silicon-based
+products
+Mesa
+› Assembly
+Tijuana
+> Power semiconductors
+(MOSFETs, IGBTs, diodes)
+Temecula
+RF power transistors
+› Competence center for
+Morgan Hill
+> HiRel printed circuit boards
+77
+San Jose
+Compared to all suppliers, spending with contract manufacturers increased disproportion-
+ately. Firstly, because International Rectifier has traditionally had a higher outsourcing share
+than Infineon, and secondly as a result of our above-mentioned manufacturing strategy. We
+spent a good half of our revenue on externally manufactured products and services provided
+by our suppliers.
+Number of suppliers increased due to the acquisition of International Rectifier;
+increased importance of contract manufacturers following the acquisition and
+implementation of our manufacturing strategy
+G see glossary, page 289
+98
+86
+> HiRel hybrid modules
+Manufacturing sites
+Infineon sites
+Frontend
+Backend
+Leominster
+> HiRel power components
+and HiRel modules
+INFINEON TECHNOLOGIES ANNUAL REPORT 2015
+Combined Management Report - Our Group
+8,741
+4
+Total equity
+5,023
+4,665
+Net cash provided by operating activities from continuing operations
+1,313
+957
+37
+Net cash used in investing activities from continuing operations
+(1,098)
+8
+9,087
+1
+2,093
+2,119
+Property, plant and equipment
+9
+15.5
+897
+15.2
+982
+Segment Result/Segment Result Margin
+17
+634
+743
+(83)
+Total assets
+(2,593)
+from continuing operations
+Net cash provided by (used in) financing activities
+Diluted earnings per share in €
+18
+0.56
+0.66
+Basic earnings per share in €
++++
+220
+471
+11
+2,013
+2,240
+5
+785
+58
+826
+760
+833
++++
+(1,654)
+490
+1,363
+(229)
+Net cash position²
+Gross cash position²
+12
+Capital expenditure
+Depreciation and amortization
+Free cash flow²
+10
+2
+555
+19
+14
+0
+8
+Other Operating Segments
+11
+665
+11
+698
+Chip Card & Security
+14
+1,796
+32
+2,050
+0
+Power Management & Multimarket
+17
+971
+16
+1,073
+Industrial Power Control
+13
+41
+2,350
+41
+2,651
+Automotive
+12
+5,795
+11
+Gain (loss) from discontinued operations, net of income taxes
+Net income
+(43)
+(7)
+622
+741
+Income from continuing operations
+37
+0.66
+763
+Operating income
+2
+13.4
+(778)
+12.2
+(791)
+Selling, general and administrative expenses
+Corporate and Eliminations
+7
+(717)
+11.9
+(770)
+Research and development expenses
+12
+35.9
+2,080
+36.0
+2,330
+Gross profit/Gross margin
+0
+(1)
+0
+12.4
+0.56
+27
+Adjusted earnings per share in € - diluted
+124 Consolidated Statement of Operations
+Consolidated Financial Statements
+99 Infineon Technologies AG
+102 Corporate Governance
+98 Overall statement of the Management Board
+with respect to Infineon's financial condition
+as of the date of this report
+95 Treasury and capital requirements
+associated material risks and opportunities
+78 Significant events after the end of the reporting period
+78 Report on expected developments, together with
+68 Group performance
+Our 2016 fiscal year
+66 The Infineon share
+61 Our employees
+61 Sustainability at Infineon
+57 Internal management system
+125 Consolidated Statement of Comprehensive Income
+126 Consolidated Statement of Financial Position
+55 Operations
+Locations
+49
+40 The segments
+18 Finances and strategy
+Our Group
+Combined Group Management Report
+to the Annual General Meeting
+8 Report of the Supervisory Board
+The Management Board
+6
+2 Letter to shareholders
+Management Board and Supervisory Board
+Content
+53 Research and Development
+Sustainability rating by DJSI
+127 Consolidated Statement of Cash Flows
+Further Information
+4
+The planned acquisition of Wolfspeed will expand our expertise once more. It will make us
+number one in silicon carbide-based power semiconductors while at the same time laying
+the foundations for becoming the market leader in radio-frequency power components. We
+are expanding our portfolio with future-oriented technologies and are thus addressing future
+growth markets such as electro-mobility, renewable energies and next-generation cellular
+infrastructures for the Internet of Things. And what's more: We are accelerating the market
+launch of these innovative technologies and helping to meet modern society's need for energy
+efficiency, networking and mobility with the most innovative semiconductor solutions. We
+expect the acquisition to be immediately accretive to Infineon's adjusted earnings-per-share.
+Wolfspeed is an investment in the future. However, we already laid the foundation for today's
+success in past months and years. This is particularly evident for example in our Automotive
+segment. Around 90 percent of the innovations in vehicles – and thus the greatest differen-
+tiation potential for automobile manufacturers - are based on electronics. The electrification
+of the powertrain and the growing penetration of advanced driver assistance systems (with
+autonomous vehicles being the long-term goal) have triggered a far-reaching transformation
+in the automotive industry. Infineon, as the system leader in automotive, is greatly benefiting
+from this development. This year these two sub-markets have reached a significant magnitude
+and will account for half of our automotive growth over the next five years. Our Automotive
+segment is thus an excellent example of our overall corporate strategy: In the past our technol-
+ogy innovations put us in a leading position, which we have further expanded with system
+understanding and the ability to adapt to changing demands. In the future this adaptability
+will continue to help us make our customers more successful with our products and solutions.
+Companies must be able to constantly reinvent themselves in order to remain successful in
+the long term. This means employees are called on to engage in new structures and new
+processes and fill them with life. Therefore I would like to take this opportunity to thank the
+employees of Infineon in the name of the entire Management Board. Your outstanding abilities,
+your motivation and your passion have made it possible for us to continue growing even in
+the face of this year's stagnating market and fierce competition. We have even managed to
+outpace the overall semiconductor market by more than the average of the 16 previous years.
+We look forward to joining together with you to reap the harvest of our hard work in the
+coming years and to address the next tasks awaiting us.
+Management Board and Supervisory Board
+Letter to shareholders
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+3
+We want to keep growing faster than the market in the future as well. This is why we are
+rigorously continuing on the path we have chosen. As a semiconductor manufacturer we are
+one of the first stages of the value chain for many industry segments. Our technologies are
+the basis for a large number of innovations that make life easier, safer and greener. This means
+we have to recognize at an early stage the direction in which our markets will develop over
+the coming years and we have to establish the prerequisites necessary to address the require-
+ments of the future today. Our objective in this context is to use our knowledge to create
+innovations that can change markets and clearly differentiate us from our competition on a
+long-term basis.
+The developments of recent years were recognized by the international rating agency S&P
+Global Ratings (S&P; formerly Standard & Poor's Ratings Services), which in February 2016 for
+the first time issued a long-term credit rating for Infineon. S&P has rated our creditworthiness
+as "BBB" (outlook "stable"). This gives Infineon the best current S&P rating of any European
+semiconductor manufacturer. The rating recognizes Infineon's growth, well above average
+compared to the rest of the industry, as well as our leading market position in several areas.
+S&P was also impressed by our strong financial profile. This rating offers us access to more
+favorable financing conditions in the capital market, which in turn helps enhance our organic
+growth strategy with strategic and financially viable acquisitions. We are actively shaping the
+current wave of consolidation in the semiconductor industry, for example with our planned
+acquisition of the US corporation Wolfspeed.
+Chief Executive Officer
+Dr. Reinhard Ploss
+Management Board and Supervisory Board
+Letter to shareholders
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+2
+128 Consolidated Statement of Changes in Equity
+130 Notes to the Consolidated Financial Statements
+All our activities are based on our strategic approach "Product to System", which we apply
+along our entire value chain to make our customers successful. This strategy is supported by
+additional elements: a culture of permanent innovation, continuous pursuit of technology
+leadership, a strong dedication to quality, differentiated in-house manufacturing and a
+go-to-market approach tailored to a variety of markets. As a result, we can offer our customers
+leading products at the highest possible quality and supply reliability, and can thus achieve
+our goal of growing profitably and faster than the market. This is our recipe for success, today
+and in the future.
+Infineon performed very well in the previous fiscal year. In spite of the difficult economic
+situation and a sluggish semiconductor market we grew once again and have achieved our
+targets. Revenue increased to 6,473 million euros, Segment Result improved to reach
+982 million euros, equivalent to a margin of 15 percent. Earnings per share rose to 66 cents.
+After two years in which we had benefited from the positive world economic situation, the
+2016 fiscal year presented us with challenges that we have readily mastered. We want our
+shareholders to have their fair share in this development. The Management Board and
+the Supervisory Board will therefore propose a dividend of 22 cents per share at the Annual
+General Meeting on February 16, 2017.
+and business partners,
+dear Infineon colleagues,
+Dear shareholders
+Neubiberg, November 2016
+Letter to shareholders
+Letter to shareholders
+Management Board and Supervisory Board
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+191 Imprint
+191 Financial calendar
+188 Technology Glossary
+186 Responsibility Statement by the Management Board
+187 Auditor's Report
+The 2016 fiscal year has proven that Infineon as a company enjoys solid health and pursues
+the right strategy. In recent years we have laid the foundation that ensures stability even
+in difficult times. We have focused on applications, technologies and products that are more
+in demand today than ever before in the context of global megatrends: automotive semicon-
+ductors, industrial power semiconductors, radio-frequency components and security solutions.
+Semiconductors are essential in tapping renewable energy sources. They reduce the amount
+of energy consumed by electric devices and facilitate systems that make transportation safer
+and cleaner. They are also at the heart of modern communications and enable fast and secure
+data traffic in an increasingly connected world. We have gained the expertise necessary to
+do all this over many years, and we continue to systematically expand it. Competence and
+good ideas are an excellent place to start, but a truly innovative company is characterized
+by the successful execution of ideas in the market.
+#1 in Europe
+Credit rating
+"BBB"
+13.1%
+1 Columns may not add up due to rounding. The business with XMC industrial microcontollers developed by Automotive and Chip Card & Security was
+transferred to Power Management & Multimarket and Industrial Power Control with effect from October 1, 2015. The pevious year figures have been
+adjusted according by.
+35,424
+36,299
+Infineon employees as of September 30
+Return on Capital Employed (ROCE) 2
+Debt-to-total-capital ratio
+Debt-to-equity ratio4
+Inventory intensity4
+12
+7.3%
+8.2%
+Return on assets4
+12.9%
+9
+14.8%
+Return on equity4
+4
+53.4%
+55.3%
+Equity ratio
+10
+0.20
+0.22
+Dividend per share in €³
+6,473
+0.60
+0.76
+13.6%
+2
+35.2%
+38.4%
+Segment Result
+(€ 15.2% Margin)
+€982 million
+Revenue (+12%)
+€6.473 billion
+Our growth strategy has proven itself
+and has earned the proper recognition:
+In February 2016 the rating agency S&P
+Global Ratings evaluated our credit-
+worthiness as "“BBB” (outlook “stable”),
+the highest credit-worthiness rating of
+any European semiconductor company.
+Furthermore, we earned the highest rating
+of any European semiconductor manu-
+facturer in the Dow Jones Sustainability
+Index (DJSI) and are listed in the DJSI
+World Index.
+Today our traditional core competencies
+are in greater demand than ever. At the
+same time we are preparing for the suc-
+cesses of tomorrow. During the past fiscal
+year we further strengthened our position
+in important future-oriented technologies
+through strategic acquisitions.
+We make our customers more successful
+with leading technology and system
+understanding. Here we benefit from long-
+term, global megatrends and develop
+solutions that make life easier, safer and
+greener.
+Infineon continued to grow during the 2016
+fiscal year. Revenue increased organically
+by 7 percent, and by 12 percent including
+the contribution from International
+Rectifier. Segment Result increased to
+€982 million, corresponding to a margin
+of 15.2 percent.
+at a glance
+Our year
+Our growth strategy has proven itself
+and has earned the proper recognition:
+In February 2016 the rating agency S&P
+Global Ratings evaluated our credit-
+worthiness as “BBB” (outlook “stable”),
+the highest credit-worthiness rating of
+any European semiconductor company.
+Furthermore, we earned the highest rating
+of any European semiconductor manu-
+facturer in the Dow Jones Sustainability
+Index (DJSI) and are listed in the DJSI
+World Index.
+Today our traditional core competencies
+are in greater demand than ever. At the
+same time we are preparing for the suc-
+cesses of tomorrow. During the past fiscal
+year we further strengthened our position
+in important future-oriented technologies
+through strategic acquisitions.
+We make our customers more successful
+with leading technology and system
+understanding. Here we benefit from long-
+term, global megatrends and develop
+solutions that make life easier, safer and
+greener.
+Infineon continued to grow during the 2016
+fiscal year. Revenue increased organically
+by 7 percent, and by 12 percent including
+the contribution from International
+Rectifier. Segment Result increased to
+€982 million, corresponding to a margin
+of 15.2 percent.
+2016
+Our year
+Infineon at a glance
+5 Debt-to-total-capital ratio = long-term and short-term debt divided by total assets.
+4 See the chapter "Review of financial condition" for definition, P page 73.
+3 A dividend per share of €0.22 for the 2016 fiscal year will be proposed to the Annual General Meeting on February 16, 2017.
+2 See the chapter "Internal management system" for definition, P page 57.
+2
+17
+12.8%
+15.0%
+(5)
+20.5%
+19.5%
+(8)
+18
+Revenue by segment
+5
+10
+Page 47
+Chip Card & Security
+Page 44
+Power Management & Multimarket
+1 In alphabetical order. Infineon's major distributions customers are Arrow, Avnet, Jingchuan, Tomen, Weikeng and WPG Holding (SAC).
+Source: IHS Markit, October 2016
+#1 with a market share of 27.6%
+for IGBT-based power semiconductors
+IIIII
+Market position²
+Key customers'
+> IGBT module solutions incl. IGBT stacks
+> IGBT modules (low-power, medium-power, high-power)
+> Driver ICs
+› Discrete IGBTs
+› Bare die business
+Product range
+ABB / Alstom / Bombardier / CSR Times / Danfoss /
+Eaton/Emerson / Goldwind / Midea / Rockwell /
+Schneider Electric / Siemens / Toshiba / Vestas /
+Yaskawa
+Applications
+> Charging stations for electric vehicles
+> DC motors
+AAC/Airbus / Artesyn / Boeing / Cisco/Dell/ Delta /
+Ericsson / Hewlett Packard Enterprise / Huawei / Lenovo/
+LG Electronics / Lite-On / muRata / Nokia / Osram /
+Panasonic/Quanta / Samsung/ZTE
+Key customers'
+> TVS (transient voltage suppressor) diode
+> RF power transistors
+› RF antenna switches
+> MEMS and ASICS for silicon microphones
+> Low-voltage and high-voltage driver ICs
+> GPS low-noise amplifier
+> Discrete low-voltage and high-voltage power MOSFETS
+> Customized chips (ASICS)
+› Control ICs
+Product range
+> Cellular infrastructure
+> Mobile devices
+> Power management (adapters, chargers, power supplies)
+> LED and conventional lighting systems
+> HiRel (high-reliability components)
+> Uninterruptable power supplies
+Market position²
+› Traction
+> Industrial vehicles
+> Security
+› Powertrain
+> Comfort electronics
+> Assistance systems and safety systems
+Applications
+Page 42
+Industrial Power Control
+Product range
+O=0C
+Automotive
+Infineon Technologies AG is a world leader in semiconductor solutions that make life easier, safer and greener.
+Microelectronics from Infineon is the key to a better future. In the 2016 fiscal year (ending September 30),
+the Company reported sales of about €6.5 billion with some 36,300 employees worldwide. Infineon is listed on
+the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the over-the-counter market OTCQX
+International Premier (ticker symbol: IFNNY).
+Infineon at a glance
+infineon
+Infineon Technologies AG
+Annual Report 2016
+16
+Page 40
+> 32-bit automotive microcontrollers for powertrain,
+safety and driver assistance systems
+› Discrete power semiconductors
+> Industrial drives
+> Home appliances
+> Energy transmission
+› Charging stations for electric vehicles
+Applications
+Source: Strategy Analytics, April 2016
+#2 with a market share of 10.4%
+Market position²
+Autoliv / Bosch / BYD / Continental / Delphi / Denso /
+Hella / Hitachi / Hyundai / Keihin / Lear / Mando/
+Mitsubishi/ Omron / Tesla / Valeo / ZF
+Key customers¹
+> Voltage regulators
+> Transceivers (CAN, LIN, Ethernet, FlexRay)
+› Radar
+> Power ICs
+> Magnetic and pressure sensors
+> Industrial microcontrollers
+> IGBT modules
+> Renewable energy generation
+#1 with a market share of 26.4%
+31
+Source: IHS Markit, October 2016
+48
+3,083
+6
+16
+942
+15
+1,000
+2,666
+6
+2,020
+33
+2,147
+12
+5,795
+6,473
+Change
+in %
+35
+46
+16
+1,574
+for standard MOSFET power transistors
+10
+661
+15
+12
+710
+13
+819
+6
+7
+399
+6
+424
+18
+23
+1,337
+24
+2016/2015
+revenue
+568
+€ in
+millions
+Gemalto / Giesecke & Devrient / Google / HP/Lenovo/
+Microsoft/Oberthur Technologies / Safran Morpho /
+Samsung / US Government Publishing Office /
+Watchdata
+Key customers'
+> Dual-interface security controllers
+(contact-based and contactless)
+› Contactless security controllers
+› Contact-based security controllers
+Product range
+in % of
+> Ticketing, access control
+› Secure NFC transactions
+> Payment systems incl. mobile payment
+> Mobile communications
+> Internet of Things
+> Healthcare cards
+> Governmental identification documents
+> Automotive
+> Authentication
+Applications
+Market position²
+#2 with a market share of 24.8%
+> Trusted computing
+Source: IHS Markit, July 2016
+for microcontroller-based chip card ICs
+€ in
+millions
+2015
+2016
+Therein: USA
+Americas
+Japan
+Therein: China
+in % of
+revenue
+Therein: Germany
+Europe, Middle East, Africa
+Revenue by region
+Fiscal year from October 1 to September 30
+As at and for the fiscal years ended September 30 (under IFRS)'
+Infineon key data
+Infineon at a glance
+2 All figures for 2015 calendar year. The market share of the five largest competitors is shown in the "Market position" section of the relevant segment.
+The figures provided in those sections with respect to changes in market share relate to the 2014 market share figures as calculated in 2016. Due to changes
+in the way the market is analyzed, these figures may differ from the 2014 market share figures reported in 2015.
+Asia-Pacific (w/o Japan)
+Product development delays (RC: medium)
+Product quality assurance is a key success factor for the business. Potential quality risks – for
+example due to high utilization levels - can affect yield fluctuations and hence our ability to
+supply customers. Shortfalls in product quality can lead to product recalls and potential costs
+related to liability claims. In addition, quality risks could also damage Infineon's reputation
+and thus have a significant adverse impact on future earnings.
+Product quality trends (RC: medium)
+Dependence on the success of specific customers may also grow if they account for an
+above-average share of Infineon's revenue and earnings. This situation could be driven by
+an exceptionally strong performance by the relevant customer, resulting, for instance, from
+exceptional demand for its products or from consolidation trends, in particular those affecting
+our first- and second-tier customers.
+The situation is exacerbated by the fact that our products are highly dependent on the degree
+of success achieved by individual customers in their own markets. Furthermore, there is a risk
+of losing future business and design wins if we are unable to deliver volumes over and above
+our contractual obligations if called upon by the customer to do so. In the case of unexpectedly
+high demand, we therefore face the challenge of having to deliver increased volumes that
+require an appropriate level of upfront investment. This could have an adverse impact on our
+investment ratio and, ultimately, on earnings.
+Thus, despite the fact that manufacturing processes and sites have become even more flexible,
+fluctuations in capacity utilization levels and purchase commitments, coupled with idle costs
+at manufacturing sites, nevertheless pose risks related to our cost position. These risks could
+possibly jeopardize our ability to attain growth and profitability targets that are based on
+cycle averages.
+The accelerating pace of events in the markets in which we operate, increased demands for
+flexibility by our customers, and short-term changes in order volumes could result in rising
+costs due to the under-utilization of manufacturing capacities, higher inventory levels and
+unfulfilled supplier contracts.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+88
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Combined Management Report | Our 2016 fiscal year
+Potential virus attacks, in particular on IT systems used in manufacturing processes, present
+additional risks that could result in loss of manufacturing or supply bottlenecks.
+The reliability and security of Infineon's information technology systems is of crucial importance.
+At the same time, the world has seen a general rise in the level of threats to data security. This
+applies increasingly to both the application of IT systems to support business processes and
+to internal and external communications. Despite the array of precautionary measures put in
+place, any major disruption to these systems could result in risks relating to the confidentiality,
+availability and reliability of data and systems used in development, manufacturing, selling
+or administration functions, which, in turn, could have an adverse impact on our reputation,
+competitiveness and operations.
+Data and IT systems security (RC: high)
+Operational risks
+Increasingly dynamic markets (RC: high)
+The ever-increasing complexity of technologies and products, shorter development cycles
+and higher customer expectations can cause a great deal of tension in the field of product
+development. Buffer times built into processes to compensate for potential delays are reduced
+accordingly. In the event of being unable to execute our development plans at the desired
+quality levels, the outcome could be development delays and increased development costs,
+which could have an adverse impact on our financial condition, liquidity, cash flows and
+earnings.
+P see page 75
+Our medium- and long-term forecasts are based on expected manufacturing cost trends.
+In this context, measures aimed at optimizing manufacturing costs for raw materials and
+supplies, energy, labor and automation, as well as for bought-in services from external
+business partners, may not be feasible to the extent envisaged.
+At the G20 summit held in Hangzhou (China) in September 2016, China ratified the Paris climate
+agreement, thereby giving its formal commitment to reducing carbon emissions. As a conse-
+quence, the importance of expanding renewable energy sources in China has increased
+enormously. Our presence in this market, alongside our collaboration with leading companies
+in the wind and solar power sectors, will create further opportunities for long-term growth.
+Our success in positioning Infineon in China as an integral part of Chinese industry (and hence
+Chinese society) could well open up a multitude of new opportunities that is highly likely to
+have a positive impact on the growth and profitability of our business.
+Further growth in semiconductor content in vehicles (OC: medium)
+We expect semiconductor content per vehicle to continue growing. The primary driving force
+behind this trend is the rising demand for active safety features and driver assistance systems.
+We are also convinced that current global carbon emissions targets cannot be achieved
+without further electrification. The need for increased efforts in this field is relevant not only
+for electro-mobility (i.e. hybrid, plug-in hybrid and all-electric vehicles), but also for power
+units in vehicles with combustion engines. IT security within the vehicle is also further gaining
+in importance. Thanks to our expertise in the field of security controllers, we are extremely
+well positioned to exploit opportunities in this area.
+Growth from mobile applications (OC: medium)
+The continued trend towards mobility is also reflected in the unbroken high demand for
+smartphones and tablets. We benefit from this development in two ways. Firstly, through
+the components we supply for mobile devices (silicon-MEMS microphones, TVS diodes,
+GPS amplifiers, CMOS-RF switches), and secondly, through power semiconductors, which
+form the key components for energy-efficient chargers (high-voltage and low-voltage power
+transistors, driver ICs and control ICs).
+Security applications (OC: medium)
+The trend towards electronic identity documents is having a positive impact on Chip Card &
+Security segment revenue. Paper-based documents are increasingly being replaced by chip-
+based versions, due to the higher level of security they offer. New markets are also emerging
+in conjunction with the Internet of Things and the Industrial Internet ("Industry 4.0"). The
+authentication of devices is playing an increasingly important role in both of these fields, for
+which Infineon offers the corresponding security chips.
+Liquidity position (OC: medium)
+Our current liquidity position, which we describe in the chapter "Review of liquidity", enables
+us to obtain favorable refinancing conditions. This fact gives Infineon both the financial
+headroom and the entrepreneurial flexibility it needs to implement its business strategies
+and initiatives.
+International Rectifier acquisition (OC: medium in the Annual Report 2015)
+planned volume requirements. The prices of raw materials and energy have recently been
+subject to significant fluctuation, and there is no reason to assume the situation will change
+in the near future. If we are unable to offset cost rises or pass them on to customers, it could
+have an adverse impact on earnings.
+89
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Combined Management Report | Our 2016 fiscal year
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Moreover, our dependence on various raw materials (such as gold and copper) used in
+manufacturing and our energy requirements expose us to substantial price risks. We are also
+dependent on supplies of the so-called rare earths required for selected manufacturing
+processes in conjunction with process integration. At the time of writing, financial instruments
+are in place to hedge our price risk exposure for gold wire during the 2017 fiscal year, based on
+Manufacturing cost trends - raw material prices, cost of materials
+and process costs (RC: medium)
+Increased market competition and commoditization of products (RC: high)
+The rapid pace of technological change in the market also results in a greater replaceability
+of our products. Due to the resulting aggressive pricing policies, we may be unable to achieve
+our long-term strategic goals of gaining and/or maintaining market share and of product
+pricing. Moreover, accelerating M&A (merger and acquisition) activity within the semiconductor
+industry could result in even tougher competition. Potential benefits for competitors in this
+market include improved cost structures and stronger sales channels. This situation could
+have an adverse impact on Infineon's earnings.
+Assessment of effectiveness
+Cyclical market and sector development (RC: high)
+85
+85
+> Issues relevant for financial reporting and disclosures in connection with agreements entered
+into are recognized and appropriately presented;
+> Intragroup transactions are fully accounted for and properly eliminated;
+> Group-wide financial reporting, measurement and accounting guidelines are continually
+updated and adhered to;
+The Internal Control System is an integral part of the accounting process in all relevant legal
+entities and corporate functions. The system monitors compliance with stated principles
+and stipulated procedures based on preventive and detective controls. Among other things,
+we regularly check that:
+The principal focus of the ICS is on the financial reporting process, with the aim of monitoring
+the proper maintenance and effectiveness of accounting systems and financial reporting. The
+primary objective of the ICS is to minimize the risk of misstatement in Infineon's internal and
+external reporting and to ensure with a reasonable amount of certainty that the Consolidated
+Financial Statements comply with all relevant regulations. Appropriate controls must therefore
+be in place throughout the organization to ensure such compliance. Clear lines of responsibility
+are assigned to each of the
+processes.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Internal Control System with respect to the financial reporting process
+All reported risks and opportunities in their entirety are reviewed for the Infineon Group
+for possible correlation and overlap factors and are analyzed using an Infineon-specific
+categorization model. Regular risks and opportunities analysis and new developments in
+risk management culture are supplemented by interdisciplinary workshops held at segment,
+corporate and regional levels. Important information relevant for Infineon's Risk and Oppor-
+tunity Management System is available to all employees via our intranet system, including
+access to ERM tools and ERM guidelines, containing job descriptions for all functions involved
+in the process as well as all information necessary for reporting purposes.
+Based on the potential degree of impact on operations, liquidity, earnings, cash flows and
+reputation as well as the estimated probability of occurrence, a risk is classified as "high",
+"medium" or "low".
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Combined Management Report | Our 2016 fiscal year
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+The opportunities arising from the acquisition of International Rectifier, described in the 2015
+Annual Report, were integrated during the 2016 fiscal year in the medium-term forecasts of
+the segments and are therefore no longer explicitly presented here.
+94
+Risk and Opportunity Managers are designated at appropriate hierarchical levels to manage
+and monitor identified risks and opportunities, and are responsible for formally determining
+a set of appropriate strategies (avoidance, mitigation, transfer to other parties, acceptance).
+Working closely with corporate functions and individual managers, the Risk and Opportunity
+Manager is also responsible for defining and monitoring measures aimed at implementing the
+adopted management strategy. For our system to be successful, it is essential that risks and
+opportunities are managed and monitored proactively and with a great deal of commitment.
+Compliance with the ERM approach is monitored by the corporate Risk Management and ICS
+departments using procedures incorporated in business processes. Group Internal Audit also
+tests compliance with legal requirements and Infineon guidelines and, where appropriate,
+rules relating to Risk and Opportunity Management and initiates corrective measures.
+The Supervisory Board's Investment, Finance and Audit Committee oversees the effectiveness
+of the Risk Management System. As part of the statutory audit, the external Group auditor also
+examines our early warning system pursuant to section 91, paragraph 2, of the German Stock
+Corporation Act to ascertain its suitability to detect risks that could pose a threat to Infineon's
+going-concern status and reports annually thereon to the Chief Financial Officer (CFO) and the
+Investment, Finance and Audit Committee of the Supervisory Board.
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+› Processes and controls are in place to explicitly guarantee the completeness and correctness
+of the year-end financial statements and financial reporting;
+We have once again achieved above-average revenue growth in China, as a result of which
+the share of Group revenue generated in this region rose again slightly from 23 percent in the
+2015 fiscal year to 24 percent in the 2016 fiscal year. Our dependence on the Chinese market
+therefore remains and constitutes a slightly higher risk than one year earlier. This risk includes
+the possibility of lower demand for exports to China and hence a decline in manufacturing
+capacity utilization levels. There is also a risk that an increased volume of previously imported
+semiconductors will be manufactured in China going forward. Regardless of our assessment
+of potential scenarios and outcomes within this complex set of risks, these developments
+could have an adverse impact on Infineon's operations, financial condition, liquidity, cash
+flows and earnings.
+In this context, we are particularly monitoring the European debt crisis. As a consequence of
+high levels of public sector debt, measures are increasingly being taken to consolidate budge-
+tary shortfalls and cut investment expenditure. Uncertainty among consumers and companies
+is growing and unemployment remains high in many EU countries. A number of geopolitical
+risks, such as the crisis in Ukraine as well as unrest and civil wars in the Middle East, represent
+additional risk factors.
+87
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Combined Management Report | Our 2016 fiscal year
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+98
+86
+As a globally operating company, our business is highly dependent on global economic
+developments. A worldwide economic downturn - particularly in the markets we serve - may
+result in us not achieving our forecasted revenue. Risks can also arise due to political and
+social changes in countries in which we manufacture and/or sell our products.
+Unsettled political and economic climate (RC: high)
+Strategic risks
+In the following section, we describe risks that could have a significant or materially adverse
+impact on Infineon's operations, liquidity, earnings, cash flows and reputation and which have
+therefore been allocated to the risk classes “high” or “medium”. Depending on the potential
+degree of impact and the estimated likelihood of occurrence, the risk class is shown in paren-
+theses for each risk (e.g. “RC: high").
+Significant risks
+At the end of the annual cycle, the material legal entities review and confirm the effectiveness
+of the ICS with regard to the accounting and financial reporting process. The Management
+Board and the Investment, Finance and Audit Committee of the Supervisory Board are regularly
+informed about any significant control deficiencies and the effectiveness of the internal controls.
+The Risk Management and ICS are continuously reviewed to ensure compliance with internal
+and external requirements. Regular improvements made to the system contribute to the
+continuous monitoring of the relevant risk areas within the responsible organizational units.
+International Rectifier's ICS was integrated in the Infineon Group's ICS during the 2016 fiscal
+year in conjunction with the merger of legal entities and processes.
+Furthermore, in a Representation Letter, all legal entities, segments and relevant corporate
+functions confirm that all business transactions, all assets and liabilities and all income and
+expense items have been recognized in the financial statements.
+We systematically assess the effectiveness of the ICS with regard to the corporate accounting
+process. An annual risk analysis is initially performed and the defined controls are revised, as
+and when required. The assessment involves identifying and updating significant risks relating
+to accounting and financial reporting in the relevant legal entities and corporate functions.
+The controls defined for identifying risks are documented in accordance with Group-wide
+guidelines. Regular random tests are performed to assess the effectiveness of the controls.
+These tests constitute the basis for an assessment of the appropriate extent and effectiveness
+of the controls. The results are documented and reported in a global IT system. Any deficiencies
+identified are remedied with due consideration given to their potential impact.
+> Processes are in place for the segregation of duties and for the dual control principle in the
+context of preparing financial statements, as well as for authorization and access rules for
+relevant IT accounting systems.
+The worldwide semiconductor market is dependent on global economic growth and hence
+subject to fluctuations. Our target markets continue to be exposed to the risk of short-term
+market fluctuations. As a result, our own forecasts of future business developments are subject
+to a high degree of uncertainty. It is possible, for instance, that future market downturns will
+follow another pattern, for example an L shape. The absence of market growth or its decline
+would make it considerably more difficult to attain our own growth target. In the event that
+we are unprepared for market fluctuations, or our response to such fluctuations turns out to be
+inappropriate, this could have a sustained materially adverse impact on Infineon's operations,
+financial condition, liquidity and earnings.
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+In order to develop or expand our business, we may seek to acquire other businesses or enter
+into various forms of cooperation arrangements. In the case of acquisitions, there is a risk
+that these activities prove to be unsuccessful, particularly regarding the integration of people
+and products in existing business structures. These issues could adversely impact our financial
+condition and earnings performance.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Specified currencies are hedged Group-wide by means of derivative financial instruments.
+These hedges are based on forecasts of future cash flows, the occurrence of which is
+uncertain. Under these circumstances, exchange rate fluctuations could – despite hedging
+measures - also have an adverse impact on earnings.
+Risk of default by banking partners (RC: medium)
+The relatively high level of our holdings of liquid funds (gross cash position) exposes us to the
+potential risk of a default by one or more of the banking partners with whom we do business.
+We mitigate this risk - which could still arise despite various state-insured deposit protection
+mechanisms - by a combination of risk avoidance analyses and risk diversification measures.
+The failure of these measures could have a materially adverse impact on Infineon's financial
+condition and liquidity situation.
+Further information regarding the management of financial risks is provided in note 22 to the
+Consolidated Financial Statements.
+Legal and compliance risks
+Qimonda insolvency (RC: medium)
+Due to the insolvency proceedings relating to Qimonda and claims brought against Infineon,
+we are exposed - even after the partial settlement reached on September 11, 2014 - to
+a substantial amount of potential liabilities, which are described in detail in note 23 to the
+Consolidated Financial Statements.
+P see page 170 f.
+Provisions are recognized in connection with these matters as of September 30, 2016. The
+provisions reflect the amount of those liabilities that management believes are probable and
+can be estimated with reasonable accuracy at that time. There can be no assurance that such
+provisions recorded will be sufficient to cover all liabilities that may ultimately be incurred in
+relation to these matters.
+As with many other companies in the semiconductor industry, allegations are made against
+us from time to time that we have infringed other parties' protected rights. Regardless of the
+prospects of success of such claims, substantial legal defense costs can arise.
+Whilst we often benefit from cross-licensing arrangements with major competitors and
+are keen to broaden the protection offered in this area by entering into new agreements,
+no such opportunities exist to safeguard against risks of this nature in the case of companies
+specializing in the exploitation of patent rights.
+We cannot rule out that patent infringement claims will be upheld in a court of law, thus
+resulting in significant claims for damages or restrictions in selling the products concerned.
+Any such outcome could in turn have an adverse impact on our earnings performance.
+Further information is provided in note 23 to the Consolidated Financial Statements.
+Impact of our global operations (RC: medium)
+Our global business strategy requires the maintenance of R&D locations and manufacturing
+sites throughout the world. The location of such facilities is determined by market entry
+hurdles, technology and cost factors. Risks could, therefore, arise from adverse economic
+and geopolitical developments in our regional markets, changes in legislation, and policies
+affecting trade and investment aimed at limiting free trade and varying practices of the
+regulatory, tax, judicial and administrative bodies in the jurisdictions where we operate.
+These risks could restrict our business activities in those countries. We could also be exposed
+to fines, sanctions and damage to reputation.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Intellectual property rights and patents (RC: medium)
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Psee page 170 f.
+90
+Frontend and backend manufacturing need to be optimally synchronized to enable Infineon
+to develop competitive and high-quality products designed to provide customized techno-
+logical solutions. In view of the rapid pace of technological change and increasingly stringent
+customer requirements, coordination processes need to become increasingly sophisticated.
+Failure to continue making progress in this area could result in quality problems, product
+development or market maturity delays as well as higher R&D expenses and hence adversely
+impact our earnings performance.
+One risk that semiconductor companies operating in-house manufacturing facilities typically
+face is that of delays in the ramping-up of production volumes at new manufacturing sites,
+coupled with the required transfer of technology. One good example is in the Automotive
+segment, where customers' product approval and testing processes can take place over an
+extended period of time, thus influencing our global manufacturing strategy as well as short-
+and medium-term capacity utilization. Failure to anticipate these changes in the manufacturing
+process in good time could result in capacity shortages and hence lower revenue on the one
+hand as well as costs incurred due to under-utilization on the other.
+Dependence on individual manufacturing sites (RC: medium)
+Our South East Asian manufacturing sites are of critical importance for our production. If, for
+example, political upheavals or natural disasters in the region were to impede our ability to
+manufacture at these sites on the planned scale or to export products manufactured at those
+sites, it would have an adverse impact on our financial condition, liquidity and earnings.
+Our current manufacturing capacities in this region are, to a large extent, not insured against
+political risks such as expropriation of assets. The transfer of manufacturing capacities from
+these sites would, therefore, not only involve a great deal of time and technical effort, Infineon
+would also be required to bear the necessary cost of investment.
+Dependence on individual suppliers (RC: medium)
+We cooperate with numerous suppliers who provide us with materials and services, or who
+manage parts of our supply chain. We do not always have alternative sources for some of these
+suppliers and therefore depend on their ability to deliver products of the required quality.
+Failure of one or more of these suppliers to meet their obligations to Infineon could have an
+adverse impact on our earnings performance.
+Need for qualified staff (RC: medium)
+P see page 166 ff.
+One of our key success factors is the availability of sufficient qualified employees at all times.
+There is, however, a general risk of losing qualified staff or not being able to recruit, train and
+retain adequately qualified staff within the business. A lack of technical or management staff
+could, among other things, restrict future growth and hence adversely impact our earnings
+performance.
+Currency risks (RC: medium)
+Our involvement and participation in various regional markets around the world creates
+cash flows in a number of currencies other than the euro - primarily in US dollars. A significant
+share of revenue on the one hand and of operating costs and investments on the other is
+denominated in US dollars and correlated currencies. For the most part, Infineon generates
+a US dollar surplus from these transactions.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+90
+Financial risks
+91
+Asian markets are particularly important to our long-term growth strategy. Our operations in
+China are influenced by a legal system that may be subject to change. One example is the fact
+that local regulations could make it mandatory to enter into partnerships with local companies.
+These circumstances could lead on the one hand to Infineon's intellectual property no longer
+being sufficiently protected and on the other to intellectual property developed by Infineon in
+China not being freely transferable to other countries and locations, thus impairing revenue
+and profitability.
+Acquisitions and cooperation arrangements (RC: medium)
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+93
+333
+We see numerous opportunities for working with new materials, such as those associated
+with silicon carbide or gallium nitride, to develop more powerful and lower-cost products.
+These materials could well have a positive influence on our ability to attain our strategic
+growth and profitability targets. The planned acquisition of Wolfspeed could significantly
+accelerate the market launch of products based on silicon carbide and gallium nitride.
+Strategic approach "Product to System" (OC: medium)
+We are constantly striving to develop new technologies, products and solutions and to
+improve on existing ones, both separately and in collaboration with customers. We therefore
+continually invest in research and development relating to the use of new technologies and
+materials. Technologies and materials in current use may well lose their predominance in
+the foreseeable future, such as silicon, which could reach its physical limits in some areas
+of application.
+With the "Product to System" strategic approach, we seek to identify additional benefits on
+a system level for our customers from within our broad portfolio of technologies and products.
+The strategy enables us to exploit available revenue potential even more effectively and thereby
+to achieve our growth and margin targets. This approach also enables us to reduce customers'
+development costs and shorten lead times required to bring their products to market.
+Support for change in energy policies and consideration of climate change issues
+(OC: medium)
+Ability to supply due to available capacities (OC: medium)
+Our in-house manufacturing capacities, together with those of our external partners, provide
+us with sufficient flexibility to meet requirements. Growing demand for power semiconductors
+has been met in particular by the expansion of our 300-millimeter manufacturing facilities in
+Dresden (Germany) and the opening of a second manufacturing facility at Kulim 2 (Malaysia).
+In response to rising demand for 77 GHz radar sensor ICs, the decision has been taken to
+expand capacities at our plant in Regensburg (Germany).
+The availability of additional capacities, combined with the proactive strategic and operational
+planning of internal and external resources, enable us to meet rising demand from both
+existing and new customers in the event of a market upturn.
+Market access and activities in China (OC: medium)
+Infineon generates more revenue in China than in any other country. Accordingly, developments
+and growth opportunities in China are of utmost importance to the Group and relate to the
+following markets that we serve:
+Vehicle production in China is still expanding, albeit at a slower pace. At the same time, rapid
+growth in the production of plug-in hybrid and all-electric vehicles has turned China into the
+world's largest market for electro-mobility.
+China is the world's biggest market for trains and home to the world's largest train manufacturer
+by far, which is an Infineon customer. The continued expansion of the domestic rail network
+and a growing volume of international infrastructure projects both represent growing business
+opportunities for Infineon.
+Population growth and increasing industrialization in all parts of the world are resulting in
+ever-greater global demand for energy. Electric power is becoming the most important energy
+carrier of the 21st century. Renewables are already playing a key role in reducing carbon
+emissions. The long-term objective is to achieve a global decarbonization by the end of the
+century, as resolved at the Climate Change Conference held in Paris in December 2015.
+Infineon's semiconductors enable electric power to be generated from renewable energy
+sources. They also boost energy efficiency and offer efficiency gains at all stages of the energy
+industry's value-added chain, whether in generation, transmission, or above all in the use
+of electrical power. They form the basis for the intelligent and efficient use of electrical power,
+for instance in industrial applications, power supplies for computers, consumer electronics
+and vehicles.
+New technologies and materials (OC: medium)
+The principal opportunities are described in the following section. The list is not exhaustive
+and represents only a cross-section of the opportunities available. Our assessment of these
+opportunities is subject to continuous change, reflecting the fact that our business, our markets
+and the technologies we deploy are continuously subject to new developments, bringing with
+them fresh opportunities, causing others to become less relevant or otherwise changing the
+significance of an opportunity from our perspective. Depending on the potential degree of
+impact and the estimated probability of occurrence, each of these opportunities is assigned
+to an "opportunity class" (OC) in the same way that risks are allocated to a risk class. These
+classifications are shown in parentheses (e.g. “OC: medium”).
+Opportunities
+In the case of smaller acquisitions or portfolio decisions, there is always a risk of non-com-
+pliance with antitrust regulations due to lack of knowledge or failure to make the people
+involved in such transactions adequately aware of the issues. This can result in high levels of
+cost (e.g. significant time spent by management, assignment of attorneys) and fines. Infineon's
+reputation may also suffer under these circumstances.
+Tax, fair trade and capital market regulations can all entail additional risks. In order to mitigate
+these risks, we rely upon the advice of both in-house and external experts and provide suitable
+training to our employees.
+Measures to implement our risk management strategy
+At a strategic risk level, we endeavor to mitigate the typical risks that arise in the semiconductor
+sector from economic and demand fluctuations and the risks related to Infineon's operations,
+financial condition, liquidity and earnings by closely monitoring changes in early warning
+indicators as well as by developing specific response strategies appropriate to the current
+position within the economic cycle. This can be done, for instance, by rigorously adjusting
+capacities and inventory levels at an early stage, initiating cost-saving measures and making
+flexible use of external manufacturing capacities, both at frontend and backend facilities.
+At an operational level, we have adopted various quality management strategies aimed at
+avoiding quality risks (such as "Zero Defects" and "Six Sigma"), to prevent or solve problems
+and to improve our business processes. Our company-wide quality management system
+has been certified on a worldwide basis in accordance with ISO 9001 and ISO/TS 16949 for
+a number of years and also encompasses supplier development. Our processes and initiatives
+to ensure continuous quality improvement in corporate procedures are aimed at identifying
+and eliminating the reasons for quality-related problems at an early stage.
+A structured project management system is in place to handle development projects, including
+customer-specific projects. Clear project milestones and verification procedures required
+to be carried out during a project as well as clearly defined limits of authority help us identify
+potential project risks at an early stage and counter these risks with specific measures.
+We seek to minimize procurement-related risks through appropriate purchasing strategies
+and techniques, including constant product and cost analysis ("Best Cost Country Sourcing"
+and "Focus-on-Value”). These programs include cross-functional teams of experts, who are
+responsible for the standardization of purchasing processes with respect to material and
+technical equipment.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+92
+2
+In response to the general increase in threats to data security and the high degree of pro-
+fessionalism meanwhile applied in the area of cybercrime, we have initiated an information
+security program to further improve protection against hacking attacks and related risks to
+our IT systems, networks, products, solutions and services. Information security is achieved
+primarily with the aid of Infineon's systematically applied and global Information Security
+Management System (ISMS), the prime objectives of which are to identify and measure all
+potential IT risks and to ensure that effective processes and tools are in place to minimize
+and avoid risk. The ISMS covers all areas of Infineon's business and is certified to the globally
+recognized ISO/IEC 27001 standard. All relevant risk areas are continuously monitored and
+optimized in conjunction with regular internal and external audits.
+We minimize legal risks relating to intellectual property rights and patents by pursuing a
+well-defined patent strategy, including thorough patent research and selective development
+and registration of Infineon patents as well as precautionary protective measures in the form
+of agreements with major competitors. We aim to increase the number and scope of such
+cross-licensing agreements with leading competitors in order to reduce patent-related risks.
+However, no such opportunities exist to safeguard against risks of this nature in the case of
+companies specializing in exploiting patent rights.
+We have established a Group-wide compliance management system with the aim of managing
+compliance-related risks on a systematic, comprehensive and sustainable basis. Under this
+system, major preventive procedures are continuously developed, other elements of the
+system revamped or strengthened, and appropriate responses established for possible or
+actual incidences of non-compliance with internal or external regulations. The Compliance
+Officer reports on a quarterly basis to the Investment, Finance and Audit Committee of the
+Supervisory Board.
+In certain cases, insurance policies have been taken out to protect against potential claims
+and liability risks, with the aim of avoiding or at least minimizing any adverse impact on
+Infineon's financial condition and liquidity.
+Overall statement by Group Management on risk situation
+The overall risk assessment is based on a consolidated view of all significant individual risks.
+We are not currently aware of any substantial risks capable of jeopardizing Infineon's going-
+concern status.
+Combined Management Report | Our 2016 fiscal year
+Determining and adjusting manufacturing volumes (RC: medium)
+For the 2015 fiscal year, the Company paid a dividend of €0.20 per share (€225 million in total).
+For information regarding Infineon's long-term dividend policy, see "Sustainable value creation
+for our shareholders" in the chapter "Group Strategy".
+ANNUAL REPORT 2016
+Shareholders' equity
+6,606
+6,389
+Special reserve with an equity portion
+1
+1
+Provisions for pensions and similar obligations
+93
+142
+Other provisions
+316
+362
+Provisions
+409
+504
+Bonds
+804
+3,237
+Liabilities
+48
+848
+Other liabilities
+678
+226
+1,301
+253
+284
+Trade payables
+795
+Liabilities to banks
+804
+Liabilities to affiliated companies
+249
+Distributable profit
+2,737
+3,399
+Current assets
+1,672
+1,954
+Cash and cash equivalents, marketable securities
+1,481
+3,670
+832
+517
+613
+Inventories
+5,775
+6,822
+Non-current assets
+Receivables and other assets
+2,578
+Prepaid expenses
+39
+2,897
+1,179
+1,207
+2,247
+2,253
+Retained earnings
+40
+Capital reserves
+9,487
+10,265
+Total assets
+3
+4
+Active difference resulting from offsetting
+Share capital
+5,245
+Deferred income
+15
+No shares conferring special control rights have been issued.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+103
+Nature of control over voting rights when employees participate in the
+Company's capital and do not exercise their control rights directly
+Employees who participate in the capital of Infineon Technologies AG exercise their control
+rights directly in accordance with the applicable laws and the Articles of Association, just like
+other shareholders.
+P see page 153
+Rules governing the appointment and dismissal of members of the Management Board
+Section 5, paragraph 1, of the Articles of Association stipulates that the Management Board
+of Infineon Technologies AG shall consist of at least two members. Effective July 1, 2016, the
+Management Board was expanded from three to four members. The Supervisory Board deci-
+des on the exact number of members of the Management Board and on their appointment
+and dismissal in accordance with section 5, paragraph 1, of the Articles of Association and
+section 84, paragraph 1, AktG. As Infineon Technologies AG falls within the scope of the
+German Co-Determination Act (Mitbestimmungsgesetz - "MitbestG"), the appointment or
+dismissal of members of the Management Board requires a two-thirds majority of the votes of
+the members of the Supervisory Board (section 31, paragraph 2, MitbestG). If such majority is
+not achieved at the first ballot, the appointment may be approved on a recommendation of
+the Mediation Committee at a second ballot by a simple majority of the votes of the members
+of the Supervisory Board (section 31, paragraph 3, MitbestG). If the required majority is still not
+achieved, a third ballot is held in which the Chairman of the Supervisory Board has two votes
+(section 31, paragraph 4, MitbestG). If the Management Board does not have the required num-
+ber of members, in urgent cases, the local court (Amtsgericht of Munich) makes the necessary
+appointment upon petition of a party concerned pursuant to section 85, paragraph 1, AktG.
+Pursuant to section 84, paragraph 1, sentence 1, AktG, the maximum term of appointment
+for members of the Management Board is five years. Re-appointment or extension of the
+term of office, in each case for a maximum of five years, is permitted (section 84, paragraph 1,
+sentence 2, AktG). Section 5, paragraph 1, of the Articles of Association and section 84, para-
+graph 2, AktG stipulate that the Supervisory Board may appoint a chairman and a deputy
+chairman to the Management Board. The Supervisory Board may revoke the appointment
+of a member of the Management Board and the Chairman of the Management Board for good
+cause (section 84, paragraph 3, AktG).
+Rules governing the amendment of the Articles of Association
+Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of Asso-
+ciation rests with the Annual General Meeting. However section 10, paragraph 4, of the Articles
+of Association gives the Supervisory Board the authority to amend the Articles of Association
+insofar as such amendments relate merely to the wording, such as changes in the share capital
+amount resulting from a capital increase out of conditional or authorized capital or a capital
+decrease by means of cancellation of own shares. Unless the Articles of Association provide
+for another majority, section 179, paragraph 2, AktG stipulates that resolutions of the Annual
+General Meeting regarding the amendment of the Articles of Association require a majority of
+at least three quarters of the share capital represented. Section 17, paragraph 1, of the Articles
+of Association of Infineon Technologies AG provides in principle for resolutions to be passed
+with a simple majority of the votes cast and, when a capital majority is required, with a simple
+majority of the capital unless a higher majority is required by law or in accordance with other
+stipulations contained in the Articles of Association.
+The powers of the Management Board to issue shares derive from section 4 of the Articles
+of Association, in conjunction with applicable legal provisions. Further information relating
+to the Company's existing Authorized and Conditional Capital can be found in note 15 to the
+Consolidated Financial Statements.
+Authorization to issue bonds with warrants and/or convertible bonds
+The Annual General Meeting held on February 13, 2014 authorized the Management Board,
+in the period through February 12, 2019, either once or in partial amounts, to issue bonds
+with warrants and/or convertible bonds (referred to collectively as "bonds") in an aggregate
+INFINEON TECHNOLOGIES
+Infineon shares acquired or being acquired on the basis of this or an earlier authorization
+may - if not sold either via the stock exchange or by means of a public offer to purchase
+addressed to all shareholders - be used for all legally admissible purposes. The shares may
+also be cancelled or offered to third parties in conjunction with business combinations or
+the acquisition of companies, parts of companies or participations in companies. Under
+specified circumstances subject to the consent of the Supervisory Board, the shares may also
+be sold to third parties in return for cash payment (including by means other than through
+the stock exchange or through an offer to all shareholders), used to meet the Company's
+obligations under bonds with warrants and convertible bonds and stock option plans, offered
+for sale or granted as a remuneration component to members of representative bodies and
+employees within the Group, and/or used to repay securities-backed loans. The subscription
+right of shareholders is excluded in all of the above cases (except when the shares are
+cancelled). In addition, the subscription rights of shareholders are excluded in respect of
+fractional amounts in instances in which the shares are sold through a public offer addressed
+to all shareholders.
+A resolution passed by the Annual General Meeting on February 28, 2013 authorizes Infineon
+Technologies AG, in the period through February 27, 2018, to acquire its own shares, within
+the statutory boundaries, in an aggregate amount not exceeding 10 percent of the share capital
+at the time the resolution was passed or - if the latter amount is lower - of the share capital
+in existence at the time the authorization is exercised. The Company may not use the authori-
+zation for the purposes of trading in its own shares. The Management Board decides whether
+own shares are acquired through the stock exchange, by means of a public offer to purchase
+addressed to all shareholders or a public invitation to submit offers for sale or via a bank or
+other entity that meets the requirements of section 186, paragraph 5, sentence 1, AktG. The
+authorization includes differentiating requirements – in particular with regard to the permissible
+purchase price – for each method of acquisition.
+Purchase of own shares
+The Management Board is authorized, subject to the requirements resolved by shareholders
+at the Annual General Meeting, to determine the further details of the bond issue, including its
+terms and conditions.
+Even if the dilution protection regulations are applied, the option or conversion price must
+equal at least 90 percent of the average stock exchange price of the Company's shares in the
+Xetra closing auction on the Frankfurt Stock Exchange (or a comparable successor system);
+further details - including the conditions under which the option or conversion price may be
+reduced are set out in the authorization.
+Shares with special control rights
+> in order to exclude fractional amounts resulting from a given subscription ratio from the
+subscription rights of the shareholders to the bonds or insofar as such action is necessary
+in order to grant holders of option or conversion rights from bonds that have either already
+been or will in future be issued by the Company or its subordinated Group companies
+subscription rights to that extent to which they would be entitled after exercise of their
+rights or after fulfillment of any conversion obligations.
+nominal amount of up to €2,000,000,000, to guarantee such bonds issued by subordinated
+Group companies of the Company and to grant holders of bond options or conversion rights
+to up to 130,000,000 no-par-value registered Company shares, representing a notional portion
+of the share capital of up to €260,000,000, in accordance with the relevant terms of the bonds.
+The Management Board is authorized, with the approval of the Supervisory Board, to exclude
+the subscription rights of the shareholders to the bonds,
+104
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+> if the issue price is not substantially lower than the theoretical market value of the bonds,
+as determined in accordance with accepted methods of financial mathematics; however
+this only applies insofar as the shares to be issued to service the option and/or conversion
+rights established on this basis in aggregate do not exceed 10 percent of the share capital,
+either at the time of this authorization becoming effective or at the time of its exercise;
+Section 21, paragraph 1, WpHG requires each shareholder whose voting rights reach, exceed
+or, after exceeding, fall below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the voting rights of
+a listed corporation to notify such corporation and the German Federal Financial Supervisory
+Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - "BaFin") immediately. As of Sep-
+tember 30, 2016, we have not been notified of any direct or indirect shareholdings reaching or
+exceeding 10 percent of the voting rights. The shareholdings notified to us as of September 30,
+2016 are presented in the Notes to the Financial Statements of Infineon Technologies AG
+under the information pursuant to section 160, paragraph 1, No. 8 AktG.
+Shareholdings exceeding 10 percent of the voting rights
+Pursuant to section 67, paragraph 2, AktG, only those persons recorded in the share register
+of Infineon Technologies AG are recognized as shareholders of the Company. In order to be
+recorded in the share register of Infineon Technologies AG, shareholders are required to sub-
+mit to the Company the number of shares held by them and their name or company name,
+their address and, where applicable, their registered office and their date of birth. Pursuant
+to section 67, paragraph 4, AktG, Infineon Technologies AG is entitled to request information
+from any party listed in the share register regarding the extent to which shares, to which the
+entry in the share register relates, are actually owned by the registered party and, if it does not
+own the shares, to receive the information necessary for the maintenance of the share register
+in relation to the party for whom the party concerned holds the shares. Section 67, paragraph 2,
+AktG stipulates that the shares concerned do not confer voting rights until such time as the
+information requested has been supplied in the appropriate manner.
+P see page 97
+P see page 83 ff.
+P see page 30
+101
+Infineon Technologies AG
+Combined Management Report | Our 2016 fiscal year
+Dividend
+ANNUAL REPORT 2016
+The equity ratio at the end of the reporting period was 64.4 percent, compared to 67.3 percent
+one year earlier.
+Provisions for pensions and similar obligations decreased by €49 million as a result of a new
+statutory rule, applied for the first time, requiring liabilities to be discounted using the average
+market interest rate for the past ten fiscal years. Other provisions decreased overall by
+€46 million. Liabilities increased by €659 million over the twelve-month period, mainly owing
+to a €623 million increase in liabilities to affiliated companies. The bank loan of €792 million
+(US$934 million) taken out in conjunction with the acquisition of International Rectifier was
+fully repaid out of proceeds from a US Private Placement (USPP) of notes, thus resulting in
+a decrease in liabilities to banks and an increase in other liabilities.
+Infineon Technologies AG's financial position compared to one year earlier was influenced
+by a number of factors. Within assets, increases were recorded for investments (€940 million)
+as well as for cash and cash equivalents and marketable securities (€282 million), reflecting
+changes to the investment structure within the Infineon Group. At the same time, receivables
+from affiliated companies decreased. The increase in equity (€217 million) was mainly attribu-
+table to net income of €407 million recorded in the 2016 fiscal year. Payment of the dividend
+for the 2015 fiscal year (€225 million) reduced equity accordingly.
+9,487
+10,265
+Total liabilities and shareholders' equity
+INFINEON TECHNOLOGIES
+12
+Under the German Stock Corporation Act (Aktiengesetz), the amount of dividends available
+for distribution to shareholders is based on the level of unappropriated profit (Bilanzgewinn)
+recorded by the ultimate parent, as determined in accordance with the German Commercial
+Code (HGB).
+Expected developments, together with associated material risks and opportunities
+The expected developments, together with associated material risks and opportunities
+of Infineon Technologies AG are very similar to those of the Infineon Group. Moreover, it is
+assumed that the result from investments will play a major role in Infineon Technologies AG's
+earnings performance. As a general rule, Infineon Technologies AG participates in the risks
+of its subsidiaries and equity investments on the basis of the relevant shareholding. As the
+parent company, Infineon Technologies AG is integrated in the Infineon Group's overall risk
+management system and internal control system. For information in this context and a
+description of the expected developments, risks and opportunities of Infineon Technologies AG,
+see the chapter "Risk and opportunity report".
+Restrictions on the voting rights of shares may, in particular, arise as the result of the regula-
+tions of the German Stock Corporation Act (Aktiengesetz - "AktG"). For example, pursuant to
+section 136 AktG, shareholders are prohibited from voting under certain circumstances and,
+according to section 71b AktG, Infineon Technologies AG has no voting rights from its own
+shares. Furthermore, non-compliance with the notification requirements pursuant to
+section 21, paragraphs 1 or 1a of the German Securities Trading Act (Wertpapierhandels-
+gesetz - "WpHG") and to section 25, paragraph 1 or section 25a, paragraph 1, WpHG can,
+pursuant to section 28 WPHG, have the effect that certain rights (including the right to vote)
+may, temporarily at least, not exist. We are not aware of any contractual restrictions on voting
+rights or the transfer of shares.
+Restrictions on voting rights or the transfer of shares
+The Company held 6 million of the above-mentioned issued shares as own shares at the end
+of the reporting period (September 30, 2015: 6 million). Own shares held by the Company
+on the date of the Annual General Meeting do not carry a vote and are not entitled to participate
+in profit.
+The share capital of Infineon Technologies AG stood at €2,265,346,218 as of September 30, 2016.
+This sum is divided into 1,132,673,109 non-par registered shares, each of which represents
+a notional portion of the share capital of €2. Each share carries one vote and gives an equal
+right to the profit of the Company based on the profit appropriation resolved by shareholders
+at the Annual General Meeting.
+Structure of the subscribed capital
+Information pursuant to section 289, paragraph 4, and
+section 315, paragraph 4, of the German Commercial Code (HGB)
+Infineon Technologies AG reports unappropriated profit of €249 million in its financial
+statements for the fiscal year ended September 30, 2016. Based on earnings generated and
+Infineon's positive business outlook, a proposal will be made to the Annual General Meeting
+to pay a dividend of €0.22 per share for the 2016 fiscal year, an increase of €0.02 compared
+to the previous fiscal year. The disbursement of the proposed dividend is subject to approval
+by shareholders.
+Corporate Governance
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Most transactions within the Infineon Group involving derivative financial instruments are
+handled by Infineon Technologies AG. The comments provided in the chapter "Treasury and
+capital requirements" regarding the nature and scope of transactions with derivative financial
+instruments and hedged risks apply to Infineon Technologies AG. Reference is also made to
+the notes to the Separate Financial Statements of Infineon Technologies AG.
+102
+6,185
+Powers of the Management Board to issue shares
+637
+As of September 30, 2016, Infineon's debt totaled €1,769 million, of which an amount of
+€17 million falls due for repayment in the 2017 fiscal year.
+Proposed dividend
+A dividend of €0.22 per share will be proposed to Infineon's shareholders for the 2016 fiscal
+year. Subject to shareholder approval, this will result in a distribution of approximately
+€248 million (for the previous fiscal year: €225 million). For further information see note 15 to
+the Consolidated Financial Statements.
+Acquisition of Wolfspeed
+On July 14, 2016, the Company and Cree Inc. ("Cree"), USA, signed an agreement for the
+acquisition of Cree's Wolfspeed business. Infineon intends to buy Wolfspeed (including the
+related wafer substrate business) for a purchase price of US$850 million. The acquisition is
+subject to regulatory approvals in the relevant jurisdictions and customary closing conditions.
+The transaction will be financed by Infineon using cash on hand and three committed bank credit
+facilities with terms of up to five years (see note 14 to the Consolidated Financial Statements).
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Treasury and capital requirements
+Capital requirements for the 2017 fiscal year | Derivative financial instruments | Rating
+97
+P see page 78
+P see page 59
+P see page 174
+Acquisition of a majority shareholding in MoTo Objekt Campeon GmbH & Co. KG
+On November 17, 2016 Infineon entered into an agreement with Geneba RE 3 B.V. (Geneba)
+relating to the purchase of the latter's 93 percent shareholding in MoTo Objekt Campeon GmbH &
+Co. KG (MOTO) for an amount of €113 million (see the chapter "Significant events after the
+end of the reporting period”). The transaction will be financed by Infineon using cash on hand.
+Coverage of capital requirements
+Our gross cash position as of September 30, 2016 amounted to €2,240 million. We also have
+access to various stand-alone short- and long-term credit facilities from various financial
+institutions totaling €720 million. Free cash flow from continuing operations (for definition:
+see the chapter "Internal Management System") will be between €400 and €500 million in
+the 2017 fiscal year, since cash provided by operating activities is expected to exceed planned
+investments.
+The 2016 fiscal year has shown that Infineon enjoys sound health and is pursuing the right
+strategy. In recent years, we have created a solid foundation for our business and focused
+our attention on applications, technologies and products, which are in greater demand than
+ever due to global megatrends. Over a period of many years we have built up, systematically
+expanded and successfully deployed to the benefit of our customers the competencies needed.
+Based on our strategic "Product to System" approach, we focus our efforts along the entire
+value-added chain on the success of our customers. This approach is complemented by other
+elements, namely an all-embracing culture of innovation, continuous striving for technological
+leadership, and extreme quality awareness. In-house production makes a genuine difference
+and facilitates a customized approach to the various markets, ensuring our continued success,
+both now and in the future.
+Infineon performed well in the 2016 fiscal year, despite a difficult economic environment.
+We achieved our growth targets - revenue grew by 12 percent to €6,473 million and Segment
+Result improved by 9 percent to €982 million, the latter corresponding to a margin of 15.2 per-
+cent. Despite higher investments, free cash flow from continuing operations improved to
+€490 million. In the previous fiscal year, adjusted for the three exceptional items (the acquisi-
+tion of International Rectifier, the Qimonda partial settlement relating to patents, and the EU
+fine), free cash flow amounted to €393 million. Our performance in recent years has also been
+a convincing one for the international rating agency, S&P Global Ratings (S&P; formerly Standard
+& Poor's Ratings Services), which assigned a first-time long-term credit rating to Infineon in
+February 2016. S&P rates Infineon's creditworthiness with a "BBB" (outlook "stable") investment
+grade rating. Infineon therefore currently holds the highest S&P rating of any European semi-
+conductor manufacturer. We want our shareholders to participate appropriately in the excellent
+progress that Infineon is making. Therefore, at the Annual General Meeting to be held on
+February 16, 2017, the Management Board and the Supervisory Board will propose to raise
+the dividend by 2 cents (10 percent) to €0.22 per share.
+98
+Overall statement of the
+Management Board with respect
+to Infineon's financial condition
+as of the date of this report
+Overall statement of the Management Board with respect to Infineon's financial condition as of the date of this report
+Combined Management Report | Our 2016 fiscal year
+Debt repayment
+ANNUAL REPORT 2016
+Infineon was assigned a long-term credit rating from the international rating agency S&P for
+the first time in February 2016. The solid investment grade rating "BBB" (outlook "stable")
+reflects among other things Infineon's adjusted capital structure targets. S&P has confirmed
+Infineon's rating following the announcement of the planned acquisition of Wolfspeed.
+Rating
+We employ the following derivative financial instruments for hedging purposes: forward
+foreign currency contracts to reduce exchange rate exposures and commodity swaps to reduce
+price risks for expected purchases of gold. We have concluded two Euro/US Dollar Deal
+Contingent Forward contracts to hedge part of the exchange rate risks relating to the purchase
+price obligation for the planned acquisition of Wolfspeed. We do not use derivative financial
+instruments for trading or speculative purposes. Further information regarding derivative
+financial instruments and the management of financial risks is provided in notes 21 and 22 to
+the Consolidated Financial Statements.
+Derivative financial instruments
+P see page 162 ff.
+Taking into account the financial resources available to Infineon - including internal liquidity
+on hand, net cash that can be generated and available credit facilities - we assume that
+we will be able to cover our planned capital requirements for the 2017 fiscal year. This also
+includes guarantees issued mainly for the rental of buildings (see note 24 to the Consolidated
+Financial Statements).
+INFINEON TECHNOLOGIES
+Semiconductor manufacturing is very capital-intensive. Infineon's target ratio for future
+fiscal years for expected investments as a percentage of revenue over the economic cycle
+(for definition see the chapter "Internal Management System") is approximately 13 percent.
+Depending on the business situation, Infineon is currently planning investments for the 2017
+fiscal year of approximately €950 million (for details see the chapter "Outlook"). Firm investment
+commitments as of September 30, 2016 totaled €275 million.
+Investments
+P see page 151
+Treasury at Infineon is firmly based on a centralized approach in which the Group Finance &
+Treasury department is responsible for all major tasks and processes worldwide relating
+to financing and treasury matters.
+Corporate treasury function
+Group-wide treasury principles are in place regarding all issues relating to liquidity and
+financing, such as banking policies and strategies, execution of financing agreements, liquidity
+and investment management worldwide, currency and interest rate risk management and
+the handling of external and intragroup cash flows. Treasury principles are authorized by
+the Chief Financial Officer (CFO) and reviewed and updated regularly. They are set out in a
+corresponding "Treasury Policy" which is applicable Group-wide.
+P see page 166 ff.
+Infineon is not subject to any statutory or legal capital requirements, nor are any defined in
+the Articles of Association.
+The balance of these two figures is no longer subject to a separate target (previously: positive
+net cash position).
+Cash pooling structures are in place for corporate liquidity management purposes. To the
+extent permitted by law and economically feasible, subsidiaries transfer all surplus cash to
+corporate bank accounts in order to ensure the best possible allocation of liquidity within
+the Group and cover the financing requirements of other Group companies. In this way we are
+able to minimize external financing requirements and maintain an optimal capital structure
+with a correspondingly positive impact on financing costs. Settling intragroup transactions via
+internal bank accounts set up in accordance with our in-house banking approach, we are also
+able to reduce the volume of external banking transactions and hence bank fees.
+Accordingly, Infineon plans to maintain a liquidity level (gross cash position) of at least €1 billion
+and additionally 10 to 20 percent of revenue. The previous target range for the gross cash
+position was between 30 and 40 percent of revenue. The upper limit for gross debt remains
+unchanged and should not exceed two times EBITDA (earnings from continuing operations
+before interest and taxes plus scheduled depreciation and amortization).
+Principles and structure of Infineon's treasury
+Treasury and capital requirements
+Principles and structure of Infineon's treasury
+Treasury and capital requirements
+530
+Combined Management Report | Our 2016 fiscal year
+The Infineon treasury's stated objective is to ensure financial flexibility based on a solid capital
+structure. It is of prime importance for all companies in the semiconductor industry to ensure
+that sufficient cash funds are available to finance operating activities and planned investments
+throughout all phases of the business cycle. Debt should only constitute a modest proportion
+of the financing mix, so that headroom is available at all times. Infineon has defined key capital
+management targets based on these general principles. These resulting capital structure
+targets were adjusted at the beginning of 2016, to reflect the strong revenue growth and the
+positive development of Infineon's profitability in recent years.
+The planned acquisition of Wolfspeed will enable us to further broaden our range of expertise.
+The move will make us the leading market player in silicon carbide-based power semiconduc-
+tors, while at the same time paving the way to become market leader in RF power components.
+We are integrating tomorrow's technologies in our portfolio today, enabling us to address
+future growth markets such as electro-mobility, renewables, and next-generation cellular
+infrastructure relevant for the Internet of Things. The acquisition of Wolfspeed will enable
+us to bring these innovative technologies to market more quickly and make a meaningful
+contribution to serving the needs of a modern-day society by providing state-of-the-art semi-
+conductor solutions for energy efficiency, connectivity and mobility. We expect the acquisition
+to have an immediate positive impact on Infineon's adjusted earnings per share.
+Liquidity accumulated at Group level is invested centrally by the Group Finance & Treasury
+department, based on a conservative approach to investments, in which preservation of capital
+is prioritized over return maximization. The Group Finance & Treasury department is also
+responsible for managing currency and interest rate risks. Foreign currency cash flows which
+are not offset within the Group are hedged externally (see note 22 to the Consolidated Financial
+Statements for further information).
+95
+P see page 154
+P see page 82
+P see page 60
+Based on our forecast for the 2017 fiscal year, we anticipate being able to finance operating
+activities out of cash flows provided by operating activities. Further information regarding
+fixed contractual obligations as of September 30, 2016 (such as leasing arrangements, fixed
+service and supply agreements for commodities, input materials, electricity, gas and other
+similar items) is provided in note 24 to the Consolidated Financial Statements.
+Financing our operations
+Capital requirements for the 2017 fiscal year
+95
+P see page 173
+Furthermore, to the extent permitted by law, all financing activities and credit lines worldwide
+are arranged, structured and managed either directly or indirectly by the central Finance &
+Treasury department in accordance with stipulated treasury principles. Debt is normally unse-
+cured and based on customary market terms and conditions.
+96
+Principles and structure of Infineon's treasury | Capital requirements for the 2017 fiscal year
+Treasury and capital requirements
+Combined Management Report | Our 2016 fiscal year
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+A crucial factor for the reliable implementation of treasury responsibilities is the use of
+capable and financially sound financial institutions. Infineon maintains business relationships
+with various international and local commercial and investment banks and avoids becoming
+dependent on individual banks. Partner banks must demonstrate a high level of credit-
+worthiness. Infineon has spread its excess liquidity investments across more than ten banks.
+At September 30, 2016 no financial institution was responsible for more than 13 percent of
+Infineon's liquidity investments.
+It is also our intention to continue growing faster than the market in the future. Applying
+the same focused approach that served us well to date, we remain committed to our target of
+a compound annual revenue growth rate of 8 percent over the cycle and intend to generate
+a Segment Result Margin of 17 percent (previously 15 percent) across the cycle going forward.
+Our intention is to achieve this growth with an average ratio of investments to revenue of
+13 percent over the economic cycle.
+Treasury principles and responsibilities
+ANNUAL REPORT 2016
+571
+407
+(47)
+(38)
+618
+445
+Transfers to retained earnings according to section 58 paragraph 2 AktG
+Transfers to retained earnings according to section 58 paragraph 2a AktG
+Unappropriated profit at the end of year
+(7)
+Net income
+Income tax
+Income before taxes
+Other financial result
+(52)
+Interest result
+21
+361
+(158)
+(208)
+2016
+INFINEON TECHNOLOGIES
+2015
+Financial assets
+Intangible assets, property, plant and equipment
+€ in millions
+(137)
+German Commercial Code (condensed)
+100
+Combined Management Report | Our 2016 fiscal year
+Infineon Technologies AG
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Infineon Technologies AG posted a slight increase in revenue and gross profit (2 percent) in
+the 2016 fiscal year. The sharp year-on-year drop in the result from investments was mainly
+due to income recorded in the previous fiscal year in conjunction with the reversal of an
+impairment charge on the investment in Infineon Technologies Holding B.V., which took the
+carrying amount of the investment to the maximum level permitted under German Commercial
+Code. Infineon Technologies AG reports a net income of €407 million for the 2016 fiscal year.
+After transferring a total of €158 million to retained earnings, the unappropriated profit
+amounted to €249 million.
+226
+249
+Statement of financial position of Infineon Technologies AG in accordance with the
+37
+Net assets and financial position
+48
+5,243
+5,357
+Revenue
+2015
+2016
+€ in millions
+Statement of income of Infineon Technologies AG in accordance with the
+German Commercial Code (condensed)
+Earnings position
+In addition to reporting on the Infineon Group, in the following section we also report on the
+performance of Infineon Technologies AG.
+Infineon Technologies AG
+For the 2017 fiscal year, we expect year-on-year revenue growth - not yet taking into account
+the planned acquisition of Wolfspeed - of 6 percent, plus or minus 2 percentage points, based
+on an assumed US dollar/euro exchange rate of US$1.10. For the mid-point of the range for
+forecast revenue, we expect to achieve a Segment Result Margin of approximately 16 percent
+for the 2017 fiscal year. Planned investments for the 2017 fiscal year are in the region of
+€950 million.
+99
+Overall statement of the Management Board with respect to Infineon's financial condition as of the date of this report | Infineon Technologies AG
+Result from investments, net
+Combined Management Report | Our 2016 fiscal year
+Cost of goods sold
+(3,781)
+Infineon Technologies AG is the parent company of the Infineon Group and performs the
+Group's management and corporate functions. It takes on major Group-wide responsibilities
+such as Finance and Accounting, Corporate Compliance, Human Resources, strategic and pro-
+duct-oriented R&D activities, and also Corporate and Marketing Communication worldwide.
+Furthermore, it manages supply chain processes throughout the Group. Infineon Technologies AG
+has its own manufacturing facilities, located in Regensburg and Warstein (both in Germany).
+Unlike the Consolidated Financial Statements, which are prepared in accordance with Inter-
+national Financial Reporting Standards ("IFRS"), Infineon Technologies AG's Separate Financial
+Statements are prepared in accordance with the provisions of the German Commercial Code
+("HGB"). The complete Separate Financial Statements are published separately.
+(153)
+(400)
+(3,698)
+(303)
+General and administrative expenses
+(181)
+Selling expenses
+(724)
+Other income (expense), net
+Research and development expenses
+37
+1,545
+1,576
+Gross profit
+(742)
+433,214
+2016
+433,214
+307,500
+95,800
+120,000
+323,243
+(Chief Executive Officer)
+Dr. Reinhard Ploss
+433,214
+2015
+29,914
+of the
+fiscal year
+Number
+Number
+Number
+Number
+Number
+Fiscal year
+Member of the Management Board
+Total
+expense for
+share-based
+compensation
+Exercisable
+stock options
+outstanding
+at the end of
+the fiscal year
+120,000
+Stock options
+forfeited in
+the fiscal year
+Stock options
+exercised in
+the fiscal year
+Stock options
+outstanding at
+the end
+in €
+314,286
+(Member of the Management Board)
+2016
+229,167
+Total
+2015
+Stock Option Plan 2010
+(Member of the Management Board)
+160,607
+229,167
+229,167
+2016
+Arunjai Mittal 4
+2015
+(Member of the Management Board)
+2016
+Jochen Hanebeck³
+2015
+2016
+Dr. Helmut Gassel 2
+217,610
+350,952
+350,952
+2015
+(Chief Financial Officer)
+213,678
+52,260
+167,740
+130,952
+350,952
+Dominik Asam
+of the
+fiscal year
+153,225
+3 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from September 30, 2016. The total cost of share-based
+compensation for Mr. Mittal relates to his period as member of the Management Board. We refer to the performance shares allocated to Mr. Mittal during the 2016 fiscal year in
+"Management Board compensation in the 2016 fiscal year in accordance with German Accounting Standard 17 (DRS 17)" in this chapter. The cost of these performance shares
+amount to €164,136.
+33,232
+2015
+(Chief Financial Officer)
+85,288
+164,024
+23,200
+62,088
+2016
+Dominik Asam
+90,572
+228,277
+42,990
+47,582
+2015
+(Chief Executive Officer)
+125,136
+244,367
+34,564
+90,572
+2016
+Dr. Reinhard Ploss
+grant date
+in €
+Member of the Management Board
+Number
+2016
+Fair value
+Number
+28,856
+62,088
+Dr. Helmut Gassel¹
+2016
+2 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations.
+1 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing Officer. He is responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions and Intellectual Property.
+214,748
+534,727
+100,702
+272,512
+408,391
+57,764
+214,748
+114,046
+2015
+2016
+Total
+62,088
+Stock options
+outstanding at
+the beginning
+153,225
+33,232
+2015
+(Member of the Management Board)
+62,088
+62,088
+2016
+Arunjai Mittal³
+2015
+(Member of the Management Board)
+2016
+Jochen Hanebeck²
+2015
+(Member of the Management Board)
+28,856
+2015
+Single-year variable compensation (STI)
+229,167
+667,619
+1,013,333
+Total compensation (DCGK)
+Pension expense
+1,204,367
+Total variable compensation
+244,367
+Performance Share Plan¹
+Long Term Incentive (LTI)
+680,000
+340,000
+960,000
+340,000
+480,000
+480,000
+2016-2018 tranche
+2015-2017 tranche
+850,000
+340,000
+340,000
+1,200,000
+Mid Term Incentive (MTI)
+Multi-year variable compensation
+480,000
+480,000
+Variable compensation
+Total fixed compensation
+791,185
+791,185
+2,315,091
+791,368
+228,277
+1,188,277
+219,796
+2,518,982
+912,500
+For information regarding the compensation paid to Mr. Mittal after termination of his Board
+activities (i.e. for the months July to September 2016), see "Management Board compen-
+sation in the 2016 fiscal year in accordance with German Accounting Standard 17 (DRS 17)"
+in this chapter.
+Number
+P see page 111
+4 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his employment ended with effect from September 30, 2016. With relation to his pension expense,
+in accordance with his contract of employment Mr. Mittal is treated as if he had remained a member of the Management Board until September 30, 2016.
+3 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations. Due to current actuarial assumptions past service costs
+for Mr. Hanebeck amounting to €2,326,793 have been recorded in the 2016 fiscal year in accordance with IAS 19.
+2 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing Officer. He is responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions and Intellectual Property. Due to current actuarial assumptions past service costs for Dr. Gassel amounting to €1,981,124 have been
+recorded in the 2016 fiscal year in accordance with IAS 19.
+1 The figures of the active members of the Management Board in the 2016 fiscal year are based on a fair market value per performance share amounting to €7.07 (2015: €5.31),
+which was calculated using a Monte-Carlo simulation.
+3,204,746
+1,144,258
+1,897,314
+1,906,270
+4,183,224
+1,232,907
+271,061
+271,061
+272,721
+271,061
+2,142,500
+82,012
+833,225
+844,024
+3,072,500
+122,183
+612,500
+82,012
+153,225
+164,024
+122,183
+41,185
+41,185
+750,000
+Compensation granted in accordance with DCGK
+The DCGK recommends that the individual compensation components of each member of the
+Management Board be disclosed in accordance with specified criteria. It also recommends
+that disclosure is based on the model tables – in part diverging from DRS 17 - provided in the
+appendix to the Code.
+Management Board compensation in the 2016 fiscal year in accordance with the
+German Corporate Governance Code
+In the 2009 fiscal year, the Company entered into a restitution agreement with each of the
+active members of the Management Board at that time. Dr. Ploss is the only current member
+of the Management Board affected by the agreement. These agreements stipulate that the
+Company covers all costs and expenses of any legal, governmental, regulatory and/or parliamen-
+tary proceedings and investigations as well as arbitration proceedings, in which the member
+of the Management Board is involved in conjunction with his/her activities on behalf of the
+Company. However, the agreements specifically exclude any restitution of costs if the procee-
+dings concerned constitute a breach of the duty of care owed in conjunction with section 93,
+paragraph 2, AktG.
+Other awards and benefits
+The Supervisory Board did not award any special bonuses to members of the Management
+Board during the 2016 fiscal year.
+Special bonuses
+Further details regarding the performance shares granted on October 1, 2016 for the 2017 fiscal
+year to the members of the Management Board are provided in note 17 to the Consolidated
+Financial Statements.
+P see page 116
+P see page 155
+113
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+4 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from September 30, 2016. The total cost of share-based
+compensation for Mr. Mittal relates to his period as member of the Management Board. We refer to the performance shares allocated to Mr. Mittal during the 2016 fiscal year in
+"Management Board compensation in the 2016 fiscal year in accordance with German Accounting Standard 17 (DRS 17)" in this chapter. The cost of these performance shares
+amount to €164,136.
+3 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations.
+2 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing Officer. He is responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions and Intellectual Property.
+1 When exercising stock options members of the Management Board may only make gains up to a pre-determined amount (cap). Where the cap has been reached in the fiscal year
+stock options are forfeited.
+729,821
+120,000
+697,528
+120,000
+82,174
+263,540
+197,925
+The following table shows the value of compensation granted for the 2015 and 2016 fiscal
+years, including fringe benefits, as well as the minimum and maximum values that can be
+achieved for the 2016 fiscal year.
+Unlike in the disclosures in accordance with DRS 17, the STI is required to be disclosed pursuant
+to the DCGK at the target value (i.e. the value in the event of 100 percent target achievement).
+The MTI is required to be disclosed - in a deviation from DRS 17 - at the target value for
+an "average probability scenario" at the grant date. For these purposes, Infineon assumes
+100 percent target achievement. In addition, the pension expense, i.e. the service cost pur-
+suant to IAS 19 (see "Commitments to members of the Management Board upon termination
+of their Board activities" in this chapter), is also required to be included in the amount of total
+compensation disclosed in accordance with the DCGK.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+750,000
+750,000
+41,368
+41,185
+791,185
+35,724
+1,110,724
+35,724
+1,110,724
+35,909
+1,110,909
+35,724
+1,110,724
+750,000
+1,075,000
+1,075,000
+1,075,000
+1,075,000
+2016 (max.)
+1,013,333
+1,013,333
+2015 2016 (min.)
+2016
+2016 (max.)
+2015 2016 (min.)
+2016
+Dr. Reinhard Ploss
+Chief Executive Officer
+Compensation granted to members of the Management Board in accordance with the DCGK
+(total compensation and compensation components) as well as the minimum and maximum
+values that can be achieved are shown in the following table:
+114
+Fringe benefits
+Fixed compensation
+Basic annual salary
+in €
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+Dominik Asam
+Chief Financial Officer
+Fiscal year
+112,087
+at the end
+110
+Fringe benefits
+Basic annual salary
+Fixed compensation
+in €
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Additionally, the Supervisory Board has the option - based in all cases on its own best
+judgment to grant a special bonus, among other things for special achievements of the
+Management Board or its individual members. This bonus is capped, however, at a maximum
+of 30 percent of the fixed compensation of the member of the Management Board.
+Prior to the introduction of the Performance Share Plan, the Company maintained a stock
+option plan as an LTI, which was resolved at the 2010 Annual General Meeting. Subject to
+compliance with the terms of the Stock Option Plan 2010 – particularly the attainment of the
+absolute and percentage performance targets - the stock options allocated to members of the
+Management Board on the basis of this plan may still be exercised until December 14, 2019.
+The Supervisory Board is required to define suitable alternative LTI instruments of commen-
+surate value if it is impossible or not desired by the Supervisory Board to offer an LTI on the
+basis of the Performance Share Plan.
+If the member of the Management Board leaves office during the first two years of the full
+four-year holding period applicable to the performance shares of a particular LTI tranche,
+those performance shares are forfeited unless the reason for leaving office is that the member
+of the Management Board has reached the age limit specified in his/her service contract. Only
+the holding period for the own-investment shares expires when the member of the Manage-
+ment Board leaves office; at that stage the member of the Management Board concerned can
+freely dispose of the shares. If the member of the Management Board leaves office at a later
+date - except the member resigns from office or terminates the contractual arrangements of
+his/her own volition, or if the contract is terminated by the Company for good cause - the LTI
+tranche (including the own-investment) remains in place unchanged. The member of the
+Management Board is then treated in all respects as if he/she were still in office; there is no
+pro rata reduction in the LTI tranche due to leaving office early.
+The Supervisory Board has the right, at the end of the holding period, to make a value-equi-
+valent cash settlement to the member of the Management Board rather than actually transfer
+Infineon shares.
+The shares are transferred to a securities custodian account attributable to the member of
+the Management Board; thereafter, he/she can freely dispose of them. The same also applies
+to Infineon shares acquired in conjunction with the own-investment requirement at the end
+of the holding period.
+the Philadelphia Semiconductor Index (SOX) between the date of the performance shares'
+provisional allocation and the end of the holding period. If the conditions for the definitive
+allocation of performance shares - either of all or of only those that are not performance-
+related - are met at the end of the holding period, the member of the Management Board
+acquires a claim against the Company for the transfer of the corresponding number of (real)
+Infineon shares. Performance shares which do not achieve the target are forfeited. The value
+of the performance shares definitively granted to the member of the Management Board
+per LTI tranche at the end of the holding period may not exceed 250 percent of the relevant
+LTI allocation amount; the performance shares above this amount are forfeited (cap).
+109
+Corporate Governance
+Compensation report
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The (virtual) performance shares are allocated - initially on a provisional basis - on October 1
+of each fiscal year for the fiscal year beginning on that date. The performance shares are allo-
+cated on the basis of the contractually agreed "LTI allocation amount" in euros. The number of
+performance shares is determined by dividing the LTI allocation amount by the average price
+of the Infineon share (Xetra closing price) during the nine months prior to the allocation date.
+The prerequisites for the definitive allocation of the - at that stage still virtual - performance
+shares are (i) that the relevant member of the Management Board invests 25 percent of his
+or her individual LTI allocation amount in Infineon shares (with the own-investment already
+required to be undertaken in conjunction with the provisional allocation) and (ii) that the
+holding period of four years applicable both for the member's own-investment and for the
+performance shares has come to an end. Moreover, 50 percent of the performance shares are
+performance-related; they are only allocated definitively if (iii) the Infineon share outperforms
+With effect from the 2014 fiscal year, the LTI is awarded in the form of a Performance Share
+Plan. As well as being relevant for members of the Management Board, the new LTI also
+applies - with minor differences attributable to specific circumstances - to Infineon managers
+and selected Infineon employees worldwide.
+The long-term incentive (LTI) is intended to reward long-term and, similar to the MTI, sustained
+performance on the part of members of the Management Board and, additionally, to ensure
+that their interests are aligned with the interest of the Company's shareholders regarding a
+positive share price development. Assuming a 100 percent target achievement of the variable
+compensation, the LTI constitutes approximately 15 percent of target annual income.
+If the term of office commences during a fiscal year, the MTI tranche is determined on a pro-rata
+basis (1/36 for each month of a full MTI tranche started). Upon leaving Infineon, regulations
+ensure that the member of the Management Board can only receive an MTI payment for the
+actual number of MTI tranches during his/her term of office. MTI tranches already started are
+forfeited if a mandate or service contract of a member of the Management Board comes to an
+end before the due date, for instance if a member resigns from office or terminates the con-
+tractual arrangements of his/her own volition or if the contract is terminated by the Company
+for good cause.
+The Supervisory Board may increase or reduce the amount to be paid under the MTI in each
+case by up to 50 percent, as it sees fit, based on the performance of the Management Board
+as a whole, Infineon's situation and any exceptional factors. When exercising its judgment
+in this respect, the Supervisory Board also takes into account the level of achievement of the
+three-year target for revenue growth and Segment Result that is set each year by the Super-
+visory Board exclusively for this purpose. Unlike the STI, there is no lower limit for the amount
+by which the Supervisory Board can adjust the MTI; for the upper limit, however, the cap
+applies (200 percent).
+Management Board compensation in the 2016 fiscal year in accordance with
+German Accounting Standard 17 (DRS 17)
+A new MTI tranche, each with a term of three years, commences every fiscal year. The incentive
+is paid in cash at the end of the three-year term. The amount of the payment is determined
+on the basis of actual ROCE and free cash flow figures during each three-year period. For these
+purposes, the target values for ROCE and free cash flow for each individual year of an MTI tranche
+correspond to the STI targets set each year in advance. The level of target achievement for
+both the RoCE target and the free cash flow target must reach a threshold of 50 percent in
+each year of the relevant three-year period, otherwise the level of target achievement for the
+purposes of the MTI is set to zero for the year concerned. If the thresholds are exceeded, the
+level of target achievement determined for the STI applies for the relevant annual tranche of
+the MTI. The MTI to be paid at the end of the three-year period is determined by calculating
+the arithmetic mean of the three annual target achievement levels. Unlike the STI, the MTI is
+paid as calculated, even if the mean level of target achievement for the three-year period is
+below the 50 percent threshold. A cap of 200 percent applies, meaning that the maximum
+amount that can be paid is two times the target MTI (= 100 percent), regardless of the actual
+achievement level.
+of the fiscal year
+Dr. Reinhard Ploss
+Chief Executive Officer
+76,153
+589,220
+336,260
+831,840
+474,720
+Single-year variable compensation (STI)
+Variable compensation
+Total fixed compensation
+171,250
+8,714
+179,964
+750,000
+41,368
+791,368
+791,185
+1,110,909
+1,110,724
+41,185
+35,909
+35,724
+750,000
+1,075,000
+1,075,000
+2016
+2015
+2016
+2015
+2016
+Member of the
+Management Board
+Dr. Helmut Gassel³
+Dominik Asam
+Chief Financial Officer
+Total compensation to members of the Management Board pursuant to DRS 17 and benefits
+to the individual members of the Management Board - also presented in accordance with
+DRS 17 - are shown in the following table:
+Multi-year variable compensation
+108
+Corporate Governance
+@www.infineon.com/declaration-on-
+The Corporate Governance Report is publicly available at www.infineon.com/corporate-
+governance-report.
+Corporate Governance Report
+corporate-governance-report
+@www.infineon.com/
+Comparable arrangements for employees are only in place in a small number of individual
+cases. Notwithstanding this, the terms of the Performance Share Plan, in which members of
+the Management Board and Infineon managers and selected Infineon employees worldwide
+participate, contains a rule that takes effect in the event of a defined change-in-control event,
+namely, when a party holds at least 30 percent of the voting rights in Infineon Technologies AG.
+The principal stipulation of the rule is that the four-year vesting period provided by the plan
+ends prematurely in the event of a change of control. This Performance Share Plan rule does
+not apply to members of the Management Board.
+106
+Corporate Governance Report | Declaration on Corporate Governance | Compensation report
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The change-of-control clauses agreed with the members of the Management Board corres-
+pond to the recommendation made in section 4.2.3, paragraph 5, of the German Corporate
+Governance Code. Such clauses are intended to give members of the Management Board
+security if a change-of-control situation occurs, and to preserve their independence in the
+event of a takeover bid.
+If a member of the Management Board leaves his or her position in connection with a defined
+change of control (namely, where a party holds at least 50 percent of the voting rights in
+Infineon Technologies AG), that member is currently entitled to continued payment of the
+relevant annual remuneration for the entire remaining contract term. In accordance with a
+special contract termination right granted to members of the Management Board, the period
+of continued payment is capped at a maximum of 36 months in the event that the member
+resigns, or at a minimum of 24 months and a maximum of 36 months in the event that the
+member is removed from office or dismissed by Infineon Technologies AG. Further details are
+contained in the Compensation Report.
+Various financing contracts with lending banks and capital market creditors (see note 14 to
+the Consolidated Financial Statements) contain defined change-of-control clauses which give
+creditors the right to call for early repayment. These clauses reflect standard market practice.
+Furthermore, certain patent cross-licensing agreements, development agreements, subsidy
+agreements and approvals, supply contracts, joint venture agreements and license agree-
+ments contain customary change-of-control clauses, according to which a change in control of
+Infineon Technologies AG triggers the right of the other party at its sole discretion to terminate
+or to continue the agreement as well as other rights which may, under certain circumstances,
+be unfavorable for Infineon.
+Significant agreements in the event of a change of control
+The use of own shares, acquired through derivatives, is governed by the same rules as
+applicable for the direct acquisition of own shares.
+If own shares are acquired using derivatives in accordance with the requirements stipulated in
+the authorization, any right of the shareholders to conclude such derivative transactions with
+the Company will be excluded in analogous application of section 186, paragraph 3, sentence 4,
+AktG. Similarly, the shareholders have no right to conclude derivative transactions with the
+Company insofar as arrangements for the conclusion of derivative transactions include a pre-
+ferred offer for the conclusion of derivative transactions concerning small volumes of shares.
+Shareholders have a right to sell their Infineon shares in this connection only insofar as the
+Company is required to accept the shares under the derivative transactions. No other right to
+sell shares will apply in this connection.
+According to a resolution passed by the Annual General Meeting on February 28, 2013, the
+acquisition of Infineon Technologies AG shares may also be effected using equity derivatives.
+The total number of shares that can be acquired using derivatives may not exceed 5 percent
+of the Company's share capital, determined either at the time of this authorization becoming
+effective or at the time of its exercise through the use of the derivatives. The shares acquired
+through the exercise of this authorization are to be counted toward the acquisition threshold
+for the shares acquired in accordance with the authorization to acquire own shares as described
+above. The authorization stipulates other restrictions when derivatives are deployed, including
+their execution, term, servicing and acquisition price.
+P see page 106
+P see page 151
+105
+Information pursuant to section 289, paragraph 4, and section 315, paragraph 4, of the German Commercial Code (HGB)
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+corporate-governance
+Compensation report
+Declaration on Corporate Governance
+P see page 119
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The mid-term incentive (MTI) is intended to reward sustained performance by the Manage-
+ment Board reflecting Infineon's medium-term progress. In combination with the long-term
+incentive, the MTI ensures compliance with the stock corporation law requirement that the
+structure of compensation is "oriented toward sustainable growth of the enterprise". Assuming
+a 100 percent target achievement of the variable compensation, the MTI constitutes approxi-
+mately 20 percent of target annual income.
+If the term of office on the Board begins or ends during a fiscal year, the entitlement to STI
+is calculated on a pro-rata monthly basis (one twelfth for each month started). Members of
+the Management Board are not entitled to receive an STI bonus for the fiscal year in which
+they resign from office or terminate their contracts of their own volition or if their contract is
+terminated by the Company for good cause.
+An STI is paid only if, on the basis of the approved financial statements, the levels of target
+achievement reach at least the 50 percent threshold for both performance indicators (free
+cash flow, ROCE). If one of the two target thresholds is not achieved, no annual bonus is paid
+for the relevant fiscal year. If the thresholds are achieved, the arithmetic mean of the two
+target achievements is calculated and used as the percentage rate to determine the actual
+STI amount. A cap of 250 percent applies, meaning that the maximum amount that can be
+paid is two-and-a-half times the target STI (= 100 percent), regardless of the actual achieve-
+ment level. The Supervisory Board may, in addition, increase or reduce the amount to be paid
+in each case by up to 50 percent, as it sees fit, based on the performance of the Management
+Board as a whole, Infineon's position, and any exceptional factors. A lower limit applies in
+this case such that the amount to be paid cannot be less than the amount that would be due
+given 50 percent target achievement. The upper limit for an upward adjustment is the cap
+of 250 percent.
+(ii) At the end of the fiscal year, the actual levels of target achievement for free cash flow and
+ROCE and, hence the amount of the STI, are determined by the Supervisory Board.
+(i) At the beginning of each fiscal year, the target functions with respect to the two key
+performance indicators "free cash flow” and “Return on Capital Employed (ROCE)" are
+defined uniformly for all members of the Management Board. Underpinning the con-
+sistent approach taken to managing the business, the same target indicators - supple-
+mented by the Segment Result - are used as the basis for determining the variable
+compensation components (bonus payments) for Infineon managers and employees.
+The two key performance indicators referred to above, which are described in more detail
+in the chapter "Internal Management System", are equally weighted for the purposes
+of measuring the STI.
+The short-term incentive (STI) is intended to reward performance over the preceding fiscal
+year, reflecting Infineon's recent progress. Assuming a 100 percent target achievement of the
+variable compensation, the STI constitutes approximately 20 percent of target annual income.
+It is set by the Supervisory Board in a two-phase process:
+> Variable (performance-related) compensation: The variable compensation comprises three
+components: an annual bonus (short-term incentive), a multiple-year bonus (mid-term
+incentive) and a long-term variable compensation component (long-term incentive).
+> Fixed compensation: The fixed compensation comprises a contractual basic annual salary
+that has no link to performance and is paid in twelve equal monthly installments.
+All members of the Management Board receive as compensation for their service an annual
+income which based on target achievement of 100 percent - comprises approximately 45 per-
+cent fixed compensation and approximately 55 percent variable compensation components:
+There have been no changes in the Management Board compensation system in the 2016
+fiscal year compared to the 2015 fiscal year.
+Components of the Management Board compensation system
+107
+P see page 59
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The periodic review of the Management Board compensation system was performed by
+an external independent compensation expert during the 2016 fiscal year. Regardless of
+the existence of some scope for maneuverability, the expert concluded that the Company's
+compensation system complies with the requirements of the German Stock Corporation Act
+(Aktiengesetz) and the DCGK and is in line with current market conditions (for details of the
+review, see "Review of the Management Board compensation system and individual contracts"
+in this chapter).
+The Management Board compensation system - similar to the compensation paid to the
+individual members of the Management Board – is defined and regularly reviewed by the full
+Supervisory Board on the basis of proposals from the Executive Committee. In accordance
+with applicable legal requirements and the recommendations of the DCGK, the compensation
+paid to the members of the Management Board is intended to reflect the typical level and
+structure of management board compensation at comparable companies in Germany and
+elsewhere, as well as Infineon's economic position and future prospects. The duties, responsi-
+bilities and performance of each member of the Management Board are also to be considered,
+as is Infineon's wider pay structure. This includes considering Management Board compen-
+sation in relation to the compensation of senior management and of the workforce as a whole,
+including changes in the level of compensation over time. The stated objective is that the
+compensation structure should be designed in such a way that it promotes sustainable busi-
+ness development, with a cap in place in the event of exceptional developments. Infineon
+aims to set compensation at a level that is competitive both nationally and internationally,
+so as to inspire and reward dedication and success in a dynamic environment.
+Compensation system
+Management Board compensation
+This Compensation report, which forms part of the Management Report, explains the
+principles applied in determining compensation for the Management Board and Supervisory
+Board of Infineon Technologies AG and the level of remuneration paid to the individual
+members of the Management Board and Supervisory Board in accordance with the applicable
+legal requirements and the recommendations of the German Corporate Governance Code in
+the version dated May 5, 2015 (Deutscher Corporate Governance Kodex - "DCGK"). Infineon
+believes that transparent and understandable reporting of Management Board and Supervisory
+Board compensation represents a fundamental element of good corporate governance.
+Compensation report
+The Corporate Governance Report in accordance with section 289a HGB is publicly available
+at www.infineon.com/declaration-on-corporate-governance.
+Mid Term Incentive (MTI)1
+Total compensation
+2014-2016 tranche
+4,412,025
+534,727
+408,391
+3,215,067
+6,065,349
+153,225
+1,294,694
+2,074,139
+761,971
+1,351,433
+280,484
+Total compensation
+101,537
+Total variable compensation
+Performance Share Plan²
+Long Term Incentive (LTI)
+433,182
+112,087
+25,384
+670,094
+382,414
+196,407
+112,087
+598,462
+691,534
+177,921
+201,537
+598,462
+177,921
+2016-2018 tranche
+2015-2017 tranche
+2014-2016 tranche
+7,093,747
+2013-2015 tranche
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the plan requirements.
+2 The figures for the active members of the Management Board in the 2016 fiscal year are based on a fair market value per performance share amounting to €7.07 (2015: €5.31),
+which was calculated using a Monte-Carlo simulation model taking account of the value-reducing cap.
+4 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from September 30, 2016. The variable compensation
+elements STI and MTI awarded to Arnujai Mittal in the 2016 fiscal year were earned entirely during his membership of the Management Board.
+Virtual performance
+shares outstanding
+Virtual performance shares newly granted
+at the beginning of the fiscal year
+Performance Share Plan
+at the beginning
+of the fiscal year
+Virtual performance
+shares outstanding
+112
+Corporate Governance
+Compensation report
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The following table shows the number of performance shares awarded to members of the
+Management Board in the 2016 fiscal year. In addition, the table contains information relating
+to the Stock Option Plan 2010, on the basis of which stock options were allocated to members
+of the Management Board for the final time in the 2013 fiscal year.
+A fair market value of €7.07 (2015: €5.31) per performance share granted in the 2016 fiscal year
+was determined, taking account - among other things - of the 250 percent cap set on the LTI
+allocation amount.
+As described in the section "Management Board compensation", the contractually agreed
+LTI is granted to members of the Management Board in the form of "performance shares".
+The average price of the Infineon share relevant for the number of performance shares granted
+for the 2016 fiscal year was €10.56 (2015: €8.49).
+Share-based compensation
+The Company also maintains accident insurance policies for members of the Board.
+In accordance with their service contracts, members of the Management Board are entitled to a
+chauffeur-driven company car, which may also be used privately. Operating and maintenance
+costs for the company car and chauffeur are borne by the Company. Taxes arising on the fringe
+benefit related to private usage are borne by the members of the Management Board.
+Fringe benefits
+Similarly, they did not receive any benefits from third parties in the 2016 and 2015 fiscal years,
+whether promised or actually paid, for their Board activities at Infineon.
+Members of the Management Board did not receive any loans from Infineon, either in the 2016
+or 2015 fiscal years.
+In accordance with a mutual agreement reached with the Supervisory Board, Mr. Mittal resig-
+ned as member of the Management Board effective June 30, 2016, with his service contract
+coming to an end effective September 30, 2016. In the period between the resignation date
+and definitively leaving office at the end of the 2016 fiscal year, Mr. Mittal continued to serve
+the Company on a similar scale to his previous workload, in order to facilitate the transfer
+of duties and allow his successor to familiarize himself with the job. For the period from July
+to September 2016, Mr. Mittal received the following compensation: fixed compensation
+of €187,500, fringe benefits amounting to €8,948. In line with contractual terms, multi-year
+variable compensation (MTI) also continues to be paid to Mr. Mittal for the currently relevant
+tranches (see table). Accordingly, the actual level of target achievement was assumed for
+the 2014-2016 tranche ending September 30, 2016, while for the 2015-2017 and 2016-2018
+tranches, a provision of €393,320.13 was recognized, based on the forecasted average level
+of target achievement for the period 2016 to 2018 (119.7 percent). In addition, it was agreed
+in the contract termination agreement between Mr. Mittal and the Company that the Perfor-
+mance Shares (LTI) previously allocated to Mr. Mittal are not forfeited as a consequence of
+his resignation. On October 1, 2015, Mr. Mittal was allocated 23,200 Performance Shares
+with a fair value of €164,024 for the 2016 fiscal year. At the same time, Mr. Mittal has given
+a commitment - for the period of one year following the termination of his contract i.e. until
+September 30, 2017 - not to work for any of Infineon's major competitors. In accordance with
+the contract termination agreement concluded with Mr. Mittal, the Company is not required
+to pay any compensation for this post-contractual non-competition clause. Total multi-year
+variable compensation, paid at the termination of Mr. Mittal's activities on the Management
+Board, amounted to €557,344.13.
+P see page 106 ff.
+111
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+2013-2015 tranche
+Mid Term Incentive (MTI)1
+3 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations.
+2,010,280
+153,225
+1,294,694
+2,086,062
+1,717,180
+925,995
+1,822,637
+2,933,546
+2,434,751
+1,324,027
+164,024
+228,277
+244,367
+Total compensation
+Total variable compensation
+Performance Share Plan²
+25,384
+158,240
+196,407
+112,087
+277,280
+158,240
+177,921
+201,537
+242,620
+288,460
+177,921
+242,620
+2016-2018 tranche
+2015-2017 tranche
+Multi-year variable compensation
+101,537
+281,501
+Long Term Incentive (LTI)
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the plan requirements.
+2 The figures for the active members of the Management Board in the 2016 fiscal year are based on a fair market value per performance share amounting to €7.07 (2015: €5.31),
+which was calculated using a Monte-Carlo simulation model taking account of the value-reducing cap.
+3 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing Officer. He is responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions and Intellectual Property.
+1,299,546
+2015
+589,220
+336,260
+76,153
+Single-year variable compensation (STI)
+Variable compensation
+Total fixed compensation
+2,575,000
+106,722
+2,681,722
+750,000
+29,445
+779,445
+562,500
+26,962
+589,462
+2015
+2016
+2015
+2,730,000
+120,282
+2,850,282
+Member of the
+Management Board
+2016
+2015
+Arunjai Mittal 4
+Member of the
+Management Board
+178,947
+7,697
+171,250
+2016
+Jochen Hanebeck³
+Fringe benefits
+Basic annual salary
+Total
+Fixed compensation
+in €
+102
+36
+743
+7
+Income from continuing operations
+741
+Net income
+Income from discontinued operations, net of income taxes
+4
+2
+12
+Income tax
+622
+520
+Operating income
+Income from continuing operations before income taxes
+4
+3
+Gain from investments accounted for using the equity method
+(49)
+(67)
+Financial expenses
+10
+6
+Financial income
+555
+763
+(58)
+634
+705
+Attributable to:
+0.56
+Shareholders of Infineon Technologies AG
+(23)
+1 The calculation of earnings per share is based on unrounded figures.
+0.66
+8
+0.01
+8
+0.55
+0.66
+8
+Diluted earnings per share (in euro) from continuing operations
+Diluted earnings per share (in euro) from discontinued operations
+Diluted earnings per share (in euro)
+0.56
+0.66
+8
+00
+0.01
+8
+0.55
+0.66
+8
+632
+744
+2
+(1)
+Diluted earnings per share (in euro) attributable to
+shareholders of Infineon Technologies AG:1
+Basic earnings per share (in euro)
+Basic earnings per share (in euro) from discontinued operations
+Basic earnings per share (in euro) from continuing operations
+shareholders of Infineon Technologies AG:1
+Basic earnings per share (in euro) attributable to
+Non-controlling interests
+Other operating expenses
+In the event that a member, during a fiscal year, joins (or leaves) the Supervisory Board or one
+of its committees, or takes on a Supervisory Board function for which an allowance is paid,
+the relevant compensation components are disbursed on a pro-rata basis (payment of one
+twelfth of the relevant annual compensation component for each (started) month of member-
+ship or exercise of function).
+17
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+Compensation report
+118
+P see page 119
+In conjunction with its review of the Management Board compensation system and the
+compensation of individual members of the Management Board (for details of the review,
+see "Review of Management Board compensation and individual contracts"), the Supervisory
+Board passed a resolution to bring the existing pension plan for Dr. Ploss into line with changed
+circumstances. The previous fixed amount arrangement did not reflect current circumstances,
+in particular the fact that Dr. Ploss' appointment as Chief Executive Officer runs until 2020. The
+Supervisory Board's recognition of the need to take action was confirmed in the report drawn
+up the external compensation expert. Under the new arrangements, Dr. Ploss receives a defined
+contribution pension commitment for the period from January 2016 onwards, similar to the
+arrangements already in place for the other members of the Management Board and essentially
+identical to the Infineon pension plan applicable to all employees. In the case of Dr. Ploss, the
+fixed contribution amount has been set at 30 percent of his agreed basic annual salary.
+Alongside the annual retirement entitlements and related benefit amounts, the following
+table shows the present values of pension entitlements earned to date and the service cost in
+accordance with IFRS. As Dr. Ploss's pension entitlement is already fully vested, no service cost
+arises for the 2016 fiscal year. The service cost reported in the table for Dr. Gassel, Mr. Hanebeck
+and Mr. Mittal only relates to periods of current Board activities. The present value of pensions
+and benefit entitlements also depends on changes in the discount rates that are required to
+be applied (September 30, 2016: 1.0 percent; September 30, 2015: 2.4 percent).
+Pension entitlements
+in €
+Fiscal year
+Member of the
+Management Board
+Pension
+entitlements
+(annual) as
+of beginning
+of pension
+period
+Benefit
+amounts
+determined
+for the
+relevant
+Present value
+of pension
+and benefit
+entitlement
+Original
+service cost
+(earned in the
+current year)
+fiscal year
+271,061
+2,558,440
+225,000
+2016
+Dominik Asam
+219,796
+ANNUAL REPORT 2016
+5,634,266
+2015
+(Chief Executive Officer)
+6,832,791
+210,000
+2016
+Dr. Reinhard Ploss
+205,000
+INFINEON TECHNOLOGIES
+The amounts credited to the pension entitlement accounts of Dr. Gassel, Mr. Hanebeck and
+Mr. Mittal - in line with the plan rules applied to Infineon employees - are paid out on or after
+reaching the age of 67, provided the service contract has also ended, or, upon request, at an
+earlier point in time if the service contract ends on or after reaching the age of 60. If the bene-
+ficiaries elect that their pension be paid out in monthly installments, the pension amount is
+adjusted automatically each year in accordance with the Infineon pension plan.
+Dr. Gassel, Mr. Hanebeck and Mr. Mittal have statutorily vested pension entitlements dating
+from their previous periods of employment with Infineon. The contracts appointing them
+to the Board specifically state that the amounts made available to cover their vested pension
+entitlements represent a continuation of those vested entitlements (and are, therefore, not
+subject to any separate vesting arrangements). The Company makes a fixed annual pension
+contribution on behalf of Dr. Gassel, Mr. Hanebeck and Mr. Mittal for each full fiscal year of
+service on the Board, equivalent to 30 percent of the relevant agreed basic annual salary.
+The Supervisory Board is not required to decide each time on the amount to be contributed.
+Pension contributions for the 2016 fiscal year amounted to €225,000 for Mr. Mittal and €51,375
+each for Dr. Gassel and Mr. Hanebeck (proportionate pension contribution for three months
+of Board activities).
+1 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing Officer. He is responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions and Intellectual Property. Due to current actuarial assumptions past service costs for Dr. Gassel amounting to €1,981,124 have been
+recorded in the 2016 fiscal year in accordance with IAS 19.
+1,675,191 2,014,868
+241,677 241,183
+994,240
+844,052
+76,153
+29,321
+284,421
+2 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations. Due to current actuarial assumptions past service costs
+for Mr. Hanebeck amounting to €2,326,793 have been recorded in the 2016 fiscal year in accordance with IAS 19.
+281,575
+25,458
+272,721
+76,153
+994,240
+1,384,140 1,806,552
+219,796 271,061
+2,868,798
+Total compensation (DCGK) 2,841,524 2,714,845
+2,058,329
+(Chief Financial Officer)
+3 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his service contract ended with effect from September 30, 2016. With relation to his
+pension expense, in accordance with his contract of employment Mr. Mittal is treated as if he had remained a member of the Management Board until September 30, 2016.
+For information regarding the compensation allocated to Mr. Mittal after termination of
+his Board activities (i.e. for the months July to September 2016), see "Management Board
+compensation in the 2016 fiscal year in accordance with German Accounting Standard 17
+(DRS 17)" in this chapter.
+In addition to a one-time, contractually vested initial component of €540,000 paid as compen-
+sation for the loss of vested retirement pension entitlements in connection with the termination
+agreement with his previous employer, Mr. Asam will receive from the Company for each
+fiscal year of his membership on the Management Board a pension contribution amounting
+to between 25 and 40 percent, as determined by the Supervisory Board, of the relevant agreed
+basic annual salary, i.e. fixed compensation. As in the previous year, the pension contribution
+for Mr. Asam for the 2016 fiscal year has been set at 30 percent of his basic annual salary, which
+amounts to €225,000. The pension entitlements arising from the defined contributions made
+on behalf of Mr. Asam became vested with effect from December 31, 2013.
+The plan rules applicable for Mr. Asam on the one hand and Dr. Gassel, Mr. Hanebeck and
+Mr. Mittal on the other differ in terms of the initial defined component, the annual transfer to
+the pension account, and the vesting period:
+If the entitlements of members of the Management Board (i) have not yet legally vested or
+(ii) have legally vested, but are not protected by the state pension insurance scheme (Pensions-
+sicherungsverein), the Company maintains pension reinsurance policies in favor of, and
+pledged to, the members of the Management Board concerned.
+In accordance with the compensation system in place since 2010, Mr. Asam, Dr. Gassel,
+Mr. Hanebeck and Mr. Mittal – all of whom took up office after the new system had been
+approved - have each received a defined contribution pension commitment (rather than
+a defined benefit pension commitment based on the number of years of service), which is
+essentially identical to the Infineon pension plan applicable to all employees. The Company
+has accordingly set up a personal pension account (basic account) for each beneficiary and
+makes annual pension contributions to it. The Company adds annual interest to the balance
+in the basic account using the highest statutory interest rates valid for the insurance industry
+(guaranteed interest rates) until disbursement of the pension begins and may also award
+surplus credits. Ninety-five percent of any income earned over and above the guaranteed
+interest rate is credited to the pension account, either at the date on which disbursement of
+the pension begins or, at the latest, when the beneficiary reaches the age of 60. The balance
+of the basic account when disbursement of the pension begins (due to age, invalidity or
+death) - increased by an adjusting amount in the event of invalidity or death - constitutes
+the retirement benefit entitlement and is paid out to the member of the Management Board
+or his or her surviving dependents in twelve annual installments, or, if so requested by the
+member of the Management Board, in eight annual installments, as a lump sum or as a life-
+long pension.
+117
+Compensation report
+P see page 111
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+INFINEON TECHNOLOGIES
+The members of the Management Board who were in their positions prior to the introduction
+of the new compensation system in 2010 are contractually entitled to a defined benefit pension
+payment; these entitlements were not affected by the new compensation system. In the 2016
+fiscal year, this only relates to Dr. Ploss, who, under these arrangements, has an entitlement to
+an annual retirement benefit of €210,000. This entitlement is already vested, both contractually
+and under the applicable statutory provisions (for details of the review of pension entitlements
+of Dr. Ploss adopted by the Supervisory Board, see the end of this section).
+termination
+Allowances and pension entitlements in the 2016 fiscal year
+upon
+Commitments to members of the Management Board
+of their Board activities
+ANNUAL REPORT 2016
+2015
+225,000
+2,163,812
+Benefits to members of the Management Board who left office during the
+2016 fiscal year
+The Management Board service contracts otherwise contain no promises of severance pay
+for situations in which contracts are terminated early.
+a member of the Management Board or terminates his or her contract within 12 months of
+the announcement of a change of control, the members of the Management Board concerned
+are entitled to continued payment of their annual remuneration to the end of the originally
+agreed duration of their contract, subject to a minimum period of 24 months and a maximum
+period of 36 months.
+Psee page 116 ff.
+P see page 111
+119
+In accordance with a mutual agreement reached with the Supervisory Board, Mr. Mittal
+resigned as member of the Management Board effective June 30, 2016, with his service con-
+tract coming to an end effective September 30, 2016. In the period between the resignation
+date and definitively leaving office at the end of the 2016 fiscal year, Mr. Mittal continued to
+serve the Company on a similar scale to his previous workload, in order to facilitate the trans-
+fer of duties and allow his successor to familiarize himself with the job. Accordingly, Mr. Mittal
+continued to receive employment benefits in accordance with his service contract until
+September 30, 2016. In addition, Mr. Mittal was allowed to keep the performance shares allo-
+cated to him prior to October 1, 2015, despite his resignation from the Management Board.
+At the same time, Mr. Mittal has given a commitment - for the period of one year following
+the termination of his contract i.e. until September 30, 2017 - not to work for any of Infineon's
+major competitors. In accordance with the contract termination agreement concluded with
+Mr. Mittal, the Company is not required to pay any compensation for this post-contractual
+non-competition clause.
+Compensation report
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The service contracts of members of the Management Board include a change of control
+clause, which stipulates the terms that apply when the activities of a member of the Manage-
+ment Board are terminated in the event of a significant change in Infineon's ownership struc-
+ture. A change of control for the purposes of this clause occurs when a third party, individually
+or together with another party, acquires at least 50 percent of the voting rights in Infineon
+Technologies AG as defined in section 30 of the German Securities Acquisition and Takeover
+Act (Wertpapiererwerbs- und Übernahmegesetz – “WpÜG”). Members of the Management
+Board have the right to resign and terminate their service contracts within 12 months of the
+announcement of such a change of control and any who choose to do so are entitled to
+continued payment of their annual remuneration up to the end of the originally agreed dura-
+tion of their contract, up to a maximum of 36 months. If Infineon Technologies AG removes
+Early termination of service contracts
+3 With effect from June 30, 2016 Arunjai Mittal resigned from the Management Board, his employment ended with effect
+from September 30, 2016. With relation to his pension provisions, in accordance with his contract of employment Mr. Mittal
+is treated as if he had remained a member of the Management Board until September 30, 2016.
+Corporate Governance
+2 With effect from July 1, 2016 Jochen Hanebeck was appointed to the Management Board with responsibility for Operations.
+Due to current actuarial assumptions past service costs for Mr. Hanebeck amounting to €2,326,793 have been recorded in the
+2016 fiscal year in accordance with IAS 19.
+For information regarding the compensation paid to Mr. Mittal after termination of his Board
+activities (i.e. for the months July to September 2016), see "Management Board compen-
+sation in the 2016 fiscal year in accordance with German Accounting Standard 17 (DRS 17)"
+in this chapter.
+Review of the Management Board compensation system and individual contracts
+In accordance with section 4.2.2 DCGK, the Supervisory Board engaged an external, independent
+compensation expert during the 2016 fiscal year to review the Management Board compen-
+sation system in place since October 1, 2010 and conclude on its compliance with applicable
+legislation and overall appropriateness. In this context, the target annual incomes of each
+individual member of the Management Board were subjected to detailed scrutiny. The review
+came to the conclusion that the Company's compensation system complies with both the legal
+requirements and the recommendations set out in the German Corporate Governance Code
+(DCGK). In particular, it was deemed that the compensation of Infineon's Management Board
+is commensurate with market conditions and that the variable compensation component is
+oriented towards the sustainable growth of the enterprise. Furthermore, the individual target
+annual incomes of the members of the Management Board are appropriate, both horizontally
+(i.e. looking at comparable companies) and vertically (i.e. looking at Infineon's various employee
+groupings). The compensation expert did, however, point out the existence of some scope
+for maneuverability with regard to the target annual incomes and pension arrangements.
+The results of the compensation expert's review, presented in a final report in the fall 2016, were
+discussed in detail during the Executive Committee meeting held on October 24, 2016 and
+by the full Supervisory Board on November 15, 2016. The Supervisory Board concurred with
+the conclusions reached by the compensation expert. It therefore passed a resolution to
+change the pension arrangements in place for Dr. Ploss for the period from January 2016
+onwards to a defined contribution basis (for details, see "Allowances and pension entitlements
+in the 2016 fiscal year" in this chapter).
+INFINEON TECHNOLOGIES
+Members of the Supervisory Board, moreover, are reimbursed for all expenses incurred in
+connection with the performance of their Supervisory Board duties and for any value-added
+tax payable by them in this connection. The Company also pays any value-added tax incurred
+on the total remuneration (including meeting attendance fees) of members of the Super-
+visory Board.
+› A meeting attendance fee of €2,000 per meeting of the Supervisory Board or one of its
+committees that is attended in person. The meeting attendance fee is paid only once if more
+than one meeting is held on a given day.
+› An allowance recognizing the additional work involved in performing certain functions
+within the Supervisory Board: The Chairman of the Supervisory Board receives an allowance
+of €90,000, each Vice-chairman receives an allowance of €30,000, the Chairman of the Invest-
+ment, Finance and Audit Committee and the Chairman of the Strategy and Technology
+Committee each receive an allowance of €25,000 and each member of a Supervisory Board
+committee receives an allowance of €15,000 - with the exception of the Nomination Com-
+mittee and the Mediation Committee. The additional allowance is payable only if the body
+to which the Supervisory Board or committee member belongs has convened or passed
+resolutions in the fiscal year concerned. A member of the Supervisory Board performing more
+than one of the functions indicated receives only the highest single additional allowance
+payable to a member performing the functions concerned. The allowance is paid to the
+relevant holder of office within one month of the end of the fiscal year.
+› A fixed compensation (basic remuneration) of €90,000. This amount applies to each member
+of the Supervisory Board and is payable within one month of the close of the fiscal year.
+The compensation due to the Supervisory Board in each fiscal year (total compensation) is
+governed by section 11 of the Company's Articles of Association and comprises the following:
+Payments to former members of the Management Board in the 2016 fiscal year
+Former members of the Management Board received total payments of €1,200,241
+(primarily pension benefits) in the 2016 fiscal year (2015: €1,124,622). As of September 30,
+2016, accrued pension liabilities for former members of the Management Board amounted
+to €77,037,350 (2015: €60,212,071).
+The Supervisory Board compensation system was subject to a thorough review by an indepen-
+dent expert in the 2016 fiscal year and amended with (retrospective) effect from October 1,
+2015, in line with a proposal put forward by the Management Board and Supervisory Board
+to the Annual General Meeting on February 18, 2016. The objective of the amendment was
+to remove the previous variable compensation component and structure Supervisory Board
+compensation in future in compliance with the recommendations of the DCGK. Due to the
+removal of the variable compensation component, the fixed compensation component
+was simultaneously increased to a commensurate market level. Shareholders approved the
+proposals put forward by the Management Board and Supervisory Board to the 2016 Annual
+General Meeting with a large majority.
+Supervisory Board compensation
+120
+Compensation report
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Compensation structure
+Pension expense
+1 With effect from July 1, 2016 Dr. Helmut Gassel was appointed Member of the Management Board and Chief Marketing
+Officer. He is responsible for Sales & Marketing, Regions, Strategy Development, Mergers & Acquisitions and Intellectual
+Property. Due to current actuarial assumptions past service costs for Dr. Gassel amounting to €1,981,124 have been recorded
+in the 2016 fiscal year in accordance with IAS 19.
+11,120,628
+(Member of the Management Board)
+29,321
+3,540,697
+51,375
+2016
+Jochen Hanebeck²
+2015
+2015
+25,458
+2,780,620
+51,375
+2016
+Dr. Helmut Gassel¹
+272,721
+(Member of the Management Board)
+733,700
+Arunjai Mittal³
+(Member of the Management Board)
+450,000
+205,000
+2015
+567,517
+18,223,665
+241,183
+2016
+3,322,550
+2,511,117
+225,000
+225,000
+552,750
+210,000
+2016
+Total
+2015
+241,677
+ANNUAL REPORT 2016
+1,730,800
+Total variable
+562,500
+26,962
+26,962
+589,462
+589,462
+77,000
+231,000
+192,500
+77,000
+462,000
+231,000
+192,500
+340,000
+340,000
+850,000
+340,000
+462,000
+Allocation amount in accordance with DCGK
+1,530,000
+241,677 241,677
+831,139 2,361,139
+833,225
+241,677 241,183
+1,511,139 1,853,853
+680,000
+654,500
+29,321
+862,768
+29,321
+208,268
+562,500
+308,000
+29,321
+516,268
+25,458
+205,422
+513,422
+308,000
+25,458
+153,225
+680,000
+340,000
+654,500
+25,458
+859,922
+750,000
+29,445
+779,445
+26,962
+589,462
+562,500
+2016 (max.)
+2016 (min.)
+2015
+Member of the Management Board
+Jochen Hanebeck³
+2016
+2016
+2016 (min.) 2016 (max.)
+Member of the Management Board
+Dr. Helmut Gassel²
+2016
+Combined Management Report | Our 2016 fiscal year
+Corporate Governance
+Compensation report
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+2015
+year
+Arunjai Mittal 4
+Member of the Management Board
+2015
+171,250
+7,697
+178,947
+171,250
+7,697
+178,947
+7,697
+178,947
+179,964
+179,964
+179,964
+115
+8,714
+171,250
+171,250
+8,714
+8,714
+171,250
+2016 (max.)
+2016 (min.)
+171,250
+Since compensation granted to members of the Management Board for the 2016 fiscal
+does not always coincide with amounts disbursed in a particular fiscal year, a separate table
+is presented - in accordance with the relevant DCGK recommendation - showing the amounts
+flowing to members of the Management Board for the 2016 fiscal year (the "allocation
+amount" ("Zufluss")).
+In line with the DCGK recommendations, the fixed compensation and the STI are required to
+be disclosed as the allocation amount for the relevant fiscal year concerned. In the case of the
+MTI, the DCGK recommends that this is disclosed as flowing to members of the Management
+Board in the fiscal year in which the plan term of the relevant MTI tranche ends. In this sense,
+in addition to the fixed compensation and the STI granted for the 2016 fiscal year, the allocation
+amount for the 2014-2016 MTI tranche also flowed to the members of the Management Board
+in the 2016 fiscal year. In accordance with the DCGK, share-based payments are deemed to
+be allocated on the basis of the relevant time and value for German tax law purposes. In line
+with the DCGK recommendations, the pension expense meaning the service cost pursuant
+to IAS 19 constitutes the allocation amount (see previous table), even though it is not - strictly
+speaking- an allocation.
+INFINEON TECHNOLOGIES
+76,153
+336,260 589,220
+831,840
+474,720
+compensation (STI)
+Single-year variable
+76,153
+Variable compensation
+589,462
+178,947
+29,445
+26,962
+7,697
+8,714
+179,964
+779,445
+750,000
+336,260
+Multi-year variable
+962,500
+550,000
+Stock Option Plan 2010
+Performance Share Plan
+Long Term Incentive (LTI)
+507,792
+405,020
+589,220
+507,792
+Tranche 2014-2016
+405,020
+552,300
+Tranche 2013-2015
+Mid Term Incentive (MTI)
+compensation
+706,080
+compensation
+562,500
+171,250
+2016
+Arunjai Mittal³
+Member of the
+Management Board
+Member of the
+Management Board
+Jochen Hanebeck²
+Dr. Helmut Gassel¹
+Member of the
+Management Board
+Dominik Asam
+Chief Financial Officer
+2015
+Dr. Reinhard Ploss
+Chief Executive Officer
+The total compensation allocated to the individual members of the Management Board
+for the 2016 fiscal year in accordance with DCGK - analyzed by component - is shown in the
+following table:
+in €
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+116
+171,250
+2016
+2016
+750,000
+41,368
+791,368
+750,000
+41,185
+791,185
+1,075,000
+35,909
+1,110,909
+1,110,724
+Total fixed compensation
+35,724
+2015
+1,075,000
+Fixed compensation
+2015
+2016
+2015
+2016
+2015
+Basic annual salary
+Fringe benefits
+Combined Management Report | Our 2016 fiscal year
+28
+Compensation report
+15,000
+22,000
+127,000
+2015
+50,000
+19,500
+15,000
+16,000
+100,500
+Kerstin Schulzendorf²
+2016
+90,000
+10,000
+100,000
+2015
+33,333
+13,000
+112,500
+18,000
+25,000
+19,500
+50,000
+2015
+90,000
+139,000
+25,000
+90,000
+2016
+Dr. Eckart Sünner
+54,333
+8,000
+24,000
+2016
+Jürgen Scholz
+110,500
+2016
+Gerd Schmidt³
+83,500
+14,000
+19,500
+50,000
+2015
+2015
+14,000
+90,000
+2016
+Dr. Manfred Puffer
+147,500
+28,000
+104,000
+Diana Vitale 2
+20,833
+15,625
+16,000
+25,000
+19,500
+50,000
+2015
+Schmitt-Landsiedel
+8,125
+128,667
+16,667
+90,000
+2016
+Prof. Dr. Doris
+54,583
+10,000
+22,000
+2016
+90,000
+16,000
+2016
+Notes
+124
+€ in millions
+for the year ended September 30, 2016 and 2015
+Consolidated Statement of Operations
+2015
+Consolidated Statement of Operations
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+123
+130 Notes to the Consolidated Financial Statements
+128 Consolidated Statement of Changes in Equity
+127 Consolidated Statement of Cash Flows
+Consolidated Financial Statements
+126 Consolidated Statement of Financial Position
+Revenue
+Gross profit
+Corporate Governance
+(778)
+(791)
+(717)
+(770)
+2,080
+Cost of goods sold
+2,330
+(4,143)
+5,795
+6,473
+Other operating income
+Selling, general and administrative expenses
+Research and development expenses
+(3,715)
+50,000
+125 Consolidated Statement of Comprehensive Income
+Financial Statements
+2 For members of the Supervisory Board who joined since February 12, 2015, the compensation was awarded on a pro-rata basis.
+3 For members of the Supervisory Board serving up until February 12, 2015, the compensation was awarded on a pro-rata basis.
+1 Based on earnings per share (undiluted) from continuing operations of €0.55 in the 2015 fiscal year. The Supervisory Board
+compensation was restructured with effect from October 1, 2015 from which date a variable compensation component
+was no longer awarded.
+233,125
+290,875
+8,000
+330,000
+262,084
+INFINEON TECHNOLOGIES
+1,440,000
+745,830
+2016
+Total
+13,000
+33,333
+2015
+106,000
+2015
+124 Consolidated Statement of Operations
+ANNUAL REPORT 2016
+Corporate Governance
+123 Consolidated
+Content
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Jochen Hanebeck
+Dr. Helmut Gassel
+Dominik Asam
+Combined Management Report | Our 2016 fiscal year
+Dr. Reinhard Ploss
+Neubiberg, November 22, 2016
+The company signed a contract on August 25, 2015 with the Technische Universität München
+relating to the provision of research and development services, to be performed primarily
+within the remit of the Chair of Professor Schmitt-Landsiedel. The Supervisory Board therefore
+approved the contract as a precautionary measure on August 4, 2015. In accordance with this
+contract the first rate of €50,000 was paid to the Technische Universität München in the 2016
+fiscal year.
+Other matters
+Members of the Supervisory Board did not receive any loans from Infineon in either the 2016
+or 2015 fiscal years.
+122
+Compensation report
+Management Board
+19,500
+54,333
+2,032,084
+248,000 1,517,830
+2015
+30,000
+30,000
+150,000
+2015
+33,333
+13,000
+25,000
+14,000
+85,333
+Dr. Herbert Diess2
+2016
+90,000
+14,000
+104,000
+2015
+33,333
+13,000
+68,333
+12,000
+10,000
+13,000
+33,333
+2015
+90,000
+125,000
+15,000
+90,000
+2016
+Annette Engelfried 2
+54,333
+8,000
+20,000
+2016
+Johann Dechant 2
+45,208
+compen-
+Total
+Meeting
+attendance
+fees
+Allowance
+for specific
+functions
+Variable
+compen-
+sation
+Fixed
+compen-
+sation
+sation
+Member of the Supervisory Board
+in €
+Supervisory Board compensation
+The total compensation (including meeting attendance fees) paid to the individual members
+of the Supervisory Board in the 2016 fiscal year comprises the following (these figures do not
+include value-added tax at 19 percent):
+Compensation of the Supervisory Board for the 2016 fiscal year
+50,000
+121
+Fiscal year
+Reinhard Gottinger³
+Peter Bauer²
+90,000
+10,000
+6,250
+8,125
+2015
+2016
+Wigand Cramer³
+2016
+54,333
+13,000
+33,333
+2015
+116,417
+16,000
+10,417
+8,000
+2016
+20,833
+20,833
+81,500
+12,000
+19,500
+50,000
+2015
+102,000
+Dr. Susanne Lachenmann 2
+12,000
+2016
+Prof. Dr. Renate Köcher
+104,500
+20,000
+15,000
+19,500
+90,000
+50,000
+2016
+22,000
+214,000
+34,000
+2015
+90,000
+90,000
+2016
+15,000
+Wolfgang Mayrhuber
+10,000
+10,000
+13,000
+33,333
+2015
+127,000
+66,333
+2015
+90,000
+28,000
+15,000
+19,500
+50,000
+2015
+22,000
+15,000
+16,000
+90,000
+Peter Gruber
+39,208
+133,000
+8,125
+4,000
+6,250
+2016
+100,500
+127,000
+2016
+2016
+Hans-Ulrich Holdenried
+Gerhard Hobbach
+100,500
+16,000
+19,500
+50,000
+15,000
+2015
+129,000
+24,000
+15,000
+15,000
+90,000
+90,000
+4,664
+40
+40
+(14)
+(5)
+6
+(19)
+40
+1
+4,665
+4,664
+4,665
+(194)
+744
+6
+(1)
+743
+1
+13
+(28)
+(202)
+(37)
+(194)
+1
+126
+(1)
+1
+(37)
+(1)
+13
+(6)
+E
+(6)
+35
+35
+667
+2
+669
+(202)
+(28)
+550
+IAS 19
+549
+The Consolidated Financial Statements prepared by Infineon Technologies AG as ultimate parent company
+the year ended September 30, 2016 have been prepared in accordance with International Financial Reporting
+Standards ("IFRS") and related interpretations effective as of September 30, 2016 as issued by the International
+Accounting Standards Board ("IASB") to the extent to which the IFRS and interpretations have been adopted by the
+European Union ("EU"). The Consolidated Financial Statements also comply with the supplementary requirements
+set forth in section 315a, paragraph 1, of the German Commercial Code ("Handelsgesetzbuch" or "HGB"). The
+aforementioned standards were complied with in full.
+The Consolidated Statement of Operations is presented using the cost of sales method.
+The fiscal year end for both Infineon and the Company is September 30 of each year.
+The Group currency is the euro ("€").
+Deviations between amounts presented are possible due to rounding. Negative amounts are presented in parentheses.
+The Company's Management Board presented the Consolidated Financial Statements on November 22, 2016.
+Financial reporting rules applied for the first time
+The IASB has issued the following Standards or amendments to Standards, which are required to be applied in the
+Consolidated Financial Statements for the year ended September 30, 2016:
+Standard/amendment/interpretation
+for
+"Employee benefits" for defined benefit plans
+(Amendments to IAS 19)
+Annual IFRS improvement cycle 2011-2013
+Effective date
+Impact on Infineon
+February 1, 2015
+February 1, 2015
+January 1, 2015
+immaterial
+immaterial
+(1)
+immaterial
+Annual IFRS improvement cycle 2010-2012
+(1)
+1 Basis of the Consolidated Financial Statements
+The Infineon Group ("Infineon") comprising Infineon Technologies AG ("the Company") and its subsidiaries design,
+develop, manufacture and market a broad range of semiconductors and related system solutions. The focus of
+activities is on applications for automotive electronics, industrial electronics, information and communications
+infrastructure as well as hardware-based security. The product range includes standard, application-specific and
+customer-specific components as well as system solutions for power, digital, analog, high frequency and mixed-
+signal applications. More than half of Infineon's revenue is generated by power semiconductors, the remaining
+revenue is attributable to high frequency components, sensors, driver components as well as microcontrollers
+for automotive, industrial and security applications. Research and development sites, manufacturing facilities,
+investments and customers are located mainly in Europe, Asia and North America.
+(225)
+(225)
+25
+9
+98
+(2)
+(5)
+(37)
+Infineon Technologies AG is a listed company under German law and ultimate parent company of the Infineon Group.
+The principal office of the Company is Am Campeon 1 - 12, 85579 Neubiberg (Germany). The Company is registered
+in the Commercial Register of the District Court of Munich (Germany) under the number HRB 126492.
+5,023
+9
+5,023
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Notes to the Consolidated
+Financial Statements
+130
+25
+126
+605
+(4)
+Other changes in equity
+(14)
+Balance as of September 30, 2015
+1,129,271,481
+2,259
+5,213
+(2,897)
+Balance as of October 1, 2015
+6
+Net income
+2,259
+5,213
+(2,897)
+744
+Other comprehensive income (loss)
+for the period, net of tax
+(159)
+Total comprehensive income (loss)
+for the period, net of tax
+Dividends
+585
+1,129,271,481
+(225)
+9
+1,532,251
+Financial reporting rules issued not yet applied
+Other comprehensive income (loss)
+for the period, net of tax
+Total comprehensive income (loss)
+for the period, net of tax
+Dividends
+Issuance of ordinary shares:
+Exercise of stock options
+Share-based compensation
+Put options on own shares
+Note
+Ordinary shares issued
+Additional
+paid-in capital
+Accumulated
+4
+deficit
+Amount
+15
+1,127,739,230
+2,255
+5,414
+(3,502)
+632
+(27)
+(202)
+Shares
+(34)
+Issuance of ordinary shares:
+3,401,628
+129
+Non-
+Total equity
+controlling
+interests
+26
+3
+35
+(37)
+of Infineon
+Technologies AG
+(40)
+4
+632
+2
+4,158
+634
+100
+(4)
+(34)
+100
+4,154
+Exercise of stock options
+Total equity
+attributable to
+shareholders
+Other reserves
+6
+19
+Share-based compensation
+9
+Balance as of September 30, 2016
+1,132,673,109
+2,265
+5,016
+Put options
+on own shares
+(2,312)
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Consolidated Statement of Changes in Equity
+Own shares
+Securities
+Hedges
+Foreign
+currency
+translation
+adjustment
+INFINEON TECHNOLOGIES
+The following new or amended Standards have been issued by the IASB and will be relevant to Infineon from today's
+perspective. They have not been applied in the Consolidated Financial Statements as of September 30, 2016 since
+they are not yet mandatory or, alternatively, have not yet been endorsed by the EU. The new or amended Standards
+133
+ANNUAL REPORT 2016
+Fair value/amortized cost
+Fair value directly through equity
+Fair value through profit or loss
+Fair value directly through equity
+(Amortized) Cost
+Equity and liabilities
+Trade payables
+Debt
+Provisions
+Pensions
+Other provisions
+Impairment-only approach
+Other liabilities (current and non-current):
+Measured at fair value through profit or loss
+Designated hedging instruments
+Other financial liabilities
+Remaining other liabilities
+Put options on own shares
+Own shares
+Fair value/amortized cost
+Fair value/amortized cost
+Projected unit credit method
+Expected settlement amount
+Other financial liabilities:
+Fair value through profit or loss
+(Amortized) Acquisition or production cost
+Lower of acquisition or production cost and net realizable value
+Lower of carrying amount and fair value less costs to sell
+(Amortized) Acquisition or production cost
+Financial investments
+Trade receivables
+Inventories
+Assets classified as held for sale
+Property, plant and equipment
+Goodwill
+Intangible assets (except goodwill):
+with definite useful life
+with indefinite useful life
+Impairment-only approach
+Other assets (current and non-current):
+Loans and receivables
+Available-for-sale
+Measured at fair value through profit or loss
+Designated hedging instruments
+Remaining other assets
+Nominal amount
+Fair value/amortized cost
+Fair value/amortized cost
+Other financial assets:
+Cash and cash equivalents
+Fair value directly through equity
+Fair value/amortized cost
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+134
+For available-for-sale financial assets, a significant or prolonged decline in the fair value of the financial asset
+below its acquisition cost is considered as an indicator that the assets are impaired. If any such evidence exists, the
+cumulative loss that had been recognized directly in equity - measured as the difference between the acquisition
+cost and the current fair value, less any impairment loss previously recognized in profit or loss - is removed from
+equity with affecting income.
+When financial assets classified as available-for-sale are sold, the accumulated fair value adjustments previously
+recognized in equity are reclassified to profit or loss.
+Financial assets or liabilities measured at fair value through profit or loss
+At Infineon financial assets or liabilities measured at fair value through profit or loss comprise almost entirely of
+derivatives used to hedge currency risks for which hedge accounting is not applied.
+INFINEON TECHNOLOGIES
+Designated hedging instruments (cash flow hedges)
+Derivative financial instruments are measured at their fair value and included in "Other current assets" or
+"Other current liabilities".
+The effective portion of changes in the fair value of derivative financial instruments that are designated as cash
+flow hedges and are part of hedging relationships that meet the criteria for hedge accounting is recognized directly
+in equity. "Effective" is the degree to which changes in the fair value or cash flows of the hedged items that are
+attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument.
+The gain or loss relating to the ineffective portion is recognized in profit or loss. Amounts accumulated in equity
+are recycled in profit or loss in the periods in which the underlying hedged item affects profit or loss.
+When a hedging instrument expires or is sold, or when a hedging relationship no longer meets the criteria for hedge
+accounting, any cumulative gain or loss existing at that time remains in equity until the underlying transaction
+actually occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was
+reported in equity is immediately transferred to profit or loss.
+Other financial liabilities
+Upon acquisition other financial liabilities are measured at fair value after deduction of transaction costs.
+In subsequent periods they are measured at amortized cost using the effective interest method. The liabilities are
+derecognized when the contractual obligations are discharged, cancelled or expired.
+Inventories
+Inventories encompass assets to be consumed in the production process or in the rendering of services (raw materials
+and supplies), that are in the production process at the balance sheet date (work in progress), or held for sale in
+the ordinary course of business (finished and purchased goods).
+Inventories are measured at the lower of acquisition or fully absorbed production cost - calculated using the
+weighted-average method – and net realizable value. Net realizable value corresponds to realizable sale proceeds
+under normal business conditions less estimated expected costs to complete and sell. Production cost comprises
+costs of material, production wages and an appropriate portion of attributable overheads, including attributable
+depreciation and amortization on property, plant and equipment and intangible assets. Overhead mark-ups are
+determined on the basis of normal capacity utilization levels.
+Certain derivative financial instruments are used to hedge foreign currency risks or risks of commodity price changes
+(such as gold prices) for expected and highly probable future transactions in order to minimize the associated risk
+(cash flow hedges).
+Fair value/amortized cost
+Upon acquisition, available-for-sale financial assets are measured at fair value taking into account transaction
+costs. Subsequently they are measured at their fair value at the end of the relevant reporting period. Transaction
+costs relating to the acquisition of available-for-sale financial assets with a definite term and fixed or determinable
+payments are capitalized and recognized in the Consolidated Statement of Operations using the effective interest
+method. Changes in the fair value of available-for-sale financial assets are recognized directly in equity. If the fair
+value is permanently or significantly lower than the amortized cost, then an impairment loss is recognized through
+profit or loss.
+Available-for-sale financial assets
+Present value of nominal amount at date of issue
+Acquisition cost
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Net income
+Cash and cash equivalents
+Available-for-sale financial assets are non-derivative financial assets that are either designated as available for sale,
+or are not allocated to any of the other categories (see above).
+Cash and cash equivalents represent cash and all financial resources with a maturity at acquisition date of
+three months or less, and are measured at their nominal amount.
+Financial instruments are initially recognized at their fair value. Transaction costs directly attributable to the
+acquisition or issuance of financial instruments are only included in the carrying amount if the financial instruments
+are not measured at fair value through profit or loss.
+Regular purchases and sales of financial assets are recognized on the basis of the settlement date. The settlement
+date is the date on which an asset is delivered to or by Infineon.
+Financial assets are derecognized when the rights to receive payments from the investments have expired or have
+been transferred and Infineon has transferred all risks and rewards associated with ownership. Financial liabilities
+are derecognized when they are extinguished, that is when the contractual obligation is discharged, cancelled
+or expired.
+Infineon classifies financial assets into the following categories: "Loans and receivables", "Available-for-sale financial
+assets" and "Financial assets measured at fair value through profit and loss". "Designated hedging instruments
+(cash flow hedges)" also belong to financial assets. Financial instruments of the category "Assets held-to-maturity"
+were not held by Infineon.
+Infineon classifies financial liabilities into the following categories: “Financial liabilities measured at fair value through
+profit and loss" and "Other financial liabilities”. Furthermore, “Designated hedging instruments (cash flow hedges)"
+belong to financial liabilities.
+Loans and receivables
+Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
+in an active market. At Infineon the balance sheet items "Cash and cash equivalents", "Financial investments",
+"Trade receivables" and current and non-current "Other assets" all contain financial assets which are classified in
+the category "Loans and receivables".
+Loans and receivables are measured on initial recognition at their fair value plus incidental acquisition costs.
+Subsequently, they are measured at amortized cost using the effective interest method. Loans and receivables are
+tested for impairment. They are considered to be impaired when there is objective evidence that Infineon will not
+receive all amounts contractually due at the relevant due date. Objective evidence that indicates that impairment
+should be recorded would include, for example, known financial difficulties or the insolvency of a debtor. The
+impairment is recorded as an expense in profit or loss (in a separate allowance account). When a payment default
+becomes certain, such loans and receivables are considered to be uncollectible and derecognized along with the
+previously recognized allowance.
+Financial instruments
+INFINEON TECHNOLOGIES
+Assets
+Balance sheet item
+January 1, 2018
+none
+impacts are still
+being analyzed
+IFRS 11
+Accounting for acquisitions of interests in joint operations
+(Amendments to IFRS 11)
+January 1, 2016
+IFRS 15
+Revenue from contracts with customer
+Financial instruments
+January 1, 2018
+Leases
+Annual IFRS improvement cycle 2012-2014
+January 1, 2019
+January 1, 2016
+none
+impacts are still
+being analyzed
+impacts are still
+being analyzed
+immaterial
+131
+2 Summary of Significant Accounting Policies
+Basis of consolidation
+IFRS 16
+The Consolidated Financial Statements presented here include the financial statements of Infineon Technologies AG
+and its direct and indirect subsidiaries on a consolidated basis. A subsidiary is defined as an entity which, directly
+or indirectly, is controlled by Infineon Technologies AG.
+January 1, 2016
+IAS 16/
+IAS 38
+IFRS 9
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+are applicable for fiscal years beginning on or after their respective effective date. As a general rule, they are not
+applied before their effective date, even if this is permitted for certain standards.
+Standard/amendment/interpretation
+Effective date
+Expected impact
+on Infineon
+IAS 1
+Presentation of financial statements
+Clarification of acceptable methods of depreciation and amortization
+(Amendments to IAS 16 and IAS 38)
+(Disclosure initiative - Amendments to IAS 1)
+IAS 7
+IAS 12
+Cash flow statements (Disclosure initiative - Amendments to IAS 7)
+January 1, 2017
+immaterial
+immaterial
+Recognition of deferred tax assets for unrealized losses
+(Amendments to IAS 12)
+January 1, 2017
+immaterial
+January 1, 2016
+Measurement principle
+Control exists when Infineon is subjected to variable returns arising from its engagement with the subsidiary
+or has a right to such, and has the ability to influence these returns as a result of its power over the subsidiary.
+Power means that Infineon has existing rights that give Infineon the current ability to direct the relevant activities
+(the activities that significantly affect the aforementioned returns).
+The financial statements of entities included in the Consolidated Financial Statements are prepared using uniform
+valuation and accounting policies.
+2015
+112.9300
+134.1300
+122.8719
+136.4560
+4.6434
+4.9410
+4.5685
+2016
+1.5270
+1.5266
+4.2186
+1.5429
+1.1225
+1.1170
+1.1065
+1.1432
+Recognition and measurement principles
+The following table summarizes the principal measurement bases used in the preparation of the Consolidated
+Financial Statements:
+1.5960
+An entity is included in the Consolidated Financial Statements from the date on which Infineon acquires control.
+Upon first-time consolidation of an entity, the acquired assets and liabilities are measured on the basis of their fair
+value at the acquisition date. Any excess of consideration paid (purchase price) over the share of the fair value of
+acquired assets, liabilities and contingent liabilities is recognized as goodwill. Any excess of Infineon's share of the
+fair value of items acquired over consideration paid is recognized as a gain.
+September 30, 2015
+Annual average exchange rate
+The balance sheet effects of intragroup transactions as well as gains and losses arising from intragroup business
+relationships are eliminated on consolidation.
+A list of subsidiaries of Infineon Technologies AG is provided in note 26.
+Functional currency, reporting currency and foreign currency translation
+The functional currency of Infineon Technologies AG is the euro. The Consolidated Financial Statements have been
+prepared with the euro as reporting currency.
+Foreign currency transactions are translated into the functional currency of the relevant entity using the exchange
+rates prevailing at the transaction date. Monetary assets and liabilities which are not denominated in the functional
+currency of the reporting entity are translated at the closing exchange rate prevailing at the end of the relevant
+reporting period. Exchange rate gains and losses from the currency translation are recognized in the Consolidated
+Statement of Operations as part of the operating result.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+September 30, 2016
+Notes to the Consolidated Financial Statements
+The assets and liabilities of foreign subsidiaries with functional currencies other than the euro are translated
+into euros using period-end exchange rates. Income and expenses of these entities are translated using the
+average exchange rate for the period under report. All cumulative differences arising from the currency translation
+of the equity in foreign subsidiaries arising from changes to exchange rates are recognized directly in equity in
+"Other reserves".
+The exchange rates of the primary currencies (€1 in foreign currency units) used in the preparation of the
+accompanying Consolidated Financial Statements, in alphabetical order, are as follows:
+€1 in units of foreign currency
+Japanese yen
+Malaysian ringgit
+Singapore dollar
+US dollar
+Closing rate
+132
+Balance as of October 1, 2014
+ASSETS
+€ in millions,
+Shareholders' equity:
+Total liabilities
+Total non-current liabilities
+86
+92
+Other non-current liabilities
+72
+76
+13
+Long-term provisions
+147
+10
+7
+Deferred tax liabilities
+426
+604
+20
+2,534
+2,491
+4,064
+4,076
+126
+91
+(2,897)
+(2,312)
+5,213
+5,016
+2,259
+2,265
+Pension plans and similar commitments
+Total liabilities and equity
+Non-controlling interests
+Equity attributable to shareholders of Infineon Technologies AG
+Own shares at cost
+Other reserves
+Accumulated deficit
+Additional paid-in capital
+Ordinary share capital
+15
+Total equity
+1,760
+1,752
+14
+LIABILITIES AND EQUITY
+8,741
+9,087
+Total assets
+4,626
+4,595
+Total non-current assets
+155
+Short-term debt and current maturities of long-term debt
+162
+623
+7
+3
+3
+7
+Other non-current assets
+Deferred tax assets
+Non-current income tax receivable
+604
+(37)
+14
+33
+Long-term debt
+1,585
+1,530
+Total current liabilities
+225
+209
+Other current liabilities
+123
+17
+120
+327
+37
+Income tax payable
+13
+Short-term provisions
+802
+857
+Trade payables
+402
+(37)
+5,023
+4,664
+(48)
+(72)
+13
+Change in provisions
+50
+57
+Change in trade payables
+(133)
+Change in other assets and liabilities
+(66)
+(65)
+(25)
+10
+6
+31
+16
+12
+Change in inventories
+11
+Change in trade receivables
+(60)
+Interest received
+817
+1,291
+Net cash provided by operating activities
+(140)
+(22)
+Net cash used in operating activities from discontinued operations
+957
+1,313
+(95)
+Net cash provided by operating activities from continuing operations
+(126)
+7
+Income tax paid
+(14)
+(26)
+Interest paid
+8
+6
+(93)
+33
+Other non-cash result
+1
+Minus: income from discontinued operations, net of income taxes
+Net income
+2015
+2016
+Notes
+127
+€ in millions
+for the year ended September 30, 2016 and 2015
+Write-downs to net realizable value are recorded on inventories using a consistent approach throughout Infineon
+and are determined at product level for technically obsolete and slow-moving inventories on the basis of the
+amount of revenues expected to be generated by the relevant product.
+Consolidated Statement of Cash Flows
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+8,741
+9,087
+4,665
+5,023
+1
+Consolidated Statement of Cash Flows
+Impairment charges
+743
+(2)
+2
+Dividends received from joint ventures
+(7)
+5
+Gains on disposals of property, plant and equipment
+42
+58
+Net interest result
+634
+(102)
+7
+Income tax
+760
+833
+12
+Depreciation and amortization
+Adjustments to reconcile net income to net cash provided by operating activities:
+(12)
+(36)
+32
+Investments accounted for using the equity method
+1,738
+14
+57
+Net cash used in investing activities from continuing operations
+(1,098)
+(2,593)
+Net cash used in investing activities from discontinued operations
+Net cash used in investing activities
+(1,098)
+(2,593)
+Proceeds from sales of property, plant and equipment and other assets
+Net change in short-term debt
+(8)
+2
+Net change in related party financial receivables and payables
+19
+(1)
+Proceeds from issuance of long-term debt
+14
+824
+14
+2,398
+(646)
+12
+INFINEON TECHNOLOGIES
+Purchases of other equity investments
+9
+(4,130)
+(1,478)
+9
+3,855
+1,496
+(716)
+(14)
+Purchases of intangible assets and other assets
+Purchases of property, plant and equipment
+322
+(11)
+(1,869)
+12
+(110)
+(139)
+Acquisitions of businesses, net of cash acquired
+ANNUAL REPORT 2016
+Repayments of long-term debt
+(846)
+Effect of foreign exchange rate changes on cash and cash equivalents
+Cash and cash equivalents at beginning of period
+Cash and cash equivalents at end of period
+(36)
+(413)
+(12)
+28
+673
+Net change in cash and cash equivalents
+1,058
+673
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Consolidated Statement of Changes in Equity
+128
+Consolidated Statement of Changes in Equity
+for the year ended September 30, 2016 and 2015
+625
+14
+1,363
+Net cash provided by (used in) financing activities
+(831)
+Change in cash deposited as collateral
+1
+Proceeds from issuance of ordinary shares
+15
+26
+11
+Cash outflows due to changes of non-controlling interests
+(229)
+3
+Dividend payments
+15
+(225)
+(202)
+Net cash provided by (used in) financing activities from continuing operations
+(229)
+1,363
+Net cash used in financing activities from discontinued operations
+(15)
+except for number of shares.
+Consolidated Financial Statements
+Consolidated Statement of
+Comprehensive Income
+1,340
+1,615
+9
+673
+625
+Other current assets
+Income tax receivable
+Inventories
+10
+Trade receivables
+Cash and cash equivalents
+Septem-
+ber 30, 2015
+Septem-
+ber 30, 2016
+Notes
+€ in millions
+as of September 30, 2016 and 2015
+Consolidated Statement of Financial Position
+126
+Financial investments
+Consolidated Statement of Financial Position
+774
+11
+1,656
+12
+2,093
+2,119
+12
+22
+Goodwill and other intangible assets
+Property, plant and equipment
+742
+4,115
+Total current assets
+229
+281
+2
+6
+7
+1,129
+1,191
+4,492
+Consolidated Statement of Comprehensive Income
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES
+100
+(28)
+(27)
+(159)
+(27)
+(159)
+634
+743
+Net change in fair value of hedging instruments
+Total items not expected to be reclassified to profit or loss in the future
+Currency translation effects
+Net income
+15
+2015
+2016
+Notes
+125
+€ in millions
+for the year ended September 30, 2016 and 2015
+Actuarial losses on pension plans and similar commitments
+ANNUAL REPORT 2016
+(6)
+Net change in fair value of available-for-sale financial assets
+667
+2
+550
+(1)
+Shareholders of Infineon Technologies AG
+Non-controlling interests
+Attributable to:
+Total comprehensive income for the year, net of tax
+(37)
+669
+35
+(194)
+Other comprehensive income (loss) for the year, net of tax
+62
+(35)
+Total items expected to be reclassified to profit or loss in the future
+(1)
+(1)
+549
+18
+Proceeds from sales of financial investments
+Purchases of financial investments
+Revenue recognition
+51
+Industrial Power Control
+2015
+2016
+2015
+2016
+2015
+2016
+2015
+2016
+Segment
+in %
+in %
+in %
+€ in millions
+51
+12.8
+13.9
+9.9
+1
+1
+11.0
+10.7
+15.0
+14.0
+750
+746
+Total
+Corporate
+& Multimarket
+Power Management
+1
+1
+10.3
+terminal growth rate¹
+after-tax WACC¹
+pre-tax WACC¹
+Book value of
+allocated goodwill
+Infineon did not hold any intangible assets with indefinite useful lives in either the 2016 or 2015 fiscal years.
+Other intangible assets
+Licenses and similar rights
+Technologies
+Customer relationships
+Capitalized development costs
+Scheduled amortization of intangible assets is based on the following useful lives:
+Intangible assets consist primarily of purchased intangible assets, such as licenses, technology and customer
+relationships (including order backlog), which are measured at acquisition cost, as well as capitalized development
+costs. These intangible assets have definite useful lives and are valued at their amortized acquisition or production
+costs with amortization recorded using the straight-line method over their expected economic life.
+Intangible assets (excluding goodwill)
+136
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+When fixed assets are sold, decommissioned or scrapped, the difference between the net proceeds and the carrying
+amount of the assets is recognized as a gain or loss in other operating income or expense.
+Leases
+Years
+3-5
+1-12
+The following table shows the allocation of the carrying amount of goodwill to the segments, as well as the
+valuation parameters used:
+The discount rate is based on the after-tax weighted average cost of capital (WACC) for the entity in question.
+The Capital Asset Pricing Model (CAPM) is used to calculate the cost of equity. The relevant pre-tax WACC used to
+discount future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax cash flows and the
+after-tax WACC using a typical tax rate for each reporting segment. The risk-free interest rate is derived using the
+Svensson method taking into account risk premiums, and the beta factor and debt ratio are derived from a group of
+companies comparable to the operating segment. In this way the discount rate derived reflects the current market
+rate of return as well as the specific risks attached to the respective segment.
+Cash flows, including the underlying parameters such as revenue growth and gross margin, are projected based on
+past experience, current operating results and the five-year strategic business plan approved in the fiscal year just
+ended. The plan is calculated bottom-up based on certain central assumptions applied consistently throughout
+Infineon. Cash flows for periods beyond the planning horizon are estimated using a terminal value. Terminal growth
+rates used do not take into account investments to increase capacity for which no cash outflow has taken place,
+and are derived from publicly available market studies from market research institutes and do not exceed the
+historical long-term average growth rate for the sector in which the relevant segment operates.
+137
+Notes to the Consolidated Financial Statements
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Infineon determines the recoverable amount of a particular unit to which goodwill has been allocated on the basis
+of its value in use. The value in use is measured by estimating the present value of future cash flows that will be
+generated by the continuing operations of the entity discounted using an appropriate discount rate.
+2
+799
+Acquired goodwill is only impaired if there is evidence of impairment. Its value is tested at the operating segment
+level for possible impairment annually as at June 30 and, additionally, whenever there are events or changes in
+circumstances that indicate that the carrying amount may not be recoverable. The recoverable amount is the
+higher of the fair value less costs to sell and the value in use. If the carrying amount of the respective operating
+segment including allocated goodwill exceeds the recoverable amount of this entity, the goodwill is impaired
+accordingly. Such impairments cannot be reversed in subsequent periods.
+Goodwill is an intangible asset that represents the future economic benefits arising from assets acquired in a
+business combination that cannot be individually identified and separately recognized. Goodwill is the excess of
+the consideration transferred for an interest in a business over the net fair value of acquired, separately identifiable
+assets, liabilities and contingent liabilities as at the date of acquisition. Goodwill arising from acquisitions of
+businesses is reported in the line item "Goodwill and other intangible assets" in the Consolidated Statement of
+Financial Position. Separately identifiable intangible assets acquired in a business combination are recognized and
+reported separately from goodwill.
+Goodwill
+Recoverability of intangible assets and other long-lived assets
+Infineon is a lessee of property, plant and equipment which are categorized as operating or finance leases in
+accordance with IAS 17 “Leases”. In the case of operating lease contracts, the lease costs are spread on a straight-line
+basis over the term of the lease arrangement.
+2-8
+3-5
+4-12
+Goodwill acquired in a business combination is allocated to the cash-generating units (CGUS) or groups of CGUS
+that will benefit from the synergies generated by the business combination. A CGU represents the smallest
+identifiable group of assets that generates cash inflows from continuing activities and that is as independent as
+possible from other assets or asset groups.
+2
+803
+1 Valuation parameters as of June 30, 2016 and 2015.
+Estimates and assumptions undergo regular review and must be adjusted where appropriate. They can vary from
+period to period and have a material effect on the financial condition, liquidity position and results of operations
+of Infineon.
+The preparation of financial statements in accordance with IFRS requires management to make estimates and
+assumptions that have an impact on the presented amounts and the associated disclosures.
+Estimates and assumptions
+Grants that are related to expenses are presented as a reduction of the related expense in the Consolidated
+Statement of Operations (see note 5).
+Grants for investments include both tax-free investment grants and taxable grants for investments in property,
+plant and equipment. Grants are recognized when it is reasonably assured that Infineon will comply with the
+conditions attached to the grant, and it is reasonably assured that the grant will be received. Tax-free investment
+grants are deferred and recognized over the remaining useful life of the subsidized asset. Taxable grants are
+deducted from the purchase and production cost of the related asset and thereby reduce depreciation and amorti-
+zation expense in future periods.
+Grants
+Costs of research activities undertaken in order to gain new scientific or technical knowledge are expensed as incurred.
+Costs for development activities, the results of which lead to a plan or design for the production of new or sub-
+stantially improved products or process improvements, are capitalized if the development costs can be measured
+reliably, the product or process is technically and commercially feasible, future economic benefits are probable
+and Infineon intends, and has sufficient resources, to complete development and use or sell the asset. The costs
+capitalized include the cost of materials, direct labor and directly attributable general overhead expense that
+serves to prepare the asset for use. Such capitalized costs are presented as internally generated intangible assets
+within "Goodwill and other intangible assets" (see note 12). Development costs, which do not fulfill the criteria
+for capitalization, are expensed as incurred. Capitalized development costs are stated at cost less accumulated
+amortization and impairment charges. After the completion of the development phase and following the ramp-up
+of production, internally generated intangible assets are generally amortized as part of cost of goods sold over
+a period of three to five years.
+Research and development costs
+141
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Cost of goods sold includes the manufacturing costs of products sold during the reporting period. In addition, among
+other things cost of goods contain idle costs, inventory risks, warranty issues as well as the amortization of capital-
+ized development costs. Recognized foreign currency effects as well as changes in the fair value of undesignated
+derivative financial instruments that are connected to the operating business are recognized in cost of goods.
+Cost of goods sold
+Although these estimates and assumptions are applied by management to the best of its knowledge based on
+current events and circumstances, actual events may result in deviations from these estimates.
+Areas containing estimates and assumptions and that are consequently most likely to be affected when actual
+results vary from estimates are:
+> recognition and recoverability of deferred tax assets (see "Current and deferred income taxes" and note 7),
+> valuation of inventory (see "Inventories" and note 11),
+> recoverability of non-financial assets especially goodwill (see "Recoverability of intangible assets and other
+long-lived assets" and note 12),
+Cree's Board of Directors and Infineon's Supervisory Board have already approved the acquisition. The approval of
+the responsible regulatory authorities is required to conclude the transaction. Completion and execution of the
+transaction is expected at the beginning of the 2017 calendar year.
+On July 14, 2016, the Company and Cree Inc. USA ("Cree") signed a contract for the acquisition of Cree's Wolfspeed
+business. Infineon intends to buy Wolfspeed (including the related wafer substrate business) for a purchase price of
+US$850 million. With the acquisition Infineon broadens its strategic portfolio of compound semiconductors.
+Wolfspeed
+The purchase price allocation for International Rectifier was finalized in January 2016; there were no adjustments
+in the 2016 fiscal year.
+The acquisition of 100 percent of the shares and associated voting rights of International Rectifier Corporation
+("International Rectifier") based in El Segundo, California (USA) was closed by Infineon on January 13, 2015.
+International Rectifier Corporation
+3 Acquisitions
+In principle Infineon recognizes revenue on sales to distributors by using the “sell in" method, that is when a product
+is sold to the distributor. In accordance with established business practice in the semiconductor industry, under
+certain circumstances distributors can apply for price protection and ship and debit credit notes. Price protection
+allows a distributor to request a credit note for unsold products held in inventory if Infineon reduced the standard
+list price of these products. In addition, in certain cases the distributor may request a ship and debit credit note
+for retrospective price adjustments. The authorization of these credits remains fully within the control of Infineon.
+Infineon calculates the provision for price protection and ship and debit in the period in which the related revenue
+is recorded. The ship and debit provision is determined based on rolling trends in the difference between the
+contract price and the standard list price to the distributor. The price protection provision is based on actual list
+prices and distributor inventory on hand. The availability of detailed distributor inventory data, the transparency
+of pricing for standard products and the long distributor pricing history enable Infineon to reliably estimate
+provisions for price protection and ship & debit credit notes at the end of the reporting period.
+Distributors can, subject to certain conditions, return a limited amount of inventory (stock return) or request
+scrap allowances. Stock return credit notes are accrued based on expected stock returns in accordance with the
+contractual agreement combined with historical experience. Distributor scrap allowances are accrued based on
+the contractual agreement and, upon submission of a valid claim, are granted up to a certain maximum based
+on turnover in a given period. Infineon monitors such product returns on an ongoing basis and adjusts accrual
+assumptions accordingly. Other returns are only permitted for quality defects within the ordinary warranty period.
+In some cases, rebate programs are offered to specific customers or distributors whereby the customer or distributor
+is granted a rebate upon achievement of a defined sales volume. Such rebates are taken into account for revenue
+recognition purposes.
+142
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+taking into account knowledge gained up to the approval by the Management Board of the Consolidated Financial
+Statements on November 22, 2016.
+All assumptions and estimates are based on the circumstances and assessments as of the balance sheet date, and
+> valuation of pension plans (see "Pensions and similar obligations" and note 20).
+> recognition and valuation of provisions (see "Provisions" and notes 13 and 23), and
+Notes to the Consolidated Financial Statements
+Other plant and office equipment
+Revenues from product sales are recognized when the significant risks and rewards of ownership of the goods
+are transferred to the buyer and it is sufficiently probable that the economic benefits associated with the sale will
+flow to Infineon. The amount of revenues recognized is based on the fair value of the consideration received or
+receivable taking into account returns, settlement discounts and bonuses.
+Contingent liabilities are either possible obligations whose actual existence is dependent on the occurrence of
+one or more uncertain future events not wholly within the control of Infineon. Or they are present obligations that
+will probably not result in the outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position, instead they are disclosed and
+described in the Notes to the Consolidated Financial Statements (see notes 23 and 24).
+Discount rates are determined on the basis of market yields at the end of the reporting period on high-grade,
+fixed interest corporate bonds from issuers carrying a very high credit rating that are denominated in the currency
+in which the benefits will be paid and that have remaining maturities approximating the terms of the related
+pension liability.
+All other plans that do not fall under the definition of a defined contribution plan are accounted for as defined
+benefit plans. These relate to the commitments of Infineon to pay vested rights and current benefits to eligible
+present and former employees and their dependants. The obligations also relate to retirement pensions. The
+liability recognized in respect of defined benefit pension plans is the present value of the defined benefit obligation
+(DBO) at the end of the reporting period less the fair value of the plan assets, together with adjustments for past
+service costs. The present value of the DBO and resulting pension cost are determined in accordance with IAS 19
+"Employee Benefits" annually for each separate plan by independent, qualified actuaries using the projected-unit-
+credit method. For the calculation, actuarial procedures are applied for which it is necessary to make specific
+assumptions. The most important of these are the discount rate, future expected increases in salaries and pensions,
+and mortality rates.
+In the case of defined contribution plans, Infineon pays pre-determined amounts based on statutory or contractual
+regulations to an independent fund or to public or private pension insurance companies. Once the contributions
+are paid, Infineon has no further performance obligation. The contributions are recognized as expense in the year
+in which they fall due and are included in costs by function within the operating result. Liabilities are recorded for
+payments due to the various defined contribution plans. Prepaid contributions are recognized as an asset to the
+extent that a cash refund or a reduction of future payments is possible.
+Infineon provides benefits to most of its employees for the period after they have retired, either directly or as a
+result of payments to private and public institutions. The benefits provided differ according to the legal, economic
+and tax circumstances prevailing in the respective country and are mostly dependent on the length of service
+and the salary of the employee concerned. The occupational pension plans include both defined contribution and
+defined benefit plans.
+Pensions and similar obligations
+Capitalized development costs (see also "Research and development costs" in this chapter) that are not subject
+to scheduled depreciation are tested for impairment annually and additionally whenever there are indications of
+impairment. Indications for impairment in particular include a reduction of expected revenues or increased costs.
+Infineon reviews non-current assets, including property, plant and equipment and intangible assets for possible
+impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
+be recoverable. The recoverability of assets held is measured by comparing the carrying amount of the asset with
+its recoverable amount. The recoverable amount of an asset is defined as the higher of its fair value less costs to
+sell and its value in use. The value in use is generally calculated based on discounted future cash flows of the CGU
+to which the asset is allocated. Considerable management judgment is necessary to estimate future cash flows.
+If such assets are considered to be impaired, the impairment recognized is measured as the amount by which the
+carrying value of the assets exceeds their recoverable amount. An impairment loss recognized in prior periods for an
+asset other than goodwill is reversed insofar as, since the last impairment, a change in the underlying assumptions
+has occurred which leads to a lower impairment requirement. The maximum possible reversal of an impairment loss
+is that which would lead to the carrying amount that would have been determined (net of scheduled depreciation
+and amortization) if no impairment loss had been recognized for that asset in prior years.
+Intangible assets and other non-current assets
+138
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+As a result of the impairment tests and the resulting sensitivity analyses carried out, Infineon concluded that none
+of the operating segments gave rise to an impairment of goodwill in the year under report. As at the reporting date,
+there were no triggering events that indicate that the recoverable amount of an entity to which goodwill had been
+allocated could have fallen below the book value.
+In addition, by applying different parameters that Infineon considers to be possible but not probable, sensitivity
+analyses are performed on the calculation of revenue growth, gross margins, the WACC and terminal growth rate.
+In this way, Infineon takes account of the inherently uncertain nature of estimates and carries out impairment tests
+on goodwill based on scenarios that are less favorable than those considered most likely. Changes considered to
+be possible to the parameters identified would have had no effect on the value of goodwill.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Contingent liabilities
+140
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+the resulting income recognized in the same functional area of the Consolidated Statement of Operations in which
+the original charge was recognized.
+Infineon generates revenues from the sale of semiconductor products and related system solutions. Infineon's
+semiconductor products include a wide variety of chips and components used in electronic applications ranging
+from automotive electronics and industrial applications to chip cards. Infineon's products are also used in a wide
+variety of microelectronic applications, such as computer systems, telecommunications systems and consumer
+goods. Revenue is allocated to the individual segments on the basis of differences in product type and applications.
+In addition, Infineon generates a small portion of its revenue from the granting of licenses.
+If the obligation decreases as a result of a change in the estimate, the provision is reversed proportionately and
+Where cash flows are expected to arise after the next twelve months and the interest effect is considered material,
+provisions are stated at the present value of expected cash outflows. For the purposes of the present value
+calculation, Infineon uses a pre-tax interest rate that reflects current market interest rate expectations and the
+risks specific to the liability. In estimating the future outflow of economic benefits Infineon also includes inflation
+assumptions if applicable. Provisions for onerous contracts are measured at the lower of the expected cost of
+fulfilment or termination of the contract. Additions to provisions are generally recognized in profit or loss.
+Provisions are measured at their expected settlement amount in accordance with IAS 37 "Provisions, Contingent
+Liabilities and Contingent Assets" or, where applicable, also in accordance with IAS 19 "Employee Benefits". The
+amount recognized for a provision is the best estimate of the expenditure required to settle the present obligation.
+Estimates of outcomes and financial effects are dependent upon the judgment of management, supplemented
+by experience gained from similar transactions and, where appropriate, the assessment of independent experts.
+The evidence considered also includes events after the reporting period and up to the date of preparation of the
+Consolidated Financial Statements. If the circumstances to be assessed encompass a large number of possible
+outcomes, the obligation is estimated by weighting all possible outcomes by their associated probabilities
+(expected value method). Where there is a continuous range of possible outcomes and each point in that range is
+as likely as any other, the average is used.
+With regard to legal proceedings and litigation, for example the Qimonda insolvency, Infineon regularly assesses
+the probability of an unfavorable outcome. Infineon records provisions and liabilities, including provisions for
+significant legal costs, for those obligations and risks relating to legal disputes which it assesses at the relevant
+reporting date are likely to occur. That is where, from Infineon's perspective at the date of assessment, there is
+compelling evidence which indicates an obligation or risk, and the obligation or risk can be quantified with reason-
+able accuracy at the time of assessment. As soon as additional information is available the affected estimates are
+reviewed and, where necessary, provisions for these proceedings are revised.
+Provisions are recognized for present legal and/or constructive obligations arising from past events that are likely
+to result in a future outflow of resources, the amount of which can be reliably estimated.
+Provisions
+All items of income and expense relating to defined benefit plans, with the exception of the net interest result, are
+recognized on a net basis in the functional areas within the operating result. The net interest result arising from the
+multiplication of the net pension obligation (pension obligation less plan assets) by the discount rate is reported
+as financial expense. Actuarial gains and losses resulting from experience adjustments for defined benefit pension
+obligations and plan assets and from changes in actuarial assumptions are recognized directly in equity and
+presented in the Consolidated Statement of Comprehensive Income in the period in which they arise. Past service
+costs are recognized immediately in profit or loss.
+139
+There is no offsetting with positive profit or loss effects. Claims for reimbursements from third parties are not offset
+against provisions, instead they are capitalized separately if their realization is virtually certain.
+1-10
+3-10
+10-25
+1,412
+2015
+2016
+Total (continuing and discontinued operations)
+Social insurance levies, pensions and similar obligations
+Wages and salaries
+€ in millions
+Personnel expenses comprised the following in the 2016 and 2015 fiscal years:
+Total (continuing and discontinued operations)
+Cost of purchased services
+Cost of raw materials, supplies and purchased goods
+€ in millions
+Expenses for purchased services and materials comprised the following in the 2016 and 2015 fiscal years:
+The Consolidated Statement of Operations (continuing and discontinued operations) includes the following
+expenses for purchased services, materials and personnel.
+6 Cost of materials and purchased services as well as personnel expense
+1,263
+For the compliance with the requirements attached to the grants and subsidies received and potential repayment
+requirements in case of nonfulfillment, see note 24.
+1,295
+2,707
+Japan
+Therein: China
+Asia-Pacific (without Japan)
+Therein: Germany
+Europe
+The average number of employees by geographic region is as follows for the 2016 and 2015 fiscal years:
+1,939
+2,047
+269
+313
+1,670
+1,734
+2015
+2016
+2,469
+1,206
+101
+110
+2
+12
+2
+3
+12
+(1)
+2015
+2016
+Income from discontinued operations, net of income taxes
+Others business' share of discontinued operations, net of income taxes
+Qimonda's share of discontinued operations, net of income taxes
+€ in millions
+Gain/loss from discontinued operations, net of income taxes
+The current risks and provisions relating to Qimonda's insolvency are described in detail in note 23, section "Pro-
+ceedings in relation to Qimonda".
+In the 2016 and 2015 fiscal years adjustments to individual provisions arose as a result of recent developments in
+connection with the insolvency of Qimonda, as well as subsequent income from other discontinued operations.
+These led to earnings after tax as shown in the table below.
+On January 23, 2009, Qimonda AG (“Qimonda”), a majority owned company, filed an application at the Munich
+Local Court to commence insolvency proceedings. On April 1, 2009, the insolvency proceedings opened. Insolvency
+proceedings were also opened for further domestic and foreign subsidiaries of Qimonda. Some of these insolvency
+proceedings have already been completed. The impacts of these proceedings are reported as discontinued opera-
+tions in Infineon's Consolidated Statement of Operations and Consolidated Statement of Cash Flows, to the extent
+that the underlying events occurred before the commencement of insolvency proceedings. To the extent that the
+events occurred after the commencement of insolvency proceedings, their results are reported as part of continuing
+operations.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+2
+59
+75
+40
+33
+2015
+2016
+Americas
+Total
+Research and development expenses
+Cost of goods sold
+Included in the Consolidated Statement of Operations in:
+€ in millions
+Infineon has received grants and subsidies from various governmental institutions under government business
+development programs, including grants for the construction of manufacturing facilities, for research and develop-
+ment activities and employee development. Grants and subsidies taken into consideration in profit or loss in the
+Consolidated Financial Statements during the 2016 and 2015 fiscal years are as follows:
+143
+5 Grants and subsidies
+Selling, general and administrative expenses
+Therein: USA
+Total
+2016
+7
+Effects from the difference between local and functional currency (Malaysia)
+14
+27
+Tax rate differential
+13
+70
+Change in available tax credits
+(151)
+(203)
+Expected income tax expense
+2015
+2016
+€ in millions
+A reconciliation of income taxes from continuing operations for the fiscal years ended September 30, 2016 and 2015,
+using as a basis the German combined statutory tax rate of 29 percent for the 2016 and 2015 fiscal years is as follows:
+(23)
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Years
+Technical equipment and machinery
+Buildings
+Scheduled depreciation on property, plant and equipment is recorded using the straight-line method. Land,
+property rights and construction in progress are not depreciated on a scheduled basis. Scheduled depreciation on
+property, plant and equipment is based on the following useful lives, as applied consistently throughout Infineon:
+Where an obligation exists to decommission or dismantle a fixed asset or restore a site to its former condition
+at the end of its useful life, the present value of the related future payments is capitalized along with the cost of
+acquisition or construction at the point of purchase or completion, and is depreciated over the estimated useful life
+of the underlying asset. A liability is recognized for the same amount, the carrying amount of which is compounded
+in future periods.
+The cost of acquisition comprises the acquisition price plus incidental acquisition costs, and subsequent acquisition
+costs, less any reduction received on the acquisition price. The cost of self-constructed equipment comprises direct
+costs as well as appropriate allocations of the necessary material and manufacturing overheads.
+Property, plant and equipment are measured at amortized acquisition or construction cost, and its value is reduced
+by scheduled depreciation and considering any impairment.
+Taxable income earned by foreign subsidiaries is determined on the basis of the tax laws applicable in the relevant
+countries and is taxed based on the applicable tax rates for these countries.
+Property, plant and equipment
+Income taxes are recognized in the Consolidated Statement of Operations, with the exception of income taxes
+relating to items recognized directly in equity or in other comprehensive income.
+Deferred tax assets in respect of deductible temporary differences and tax loss carry-forwards which exceed
+deferred tax liabilities in respect of taxable temporary differences, are only recognized to the extent that it is
+probable that the relevant Group entity can generate sufficient taxable profit to realize the corresponding benefit.
+Infineon reviews deferred tax assets for impairment at every reporting date. The assessment requires management
+to make assumptions about future taxable profits as well as other positive and negative influencing factors.
+Deferred tax assets and liabilities are netted to the extent they relate to the same tax authority and to the same
+taxpayer or a group of different taxpayers who are jointly assessed for income tax purposes.
+Deferred taxes are calculated on temporary differences between the tax base and the book value of assets and
+liabilities, and on tax losses available for carry-forward. By contrast, no deferred tax is recognized on goodwill
+arising in connection with business combinations. Similarly, deferred taxes are not recognized on the initial recog-
+nition of an asset or liability in connection with a transaction that is not a business combination and which, at the
+time of the transaction, affects neither the pre-tax income according to IFRS nor taxable profit. Deferred tax assets
+and liabilities are measured using applicable tax rates and laws that have been enacted by the end of the reporting
+period or are about to be enacted, and are to be applied when the related deferred tax asset is realized or the
+deferred tax liability is settled.
+The current income tax expense is calculated in accordance with taxation provisions in force at the end of the
+reporting period.
+Current and deferred income taxes
+135
+Notes to the Consolidated Financial Statements
+For uncertain tax positions additional tax provisions are recorded or, in case of tax losses carried forward, respective
+deferred tax assets are reduced accordingly. The assessment of uncertain tax positions is based on best estimate.
+4 Disposals and discontinued operations
+The German combined statutory tax rate for Infineon Technologies AG is 29 percent for the 2016 and 2015 fiscal years.
+This comprises a corporate tax rate of 15 percent, plus a solidarity surcharge of 5.5 percent and a municipal trade
+tax rate of 13 percent.
+Current tax expenses include an income tax benefit relating to previous fiscal years of €10 million.
+35,996
+1,753
+2,092
+2,898
+3,705
+167
+172
+1,890
+1,998
+16,738
+9,258
+9,727
+17,148
+14,168
+14,971
+2015
+33,971
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+7 Income tax
+102
+36
+253
+152
+Income tax
+Deferred tax benefit
+(151)
+A deferred tax benefit of €87 million results from the creation and reversal of temporary differences.
+(116)
+€ in millions
+2015
+2016
+Income tax from continuing operations for the fiscal years ended September 30, 2016 and 2015, is as follows:
+144
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Current tax expense
+Qimonda - discontinued operations
+Consolidated Financial Statements
+Non-deductible expenses and tax-exempt income, net
+142
+Other
+128
+146
+Unused tax credits and excess foreign tax credits
+447
+(62)
+492
+(125)
+152
+(173)
+190
+Provisions and pension obligations
+(43)
+Tax loss carry-forwards
+66
+110
+Total deferred taxes
+(147)
+604
+(10)
+623
+Total
+304
+(28)
+(304)
+(457)
+Netting
+(451)
+908
+(467)
+1,080
+457
+(26)
+25
+Property, plant and equipment
+(6)
+(4)
+(3)
+32
+Actual income taxes
+Effects due to changes in tax rate
+36
+309
+Change in valuation allowance on deferred tax assets
+(41)
+Prior year taxes
+19
+(10)
+93
+63
+102
+Other
+Deferred tax assets and liabilities as of September 30, 2016 and 2015 comprise the following:
+Effects due to changes in tax rate arise mainly from the integration of International Rectifier in Singapore and the
+resulting applicability of a lower tax rate.
+5
+(206)
+17
+Intangible assets
+Deferred tax
+Deferred tax
+assets
+liabilities
+(255)
+assets
+Deferred tax
+September 30, 2015
+September 30, 2016
+€ in millions
+Deferred tax
+liabilities
+(6)
+(5,421)
+(510)
+96
+(1)
+(25)
+(4)
+1,353
+226
+1,108
+(1,029)
+(83)
+57
+310
+(5,867)
+(693)
+Disposals
+(9)
+(1,059)
+2014
+amortization
+Reclassi-
+fication
+Impairments
+Foreign
+currency
+effects
+Septem-
+ber 30, 2015
+Septem-
+ber 30, 2015
+Septem-
+ber 30, 2014
+(649)
+(34)
+2
+1
+(4)
+116
+744
+The gross debt to EBITDA ratio was 1.1 as of September 30, 2016 (1.4 in 2015). Infineon continues to have sufficient
+financial flexibility to ensure that in addition to financing its planned investments it is also able to pay regular
+dividends (see note 15) and complete the pending acquisition of Wolfspeed.
+Net income attributable to shareholders of Infineon Technologies AG
+Actuarial loss on post-employment benefit obligations net of tax of €1 million
+As of September 30, 2015
+As of October 1, 2014
+€ in millions
+The following table shows a reconciliation of accumulated deficit as of September 30, 2015 and 2016:
+Accumulated deficit
+62
+(3,502)
+3
+(35)
+(3)
+(32)
+(1)
+October 1, Depreciation/
+(1)
+59
+632
+(27)
+(2,897)
+The gross cash position increased from €2,013 million as of September 30, 2015, to €2,240 million as of Septem-
+ber 30, 2016 (for details see the chapter "Review of liquidity" in the Combined Management Report). Based on
+revenue of €6,473 million, the ratio of gross cash to revenue was €1 billion plus 19.2 percent of revenue as of
+September 30, 2016, thereby at the upper end of the target range. In the previous year the ratio of gross cash to
+revenue was €1 billion plus 17.5 percent of revenue.
+Capital management as well as the corresponding targets and definitions are based on indicators determined on
+the basis of the consolidated IFRS financial statements. Gross cash is defined as the total of cash, cash equivalents
+and financial investments. Infineon defines EBIT as earnings (loss) from continuing operations before interest and
+taxes and EBITDA as EBIT plus scheduled depreciation and amortization.
+Infineon's main capital management objective is to ensure financial flexibility on the basis of a solid capital
+structure. As with comparable companies in the semiconductor industry, it is of prime importance that sufficient
+cash funds are available to finance operating activities and planned investments throughout all phases of the
+business cycle. On the other hand, debt should only constitute a modest portion of the financing mix. Based on
+these principles Infineon has defined key objectives for capital management. These capital structure targets were
+adjusted in February 2016 to reflect the strong revenue growth and the positive development of Infineon's profit-
+ability and will continue to be pursued by Infineon after the planned acquisition of Wolfspeed (see note 3).
+Accordingly, Infineon plans to maintain a liquidity level (gross cash position) of at least €1 billion plus additionally
+10 to 20 percent of revenue. The previous target range for the gross cash position amounted to 30 to 40 percent
+of revenue. The upper limit for gross debt of no more than two times EBITDA continues to apply. The net amount
+of these two capital structure targets is no longer subject to its own target (previously: positive net cash position).
+Infineon is not subject to any statutory capital requirements, nor are any such defined in the Articles of Association.
+In February 2016, for the first time, Infineon was assigned a long-term credit rating "BBB" (outlook "stable") by the
+international rating agency S&P Global Ratings (S&P). The solid investment grade rating reflects among other things
+Infineon's adjusted capital structure targets. S&P confirmed Infineon's rating following the announcement of the
+planned acquisition of Wolfspeed (see note 3).
+16 Capital management
+154
+Due to the results achieved in the reporting period as well as a positive business outlook, a dividend of €0.22 for
+each share entitled to a dividend shall be proposed to be paid from the €249 million of distributable profits of
+Infineon Technologies AG for the 2016 fiscal year, an increase of €0.02 compared to the previous year. This would
+result in an expected distribution of approximately €248 million. The payment of this dividend depends on the
+approval of the Annual General Meeting on February 16, 2017.
+For the 2015 fiscal year, a cash dividend of €0.20 per share (total amount: €225 million) was paid. For the 2014
+fiscal year, a cash dividend of €0.18 per share (total amount: €202 million) was paid.
+Dividends
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+(2,312)
+(159)
+Net income attributable to shareholders of Infineon Technologies AG
+Actuarial gains on post-employment benefit obligations net of tax of €5 million
+As of September 30, 2016
+94
+(1)
+41
+1,738
+154
+18
+32
+(5)
+2
+201
+17
+1
+18
+506
+118
+1,430
+(13)
+89
+2,130
+1 For the year ended September 30, 2015, amounts shown under "Acquisitions through business combinations" relate to assets acquired in connection with the acquisition
+of International Rectifier.
+INFINEON TECHNOLOGIES
+currency
+effects
+Septem-
+Foreign
+Impairments
+149
+Carrying amount
+294
+Reclassi-
+fication
+Disposals
+October 1, Depreciation/
+2015
+Depreciation and impairment
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+amortization
+16
+278
+395
+9,712
+57
+(169)
+379
+646
+8,799
+Goodwill and other intangible assets
+Total property, plant and equipment
+2
+(198)
+(4)
+25
+217
+272
+314
+ber 30, 2016
+Goodwill acquired for consideration
+Customer relationships
+21
+374
+419
+(8)
+100
+327
+Capitalized development costs
+803
+729
+25
+Total goodwill and other intangible assets
+Other intangible assets
+Licenses and similar rights
+Technologies
+49
+Depreciation and impairment
+Septem-
+ber 30, 2016
+(693)
+(205)
+312
+260
+(53)
+(68)
+(121)
+275
+342
+(32)
+(43)
+5
+(70)
+213
+262
+(144)
+(20)
+1
+1,656
+(569)
+(15)
+6
+(168)
+(392)
+(15)
+14
+(10)
+(6)
+(4)
+57
+49
+(163)
+8
+(31)
+(159)
+803
+1,343
+(6,305)
+16
+(7)
+89
+(536)
+1,353
+(5,867)
+364
+(731)
+(11)
+6
+9
+(42)
+310
+Septem-
+ber 30, 2015
+(1,059)
+64
+799
+2,093
+2,119
+(8,118)
+5
+(1)
+(87)
+162
+(7,619)
+314
+284
+116
+128
+(1,082)
+(665)
+Carrying amount
+(1)
+Unrealized (losses) resulting from securities
+Total
+77
+1,001
+1,078
+720
+144
+864
+Total
+968
+968
+646
+127
+773
+Long-term
+77
+33
+110
+74
+The total lines of credit as of September 30, 2016 and 2015 are summarized in the following table:
+€ in millions
+September 30, 2016
+September 30, 2015
+Term
+Aggregate
+facility
+INFINEON TECHNOLOGIES
+Drawn
+Aggregate
+facility
+Drawn
+Available
+Short-term
+91
+17
+Available
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+46
+ཆེ ཆེ
+33
+Payments on account and construction in progress
+29
+16
+303
+28
+43
+303
+28
+8
+42
+943
+108
+Furthermore, in connection with the pending acquisition of Wolfspeed (see note 3), Infineon concluded a financing
+agreement for three senior unsecured lines of credit with several international banks: a line of US$250 million
+with a term of three years, a line of €200 million with a term of four years and a line of US$250 million with a term
+of five years. The lines will be drawn down at the time the acquisition is completed.
+46
+Interest
+Aggregate amounts of debt and interest maturing in the coming years are as follows:
+€ in millions
+Less than 1 year
+1-2 years
+2-3 years
+3-4 years
+17
+5 years and after
+152
+September 30, 2016
+September 30, 2015
+Debt
+Interest
+Debt
+Total
+27
+In addition, Infineon has established several independent financing arrangements in the form of both short- and
+long-term credit facilities, in order to finance operating business requirements.
+The term loan in the amount of US$934 million, which Infineon had raised from several international banks in
+connection with the acquisition of International Rectifier (see note 3), was repaid in full out of the USPP proceeds
+on April 13, 2016.
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Of the total provisions as of September 30, 2016 and 2015, a cash outflow of €327 million and €402 million, respec-
+tively, is expected to occur within one year. With the exception of the service anniversary awards of €27 million
+and €22 million as of September 30, 2016 and 2015, respectively, the cash outflow for the majority of the remaining
+€49 million and €50 million as of September 30, 2016 and 2015, respectively, is expected within two to seven years.
+Other provisions comprise provisions for litigations (other than provisions relating to Qimonda), asset retirement
+obligations, onerous contracts and miscellaneous other liabilities.
+Provisions for warranties mainly represent the estimated future cost of fulfilling contractual requirements associated
+with products sold.
+Obligations to employees include, among others, costs of variable compensation, outstanding vacation and
+flextime, service anniversary awards, other personnel costs and social security costs.
+76
+327
+402
+72
+Thereof long-term
+Thereof short-term
+403
+(43)
+(271)
+243
+Provisions related to Qimonda (see note 23)
+46
+(17)
+(11)
+(3)
+32
+14 Debt
+Other
+9
+(14)
+(13)
+37
+Total provisions
+474
+55
+Debt at September 30, 2016 and 2015 consists of the following:
+151
+Septem-
+Bond €500 million, coupon 1.50%, due 2022
+496
+494
+USPP notes US$935 million, weighted average interest rate 4.09%, due 2024-2028
+Long-term debt
+830
+1,752
+298
+1,760
+1,769
+1,793
+Infineon successfully completed a US private placement of notes (USPP) with a nominal value of US$935 million
+in April 2016. The senior, unsecured USPP notes, which bear average annual interest of 4.09 percent, consist of
+the following:
+> Notes with a nominal value of US$350 million due in 2024,
+> Notes with a nominal value of US$350 million due in 2026, and
+> Notes with a nominal value of US$235 million due in 2028.
+Total
+Moreover, as of September 30, 2016, besides two senior and unsecured bonds of €800 million, there are other
+financial liabilities which primarily relate to financing for Infineon Technologies Austria AG.
+298
+968
+Septem-
+€ in millions
+ber 30, 2016
+ber 30, 2015
+Current maturities of long-term debt, weighted average interest rate: 1.37% (2015: 3.48%)
+Loans payable to banks, weighted average interest rate in the previous year: 4.35%
+Short-term debt and current maturities of long-term debt
+17
+Bond €300 million, coupon 1.00%, due 2018
+25
+(5)
+17
+33
+Loans payable to banks:
+Unsecured loans, weighted average interest rate 0.52% (2015: 1.76%), due 2017-2023
+128
+8
+1,341
+186
+514
+1,700
+803
+25
+(125)
+(29)
+8
+(12)
+(1)
+(159)
+260
+202
+(52)
+(1)
+(53)
+342
+(32)
+(32)
+(133)
+(256)
+14
+(4)
+(1)
+(3)
+2,093
+23
+(144)
+(1)
+5
+(17)
+(131)
+262
+57
+(7,619)
+(33)
+(18)
+9
+Unrealized gains (losses)
+resulting from hedge accounting
+4
+(3)
+1
+6
+(3)
+(1)
+Realized (gains) losses
+resulting from securities
+(4)
+1
+(3)
+2
+13
+(1)
+resulting from hedge accounting
+158
+(627)
+(7,099)
+272
+314
+(3)
+(1)
+3
+Deal Contingent Forward
+(6)
+(6)
+(39)
+(39)
+Realized (gains) losses
+100
+(13)
+(3)
+(392)
+153
+› Section 4(7) of the Articles of Association provides that the Management Board is authorized, with the approval
+of the Supervisory Board, to increase the share capital in the period up to February 17, 2021 - either once or in
+partial amounts - by a total of up to €30,000,000 by issuing new no par value registered shares against contributions
+in cash for the purpose of increasing the issue to employees of the Company or its Group companies (Authorized
+Capital 2016/1). The subscription rights of the shareholders are excluded in relation to these shares. The shares
+may be issued in such a manner that the contribution to be paid on such shares is covered by the portion of the
+profit for the year that the Management Board and Supervisory Board could transfer to revenue reserves in
+accordance with section 58, paragraph 2, AktG.
+Conditional capital
+As of September 30, 2016, the Company's Articles of Associations provide for two conditional capitals amounting
+to up to €281,714,094 (the previous Conditional Capital III was cancelled by the Annual General Meeting on
+February 18, 2016):
+› Pursuant to section 4(5) of the Articles of Association the share capital is conditionally increased by up to
+€21,714,094 through the issue up to 10,857,047 new no par value registered shares in connection with the Com-
+pany's "Infineon Technologies AG Aktienoptionsplan 2010" ("Stock Option Plan 2010") (see note 17) (Conditional
+Capital 2010/1). During the 2016 fiscal year, a total of 3,401,628 new no par value shares with a proportionate
+amount of share capital of €2 per share were issued out of the Conditional Capital 2010/1 as a result of the exercise
+of share options in connection with the Stock Option Plan 2010. Conditional Capital 2010/1 decreased accordingly
+by €6,803,256 to €14,910,838. The corresponding change to the Articles of Association was submitted after the
+end of the reporting period and entered into the Commercial Register as requested.
+> Pursuant to section 4 (6) of the Articles of Association the share capital is conditionally increased by up to
+€260,000,000 through the issue of up to 130,000,000 new no par value registered shares to satisfy the rights of the
+holders of warrants or convertible bonds, which the Company may issue at any time prior to February 12, 2019
+(Conditional Capital 2014).
+Notes to the Consolidated Financial Statements
+Other reserves
+€ in millions
+September 30, 2016
+September 30, 2015
+Pretax
+Tax
+Net after tax
+Changes in other reserves during the 2016 and 2015 fiscal years are as follows:
+Pretax
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES
+22
+1,777
+363
+1,809
+134
+Interest expense incurred in connection with debt for the years ended September 30, 2016 and 2015, was €64 mil-
+lion and €48 million, respectively.
+ANNUAL REPORT 2016
+15 Equity
+The ordinary share capital of Infineon Technologies AG increased during the 2016 fiscal year by €6,803,256.
+3,401,628 new shares were issued as a result of the exercise of stock options by employees as well as by current
+and past members of the Management Board (2015: 1,532,251). As of September 30, 2016 the ordinary share capital
+stood at €2,265,346,218 divided into 1,132,673,109 no par value registered shares, each representing €2 of the
+Company's ordinary share capital. Each share grants the holder one vote and an equal portion of the profits in the
+form of a dividend as resolved by the Annual General Meeting. As of September 30, 2016, of the above mentioned
+total number of issued shares the Company held 6 million own shares (2015: 6 million). Own shares held by the
+Company as at the date of the Annual General Meeting carry no voting rights and are not entitled to dividend.
+Additional paid-in capital
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €197 million
+in the 2016 fiscal year, of which €225 million related to the dividend paid in February 2016. The exercise of stock
+options by employees as well as by current and past members of the Management Board increased additional
+paid-in capital by €19 million. Expenses amounting to €9 million for share-based compensation were recorded in
+the 2016 fiscal year, additional paid-in capital increased by the same amount (see note 17).
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €201 million in
+the 2015 fiscal year, of which €202 million related to the dividend paid in February 2015. As a result of the acquisition
+of the remaining 33.6 percent share in LS Power Semitech Co., Ltd. (LSPS), Korea, from LS Industrial Systems Co.,
+Ltd. (LSIS), Korea for €15 million on April 30, 2015, additional paid-in capital decreased by €10 million and non-con-
+trolling interests were reduced by €5 million. The exercise of employee stock options increased additional paid-in
+capital by €9 million. Expenses amounting to €6 million for share-based compensation were recorded in the 2015
+fiscal year, additional paid-in capital increased by the same amount.
+Authorized share capital
+As of September 30, 2016, the Company's Articles of Associations provide for two authorized share capitals
+amounting to up to €706,000,000 (the Authorized Share Capital 2016/I was created by the Annual General Meeting
+on February 18, 2016):
+> Section 4(4) of the Articles of Association provides that the Management Board is authorized, with the approval of
+the Supervisory Board, to increase the share capital in the period until its expiry in February 11, 2020 once or in
+partial amounts by a total of up to €676,000,000 through the issue of new no par value registered shares, carrying
+a dividend right from the beginning of the fiscal year in which they are issued, against contributions in cash or in
+kind (Authorized Capital 2015/1). The Management Board is authorized, with the approval of the Supervisory Board,
+to exclude the subscription rights of the shareholders in certain cases. In accordance with German law, cash capital
+increases with subscription rights excluded pursuant to section 186, paragraph 3, fourth sentence of the AktG,
+are not permitted to exceed 10 percent of a company's share capital - neither at the time of the authorization
+becoming effective nor at the time of its exercise. For share capital increases against contributions in kind or a
+combination of cash contributions and contributions in kind, the authorization further provides an upper limit of
+20 percent of the share capital, again measured either at the time the authorization becomes effective or, if the
+value is lower, at the time of its exercise.
+Ordinary share capital
+5
+Tax
+Foreign currency translation differences
+October 1,
+€ in millions
+Short-term and long-term provisions at September 30, 2016 consist of the following:
+13 Provisions
+No property, plant and equipment was pledged as of September 30, 2016 (prior year: €13 million), equally no
+intangible assets were transferred to a third party as security or pledged as of September 30, 2016 and 2015.
+Depreciation on property, plant and equipment is presented in the Consolidated Statement of Operations mainly
+in cost of goods sold. Amortization of intangible assets is mainly presented in cost of goods sold or selling, general
+and administrative expenses.
+September 30,
+Reference is made to note 2, section "Recoverability of intangible assets and other long-lived assets" with respect
+to the procedures and assumptions used for the annual impairment test for goodwill as well as the carrying amount
+of goodwill allocated to individual CGUS or groups of CGUS.
+150
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+250
+1,738
+Impairments on property, plant and equipment in the previous fiscal year consisted primarily of €15 million of
+leasehold improvements (other plant and office equipment) and technical equipment in connection with the
+termination of manufacturing operations at Techview in Singapore which was disposed of in the 2016 fiscal year.
+In this regard €4 million of impairments were released. The release was recognized as other operating expense in
+the Consolidated Statement of Operations as was the impairment in the previous year. The impairment to inter-
+nally developed intangible assets of €15 million (prior year: €12 million) relates to the impairment of capitalized
+development projects owing to lower expected contributions to earnings from these projects. Impairments of
+intangible assets are presented as other operating expense.
+Net after tax
+2015
+Usage
+(28)
+(28)
+100
+12
+56
+Warranties
+Additions
+288
+(241)
+217
+322
+Obligations to employees
+2016
+Reversals
+(10)
+8
+14
+613
+9 Financial investments
+Financial investments comprise fixed-term deposits with banks, investment funds, money market funds and securi-
+ties. While fixed-term deposits with banks with an original term of more than three months and money market
+funds qualify as loans and receivables pursuant to IAS 39 "Financial Instruments: Recognition and Measurement",
+investment funds and securities are categorized as available-for-sale financial assets (for valuation see note 2).
+Financial investments at September 30, 2016 and 2015 comprise the following (for further information see also
+notes 21 and 22):
+€ in millions
+Fixed-term bank deposits and money market funds
+Investment funds
+Securities
+Financial investments
+Septem-
+ber 30, 2016
+Septem-
+ber 30, 2015
+1,157
+1,156
+399
+122
+59
+62
+1,615
+0.66
+0.55
+0.01
+0.66
+1,125.3
+1 The calculation of earnings per share is based on unrounded figures.
+146
+2016
+2015
+744
+632
+742
+1,340
+620
+12
+1,131.2
+(6.0)
+1,125.2
+1,128.6
+(6.0)
+1,122.6
+4.1
+2.7
+1,129.3
+2
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+(11)
+774
+742
+Changes in the allowance for doubtful accounts for the 2016 and 2015 fiscal years were as follows:
+€ in millions
+Allowance for doubtful accounts at beginning of the fiscal year
+2016
+(11)
+2015
+7
+Usage of allowance, net
+Current year's allowance, net of reversals
+Allowance for doubtful accounts at end of the fiscal year
+11
+11
+Third party trade receivables that are outstanding but not impaired at the reporting date comprise the following:
+11
+Earnings per share (in euro) from discontinued operations, net of income taxes
+Earnings per share (in euro) - basic and diluted
+753
+2
+Notes to the Consolidated Financial Statements
+10 Trade receivables
+Trade receivables due within one year at September 30, 2016 and 2015 consist of the following:
+€ in millions
+Trade receivables, third parties
+Trade receivables, related parties
+Trade receivables, gross
+785
+Allowance for doubtful accounts
+147
+Septem-
+ber 30, 2016
+Septem-
+ber 30, 2015
+784
+751
+1
+Trade receivables, net
+€ in millions
+Earnings per share (in euro) from continuing operations
+Weighted-average number of shares outstanding - diluted
+668
+There are no material tax loss carry-forwards for which no deferred tax assets were recognized and which are
+subject to expiration under statutory tax regulations. There are no material tax credits for which no deferred tax
+assets were recognized and which will expire within the next 12 years.
+The change of the net amount of deferred tax assets and liabilities can be broken down as follows:
+€ in millions
+Deferred taxes, net as of the beginning of the fiscal year
+Deferred tax arising from business acquisitions
+Deferred tax benefit attributable to continuing operations
+Deferred taxes recognized in equity
+Foreign currency translation
+Deferred taxes, net as of the end of the fiscal year
+2016
+2015
+457
+373
+(172)
+740
+190
+243
+3,451
+1,175
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+145
+In Germany Infineon Technologies AG had corporation tax loss carry-forwards of €2.0 billion and municipal trade
+tax loss carry-forwards of €3.1 billion as of September 30, 2016.
+153
+In other jurisdictions corporation tax loss carry-forwards amounted to €142 million and local income tax loss
+carry-forwards amounted to €303 million. Additionally unused tax credits and excess foreign tax credits of
+€389 million exist.
+€ in millions
+Tax loss carry forwards (Corporate tax and local income tax)
+Tax credits
+Temporary differences
+2016
+2015
+2,427
+Infineon assessed its deferred tax assets for the need for a valuation allowance. Based on the results of this
+assessment of deferred tax assets, considering all positive and negative factors and information relating to the
+foreseeable future, Infineon recognized deferred tax assets, after netting, of €623 million as of September 30, 2016.
+No deferred taxes were recorded for the following items (gross amounts):
+253
+5
+4
+Basic earnings per share are calculated by dividing earnings by the weighted average number of shares outstanding
+during the reporting period. The calculation of the diluted earnings per share is based on the assumption that all
+potentially dilutive instruments are converted into ordinary shares, resulting in a corresponding increase in the
+number of shares on the one hand and a corresponding reduction in the charge on earnings for these instruments,
+such as interest expense, on the other.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Basic and diluted earnings per share are calculated as follows for the fiscal years ended September 30, 2016
+and 2015:
+€ in millions (unless otherwise stated)
+8 Earnings per share
+Earnings attributable to shareholders of Infineon Technologies AG - basic and diluted
+thereof from discontinued operations
+Weighted-average number of shares outstanding (in millions):
+- Ordinary share capital
+- Adjustment for own shares
+Weighted-average number of shares outstanding - basic
+Adjustments for:
+- Effect of stock options and performance shares
+thereof from continuing operations
+Basic and diluted earnings per share¹ (in euro):
+105
+4
+(2)
+(1)
+457
+Infineon did not provide for additional income taxes or foreign withholding taxes on the cumulative retained
+earnings of foreign subsidiaries as of September 30, 2016 and 2015, to the extent that these earnings are intended
+to be indefinitely reinvested in those operations.
+Including the items recognized directly in equity and the expense/benefit from continuing and discontinued
+operations, the income tax benefit consisted of the following:
+€ in millions
+Income taxes from continuing operations
+38
+Income taxes from discontinued operations
+2016
+2015
+36
+102
+(3)
+(1)
+5
+Income taxes recognized directly in equity
+Income taxes
+Carrying
+amount
+0.56
+Of which not impaired
+419
+98
+517
+395
+1
+396
+294
+799
+(12)
+283
+201
+12
+(1)
+212
+18
+2,130
+18
+1
+110
+(4)
+Total goodwill and other intangible assets
+(3)
+(298)
+284
+Total property, plant and equipment
+9,712
+716
+(171)
+803
+(20)
+Goodwill and other intangible assets
+Goodwill acquired for consideration
+Capitalized development costs
+Customer relationships
+Technologies
+Licenses and similar rights
+Other intangible assets
+10,237
+271
+(13)
+2,225
+(2)
+11
+7
+Technical equipment and machinery
+6,529
+326
+258
+82
+(106)
+40
+1,003
+7,220
+Other plant and office equipment
+1,123
+73
+14
+(57)
+173
+(2)
+30
+Land, land rights and buildings
+Changes in property, plant and equipment and goodwill and other intangible assets 2015
+Cost
+October 1,
+2014
+Additions
+Acquisitions
+Disposals
+Reclassi-
+875
+through
+business
+Foreign
+currency
+effects
+Septem-
+ber 30, 2015
+combi-
+nations¹
+Thereof
+neither
+impaired
+nor past due
+Property, plant and equipment
+fication
+314
+€ in millions
+1,210
+Total
+Septem-
+ber 30, 2016
+Septem-
+ber 30, 2015
+111
+98
+701
+Finished goods and merchandise
+649
+382
+1,191
+1,129
+Cost of sales consist mainly of inventory-related expenses in the 2016 and 2015 fiscal years.
+Inventories at September 30, 2016 and 2015 are stated net of write-downs of €136 million and €117 million,
+respectively.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+379
+Consolidated Financial Statements
+Work in progress
+€ in millions
+Payments on account and construction in progress
+but past due
+Past due
+0-30 days
+Past due
+> 31 days
+Third party trade receivables, net of allowances as of September 30, 2016
+Third party trade receivables, net of allowances as of September 30, 2015
+773
+753
+Raw materials and supplies
+14
+740
+718
+16
+With respect to trade receivables that are not overdue and not impaired at the end of the reporting period, there are
+no indications that customers, based on their past credit history and current creditworthiness assessments, are not
+able to meet their obligations.
+Receivables with a maturity of more than one year are presented as other non-current assets.
+11 Inventories
+Inventories at September 30, 2016 and 2015 consist of the following:
+6
+Notes to the Consolidated Financial Statements
+6
+12 Property, plant and equipment, goodwill and other intangible assets
+73
+2
+1,095
+Technical equipment and machinery
+7,220
+336
+(95)
+(9)
+210
+Other plant and office equipment
+1,175
+83
+(64)
+15
+148
+1
+7,648
+26
+(23)
+Additions
+Changes in property, plant and equipment and goodwill and other intangible assets 2016
+Cost
+October 1,
+2015
+Acquisitions
+through
+business
+Disposals
+A summary of changes in property, plant and equipment as well as in goodwill and other intangible assets for the
+years ended September 30, 2016 and 2015 is as follows:
+Foreign
+Reclassi-
+fication
+Septem-
+ber 30, 2016
+combi-
+nations
+€ in millions
+Property, plant and equipment
+Land, land rights and buildings
+currency
+effects
+1,003
+1
+216
+2,741
+2,958
+184
+ANNUAL REPORT 2016
+€ in millions
+2,958
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+INFINEON TECHNOLOGIES
+Total
+73
+97
+32
+673
+129
+Other non-current assets
+Non-current assets:
+74
+742
+742
+1,340
+Categories of
+financial liabilities
+1,156
+129
+Carrying
+amount
+17
+through
+profit or loss
+8
+121
+673
+111
+2
+121
+Other current liabilities
+857
+857
+857
+Trade payables
+17
+At fair value
+17
+Short-term debt and current maturities
+Current liabilities:
+Balance as of September 30, 2016
+Financial liabilities
+Fair value
+163
+(cash flow
+hedges)
+hedging
+instruments
+cost)
+(amortized
+Designated
+Other
+financial
+liabilities
+of long-term debt
+1
+Balance as of September 30, 2015
+742
+Loans and
+receivables
+Available
+for sale
+At fair value
+through
+profit or loss
+Carrying
+amount
+Categories of financial assets
+Total
+Other non-current assets
+Non-current assets:
+Other current assets
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Current assets:
+Balance as of September 30, 2016
+Financial assets
+€ in millions
+The following table presents the carrying amounts and the fair values of financial instruments by their respective
+classes, and a breakdown by category of financial instruments as defined by IAS 39.
+21 Additional disclosures on financial instruments
+162
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+In connection with defined contribution plans, fixed contributions are made to external insurance providers or
+funds. Infineon has no further performance obligations or risks with regard to these pension plans in excess of the
+fixed contributions paid. Additionally the Group makes contributions to government pension schemes. Expenses for
+defined contribution plans amounted to €162 million and €144 million in the fiscal years ended September 30, 2016
+and 2015, respectively.
+Non-current liabilities:
+Designated
+cash flow
+hedges
+Fair value
+625
+625
+673
+1,340
+Other current assets
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Current assets:
+132
+3,234
+1
+2,743
+490
+3,234
+100
+74
+32
+88
+1
+87
+88
+774
+774
+774
+1,615
+1,157
+458
+1,615
+625
+132
+Long-term debt
+902
+Total
+2015 fiscal year
+10
+10
+10
+10
+Total
+Other current liabilities
+Current liabilities:
+14
+60
+417
+491
+Total
+14
+18
+32
+Other non-current assets
+Non-current assets:
+1
+1
+59
+399
+458
+Other current assets
+Financial investments
+Current assets:
+Financial investments
+Other current assets
+Non-current assets:
+Defined contribution plans
+In the 2016 and 2015 fiscal years there were no reclassifications between the levels.
+In addition, other non-current assets include an option to sell shares in an equity holding for a fixed price. The
+option is recognized as a derivative financial instrument and is not designated as a hedging instrument. The fair
+value is determined using the Black-Scholes option pricing model (Level 3).
+Other non-current assets include equity holdings and investments in funds. Where these are traded on an active
+market, the fair value is based on the actual market price (Level 1). For equity investments where no actively traded
+market price is available, the fair value is determined by considering existing contractual arrangements based on
+externally observable dividend policy (Level 3).
+Other current liabilities contain derivative financial instruments, including cash flow hedges. Their fair value is
+determined by discounting future cash flows according to the discounted cash flow method. Where possible,
+valuation parameters observed on the reporting date in the relevant markets (such as currency rates or commodity
+prices) drawn from reliable external sources are used (Level 2).
+There is no active market for the securities included in financial investments. The fair value is calculated as the
+present value of future expected cash flows, taking into account valuation parameters which can be observed in the
+market (Level 2).
+9
+9
+9
+9
+13
+63
+Level 3
+141
+13
+19
+32
+62
+1
+1
+122
+184
+Total
+Other current liabilities
+Current liabilities:
+Total
+Other non-current assets
+217
+Level 2
+Level 1
+Fair value by category
+128
+7
+137
+Other current liabilities
+802
+802
+802
+Trade payables
+33
+33
+33
+of long-term debt
+2
+Short-term debt and current maturities
+Balance as of September 30, 2015
+2,830
+8
+2,745
+2
+2,755
+8
+8
+8
+1,827
+1,752
+1,752
+Current liabilities:
+Other non-current liabilities
+137
+Long-term debt
+Fair value
+164
+Current assets:
+2016 fiscal year
+€ in millions
+The allocation to the levels as of September 30, 2016 and 2015 is as follows:
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+> Level 3: valuation parameters for assets and liabilities which are not based on observable market data.
+> Level 2: valuation parameters whose prices are not the ones considered in Level 1, but which can be observed
+either directly or indirectly for the assets or liabilities,
+Non-current liabilities:
+> Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities,
+For assets measured at amortized costs categorized as "Loans and receivables", it is assumed that the fair values
+correspond to their carrying amounts. The same assumption applies to liabilities resulting from trade payables and
+other current liabilities categorized as "Other financial liabilities (amortized cost)".
+2,763
+2
+2,755
+7
+32
+32
+1,759
+1,760
+1,760
+32
+2,764
+Total
+Other non-current liabilities
+Financial instruments measured at fair value are allocated to the following measurement levels in accordance with
+IFRS 13. The allocation to the different levels is based on the market proximity of the valuation parameters used
+in the determination of the fair value:
+321
+315
+197
+52
+430
+488
+51
+437
+Fair value of plan assets at beginning of year
+Change in fair value of plan assets:
+benefit obligation at end of year
+(914)
+(141)
+(773)
+(1,136)
+(172)
+(964)
+482
+(6)
+5
+5
+Present value of defined
+Foreign currency effects
+18
+4
+14
+22
+8
+14
+Benefits paid by Infineon
+7
+7
+Plan settlements
+(6)
+Expected return on plan assets
+11
+2
+(5)
+(5)
+Foreign currency effects
+(7)
+(7)
+Plan settlements
+(18)
+(4)
+(14)
+(22)
+(8)
+(14)
+Benefits paid
+19
+6
+13
+24
+13
+10
+2
+12
+Actuarial gains (losses)
+23
+(3)
+11
+(2)
+(3)
+(5)
+Contributions from Infineon
+13
+11
+34
+5
+(3)
+6
+(5)
+(21)
+Current service cost
+(861)
+(131)
+(730)
+(914)
+(141)
+(773)
+Present value at beginning of year
+into account future salary increases:
+plans
+plans
+plans
+(26)
+plans
+Foreign
+Domestic
+Total
+Foreign
+Domestic
+2015
+2016
+Change in defined benefit obligations taking
+€ in millions
+The development of Infineon's German (domestic) and non-German (foreign) pension plans and the plan assets to
+September 30, 2016 and 2015 is presented in the following table:
+The Group defined benefit pension plans are exposed to risks arising from changes to actuarial assumptions such
+as interest rates, salary and pension trends, investment risks and longevity risks. A low discount rate leads to higher
+pension liabilities. Equally, a lower than expected growth in plan assets could lead to a deterioration of the funded
+status, or require the payment of additional contributions.
+158
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Total
+(21)
+(4)
+(25)
+(2)
+8
+(179)
+(20)
+(159)
+Adjustments to financial assumptions
+(1)
+(1)
+(13)
+(13)
+Adjustments to demographic assumptions
+(30)
+(3)
+(27)
+(3)
+(1)
+(2)
+Past service income
+(5)
+(5)
+Interest cost
+(18)
+(5)
+Acquisitions
+(23)
+35
+3
+(5)
+(22)
+Actuarial gains (losses) for:
+Experience adjustments
+(17)
+ANNUAL REPORT 2016
+5
+470
+Domestic
+Total
+Foreign
+plans
+Domestic
+plans
+September 30, 2015
+September 30, 2016
+benefit pension plans with:
+Present value of defined
+€ in millions
+The following sensitivity analysis table shows how the present value of all defined benefit pension obligations
+would be affected by changes in the aforementioned actuarial assumptions. In each case they reflect the effect of
+changes in one actuarial assumption holding all other assumptions constant.
+Sensitivity analysis
+Discount rates are derived from high-grade fixed interest corporate bonds from issuers carrying a very high
+credit rating.
+0.7
+2.0
+plans
+0.6
+2.4
+2.0
+2.3
+2.0
+3.2
+2.4
+2.2
+1.0
+plans
+plans
+plans
+plans
+Foreign
+Domestic
+2.0
+Foreign
+plans
+Total
+a 50 basis points higher discount rate
+137
+765
+1,121
+167
+954
+a 50 basis points lower
+expected rate of pension increase
+a 50 basis points higher
+expected rate of salary increase
+a 50 basis points lower
+928
+145
+783
+1,152
+177
+975
+expected rate of salary increase
+878
+160
+1,038
+708
+131
+839
+Foreign
+a 50 basis points lower discount rate
+186
+1,245
+847
+152
+999
+a 50 basis points higher
+1,059
+Fair value of plan assets at end of year
+Domestic
+September 30, 2016
+September 30, 2016
+€ in millions
+159
+The funding of the defined benefit obligations is as follows:
+Since no asset ceilings applied, the funded status of the Infineon pension plans corresponds to the amounts
+reported in the Consolidated Statement of Financial Position as at September 30, 2016 and 2015.
+177
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+(40)
+(40)
+(56)
+Thereof: Infineon Technologies Austria AG
+September 30, 2015
+(313)
+(461)
+Thereof: Infineon Technologies AG
+(426)
+(90)
+(336)
+(604)
+(110)
+(494)
+Net pension liability
+488
+51
+437
+532
+62
+(313)
+Domestic
+Foreign
+Total
+Projected future pension increases
+Rate of salary increase
+Discount rate at the end of the fiscal year
+in %
+The weighted-average assumptions used in calculating the actuarial values for the pension plans are as follows:
+Actuarial assumptions
+914
+141
+773
+1,136
+172
+964
+833
+70
+763
+1,032
+79
+plans
+plans
+Domestic
+plans
+Foreign
+plans
+Total
+Plans that are wholly unfunded
+September 30, 2015
+11
+104
+10
+71
+81
+Plans that are wholly or partly funded
+Total
+953
+93
+982
+INFINEON TECHNOLOGIES
+In Germany Infineon primarily offers defined contribution benefits which provide for the employees when they
+reach retirement age, or in the event of disability or death. With the Infineon pension plan new entrants receive
+a defined contribution benefit which is funded by Infineon. Payments by the Infineon pension plan are generally
+made in twelve installments. For active employees who were, before the Infineon Pension Plan came into force,
+entitled to benefits in the form of an annuity, this commitment is the overriding one and thereby the possibility
+of an annuity is guaranteed. Together with former employees, whose pension benefit obligations are no longer
+transferred into the Infineon Pension Plan, this group makes up the largest part of the obligation at this time. The
+statutory framework is provided by the Company Pension Act (in German: Betriebsrentengesetz or BetrAVG) and
+by employment law in general. An appropriate provision is recorded for the German defined benefit pension plans,
+which are partly backed by plan assets. Individual agreements are in place for the members of the Management
+Board which are backed by pension reinsurance policies (detailed in the "Compensation Report" chapter).
+The benefit obligation of some foreign plans is measured according to the income in the last month or year of
+service, others are dependent on average income over the service period. Furthermore, in certain countries
+Infineon makes severance payments irrespective of the reason for the termination of employment, these payments
+are usually defined by law in the relevant country. The liabilities arising from foreign defined benefit pension plans
+are partly covered by plan assets.
+130
+3
+133
+78
+6
+33
+-
+33
+-
+33
+3
+19
+3
+23
+1
+25
+24
+15
+460
+72
+414
+74
+Government and corporate bonds are traded in liquid markets and the majority of them have an investment
+grade rating.
+The position "Other" in the table above comprises mainly commodity funds and certificates.
+As a matter of policy Infineon's pension plans do not invest in shares or debt instruments of Infineon.
+The actual return on plan assets in the fiscal year ended September 30, 2016 was €47 million (2015: €7 million).
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+19
+153
+146
+140
+790
+143
+933
+The 2005 G actuarial tables by Dr. Klaus Heubeck were used for Germany, and for Austria the AVÖ 2008-P (Ang.)
+tables were applied.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+160
+Investment strategies
+The pension plans' assets are invested with several fund managers. The investment guidelines require a mix of
+active and passive investment management programs covering different asset classes. Taking the duration of the
+underlying liabilities into account, a portfolio of investments of plan assets in equity, debt and other securities, and
+reinsurance policies is targeted to maximize the total long-term return on assets for a given level of risk. Investment
+risk is monitored on an ongoing basis through periodic portfolio reviews, coordination with investment managers
+and annual liability measurements. Investment policies and strategies are periodically reviewed as part of detailed
+studies of assets and liabilities by independent investment advisors and actuaries to ensure the objectives of the
+plans are met, taking into account any changes in benefit plan structure, market conditions or other material items.
+The aim is to optimize the risk-return portfolio of plan assets against the liabilities using a diversified portfolio of
+investments within a defined risk budget and to thereby increase the funding ratio in the long term.
+Plan asset allocation
+As of September 30, 2016 and 2015 the allocation of invested plan assets to the major asset categories is as follows:
+€ in millions
+Government bonds
+Corporate bonds
+Not quoted
+in an active
+market
+in an active
+market
+Quoted
+September 30, 2015
+Not quoted
+in an active
+market
+in an active
+market
+Amounts recognized in profit or loss and in total comprehensive income
+Quoted
+Total
+Other
+Property
+Reinsurance policies
+Cash and cash equivalents
+Equity securities
+September 30, 2016
+1,164
+The expenses and income of defined benefit plans for the years ended September 30, 2016 and 2015 comprise
+the following:
+Current service cost
+(5)
+3
+3
+(33)
+(8)
+(41)
+(28)
+(4)
+(32)
+Service costs are recorded within cost of goods sold to the extent that they relate to production employees,
+otherwise they are recorded as research and development or selling, general and administrative expenses. Interest
+costs and expected return on plan assets were recorded net as part of financial expense.
+Actuarial losses of €160 million and €30 million have been recognized outside of the Consolidated Statement of
+Operations in other comprehensive income for the years ended September 30, 2016 and 2015, respectively.
+As of September 30, 2016 and 2015, cumulative actuarial losses amounted to €482 million and €322 million,
+respectively. In addition, cumulative actuarial losses amounting to €7 million, resulting from deferred compen-
+sation and health care plans, are also recognized directly in other comprehensive income.
+In the 2017 fiscal year, payments of €21 million are expected to be made to plan assets which relate to benefits paid
+directly to pension recipients by the Group companies.
+The weighted average duration of defined benefit plans is around 18 years as of September 30, 2016 and 2015,
+respectively.
+(5)
+The following table shows the expected disbursements for defined benefit plans for the next ten fiscal years as at
+September 30, 2016 and 2015:
+Less than 1 year
+1-2 years
+2-5 years
+5-10 years
+Total
+Septem-
+ber 30, 2016
+Septem-
+ber 30, 2015
+21
+21
+22
+21
+81
+82
+191
+€ in millions
+12
+(22)
+8-
+Interest cost
+Expected return on plan assets
+Amortization of unrecognized
+past service (cost) benefit
+Pension cost
+161
+2016
+2015
+Domestic
+plans
+Foreign
+Total
+Domestic
+plans
+plans
+Foreign
+plans
+Total
+(21)
+(5)
+2
+10
+13
+2
+11
+(5)
+€ in millions
+(17)
+(5)
+(18)
+(25)
+(4)
+(21)
+(26)
+(23)
+The valuation date of the German and foreign pension plans is September 30, respectively.
+172
+890
+€ in millions
+Sales and service charges to and products and services received from related companies in the 2016 and 2015
+fiscal years consist of the following:
+1
+1
+1
+8
+1
+8
+1
+1
+1
+1
+Other related
+companies
+Joint
+ventures
+Sales and service charges
+Other related
+companies
+September 30, 2015
+September 30, 2016
+Financial payables
+Trade and other payables
+Financial receivables
+Trade and other receivables
+€ in millions
+Infineon purchases certain raw materials and services from and sells certain products and services to related
+companies. These purchases from and sales to related companies are generally effected at arm's length.
+Related companies receivables and payables as of September 30, 2016 and 2015 consist of the following:
+Related companies
+Infineon has transactions in the normal course of business with associated and other related companies (collectively,
+"related companies"). The related companies which are controlled or significantly influenced by Infineon are
+disclosed in note 26. Related persons are persons in key management positions in particular members of the
+Management and Supervisory Board (see note 26) and their close relatives (collectively "related persons").
+19 Transactions with related companies and persons
+156
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Joint
+ventures
+Products and services received
+2016
+2015
+Infineon's employee benefit plans consist of domestic and foreign defined benefit and defined contribution
+pension plans providing retirement, disability and surviving dependents' benefits. For the Infineon Group, the
+significant benefit plans in Germany pertain to Infineon Technologies AG, and among the foreign benefit plans to
+Infineon Technologies Austria AG.
+Defined benefit pension plans
+20 Pension plans
+In the 2016 and 2015 fiscal years there were no further significant transactions between Infineon and related persons
+which fall outside of the scope of the existing employment, service or appointment terms, or of the contractual
+arrangements for their remuneration.
+Disclosure of the individual remuneration of the members of the Management Board and the Supervisory Board as
+required by section 315a (1) in connection with section 314 (1) no. 6a, sentences 5 to 8 of the German Commercial
+Code, is provided in the Compensation Report which is part of the Combined Management Report.
+Neither Infineon Technologies AG nor any of its subsidiaries have granted loans to any member of the Supervisory
+or Management Boards.
+As of September 30, 2016, pension liabilities for former members of the Management Board amounted to €77.0 million
+(2015: €60.2 million).
+The total compensation of the members of the Supervisory Board of Infineon Technologies AG in the 2016
+fiscal year, including attendance fees, amounted to €1.7 million (2015: €1.5 million). Employee representatives in
+the Supervisory Board who are employed by Infineon also receive a salary for their activities as employees.
+Former members of the Management Board received total payments of €1.2 million (in particular pension payments)
+in the 2016 fiscal year (2015: €1.1 million).
+For information regarding the compensation paid to Mr. Mittal after termination of his Management Board activities,
+see "Management Board compensation in the 2016 fiscal year in accordance with German Accounting Standard 17
+(DRS 17)" in the compensation report in the chapter "Corporate Governance Report".
+157
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+In accordance with a mutual agreement reached with the Supervisory Board, Mr. Mittal resigned as member of the
+Management Board effective June 30, 2016 and his service contract came to an end effective September 30, 2016.
+During the period between his resignation from the Management Board and the end of his service contract at the
+end of the 2016 fiscal year, Mr. Mittal continued to be available in his previous role in order to facilitate the transfer of
+duties and the induction of his successor. Mr. Mittal is still entitled to a payment of €557,344.13 under his service
+contract which expired on September 30, 2016.
+The active members of the Management Board in the 2016 fiscal year received total fixed non-performance-
+related compensation for their services of €2.9 million (2015: €2.7 million). In addition, the members of the Manage-
+ment Board received variable performance-related compensation for their services in the 2016 fiscal year totaling
+€2.8 million (2015: €3.9 million). This comprised a Short Term Incentive of €1.3 million (2015: €2.0 million), and a
+Mid Term Incentive of €1.5 million (2015: €1.9 million). Furthermore, the Management Board received a Long Term
+Incentive (LTI) which, since 2014, takes the form of performance shares. The expense resulting from the LTI
+amounted to €0.4 million (2015: €0.5 million). The total compensation granted to active members of the Manage-
+ment Board amounted to €6.1 million in the 2016 fiscal year (2015: €7.1 million).
+Related persons
+Joint
+ventures
+Other related
+companies
+Joint
+ventures
+Other related
+companies
+3
+ANNUAL REPORT 2016
+1
+1
+77
+14
+80
+20
+As of September 30, 2016, sales and services relationships with related companies resulted in purchase commitments
+of €5 million (September 30, 2015: €1 million).
+5
+992
+INFINEON TECHNOLOGIES
+There were no significant non-cash transactions from acquisition or financing activities during the 2016 and 2015
+fiscal years.
+Fiscal year 2016: Employees
+in €¹
+at September 30, 2016
+Fair value per
+performance share
+Number of
+performance shares
+the nine months
+before grant in €
+Average share price of
+End of the
+waiting period
+Tranche
+The following is an overview of the allocations made:
+Performance share plan
+The Company makes use of the Stock Option Plan 2010 and, from the 2014 fiscal year, the Performance Share Plan
+in order to provide share-based compensation.
+17 Share-based compensation
+Both the term loan of US$934 million which Infineon had raised in connection with the acquisition of International
+Rectifier as well as the USPP notes of US$935 million which have been used for full repayment of the term loan
+in April 2016, contain a number of standard covenants, including among other things, change of control clauses
+as well as the compliance with a debt coverage ratio. This covenant ratio, which provides for a certain relationship
+between the size of debt (adjusted) and earnings (adjusted), was complied with in the 2016 fiscal year; Infineon
+achieved a ratio that was significantly above the minimum requirement. The entire outstanding USPP notes which
+amounted to US$935 million as at September 30, 2016 (see note 14) can become immediately repayable if the
+covenant agreement is not complied with by Infineon.
+September 30, 2019
+155
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+1,159
+795
+146
+941
+expected rate of pension increase
+Increase in life expectancy by one year
+940
+164
+1,104
+754
+136
+Notes to the Consolidated Financial Statements
+10.56
+Fiscal year 2016: Management Board
+September 30, 2019
+18 Supplemental cash flow information
+The costs for share-based compensation amounted to €9 million and €6 million in the 2016 and 2015 fiscal years,
+respectively.
+Costs for share-based compensation
+6.0 million and 9.5 million stock options with an average exercise price per option of €7.18 and €7.33 were
+outstanding as at September 30, 2016 and 2015, respectively. Of these, 1.9 million were exercisable as at both
+September 30, 2016 and 2015.
+Stock Option Plan 2010
+As at October 1, 2016, 80,704 (virtual) performance shares were allocated to the Management Board and 960,160
+(virtual) performance shares were allocated to employees.
+1 The fair value of the performance shares at the grant date is determined by an external expert using a recognized financial-mathematical method
+(Monte Carlo simulation model).
+5.20
+114,046
+6.62
+September 30, 2017
+Fiscal year 2014: Management Board
+5.72
+1,199,588
+6.62
+September 30, 2017
+Fiscal year 2014: Employees
+10.56
+1,186,294
+80,964
+7.26
+7.07
+Fiscal year 2015: Employees
+September 30, 2018
+Cash and cash equivalents reported as of September 30, 2016 and 2015 totaling €625 million and €673 million,
+respectively, include €115 million and €85 million, respectively, which were subject to legal transfer restrictions
+and so were not available for general use by Infineon. This amount represents cash and cash equivalents of
+consolidated companies located in countries where the transfer of cash is legally restricted, for example the
+People's Republic of China.
+8.49
+5.44
+Fiscal year 2015: Management Board
+September 30, 2018
+8.49
+100,702
+5.31
+1,003,944
+Pension obligations are reported in the Consolidated Statement of Financial Position under "Pension plans and
+similar commitments".
+118
+Credit risk arises when a customer or other counterparty of a financial instrument fails to discharge its contractual
+obligations. Infineon is exposed to this risk as a consequence of its ongoing operations, the financial investments
+and certain financing activities. Infineon's credit risk arises primarily from trade receivables, cash and cash equiva-
+lents, financial investments and derivative financial instruments. Excluding the impact of any collateral received,
+the carrying amount of financial investments, cash and cash equivalents and trade receivables corresponds to the
+maximum credit risk.
+Loan and receivables
+Held for trading
+Other financial liabilities
+Designated hedging instruments (cash flow hedges)
+Total
+2016
+2015
+Available-for-sale financial assets
+2
+(22)
+64
+7
+(21)
+(33)
+(77)
+(2)
+5
+€ in millions
+The net gain or loss on financial instruments (including interest income and expense) within continuing operations
+in the Group Statement of Operations amounted to the following:
+165
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+A settlement or adverse judicial decision in any of the matters described above could result in significant financial
+liabilities for Infineon and other adverse effects, and these in turn could have a material adverse effect on its business
+and financial condition, liquidity position and results of operations. Irrespective of the validity of the allegations
+and the success of the aforementioned claims and other matters described above, Infineon could incur significant
+costs in the defense of these matters.
+Any potential liability is reviewed again as soon as additional information becomes available and the estimates are
+revised if necessary. Provisions with respect to these matters are subject to future developments or changes in
+circumstances in each of the matters, which could have a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+Provisions and contingent liabilities for legal proceedings and other uncertain legal issues
+Provisions relating to legal proceedings and other uncertain legal issues are recorded when it is probable that
+a liability has been incurred and the associated amount can be reasonably estimated. To the extent that liabilities
+arising from legal disputes and other uncertain legal positions are not probable or cannot be reliably estimated,
+then they qualify as contingent liabilities.
+Furthermore, in connection with its existing or previous business operations, Infineon is also exposed to numerous
+legal risks which have until now not resulted in legal disputes. These include risks related to product liability,
+environment, capital market, anti-corruption, competition and antitrust legislation as well as other compliance
+regulations. Claims could also be made against Infineon in connection with these matters in the event of breaches
+of law committed by individual employees or third parties.
+Based on its current knowledge, Infineon does not believe that the ultimate resolution of these other pending legal
+disputes and proceedings will have a material adverse effect on Infineon's financial condition, liquidity position
+and results of operations. However future revisions to this assessment cannot be ruled out and any reassessment
+of the miscellaneous legal disputes and proceedings could have a material adverse effect on the financial condition,
+liquidity position and results of operations, particularly in the period in which reassessment is made.
+Infineon is also involved in various other legal disputes and proceedings in connection with its existing or previous
+business activities. These can relate to products, services, patents, environmental issues and other matters.
+Other
+172
+Notes to the Consolidated Financial Statements
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+(6)
+173
+(48)
+The currency
+effects included within net gains and losses amount to positive €1 million (2015: negative €2 million).
+This net currency effect arose exclusively from recognized financial instruments.
+167
+(2)
+145
+(4)
+455
+Consolidated Financial Statements
+(8)
+(2)
+39
+41
+(2)
+(9)
+(8)
+Foreign exchange derivatives are entered into by Infineon to offset the exchange risk from anticipated cash receipts
+from operating activities. In 2016 as in 2015 no foreign exchange derivatives used to hedge ongoing business were
+designated as cash flow hedges.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+1
+171
+165
+Fair value
+Interest income from financial instruments not measured at fair value through profit and loss in the 2016 and 2015
+fiscal year amounted to €6 million, respectively; interest expense from such financial instruments amounted to
+€53 million (2015: €39 million).
+Infineon does not net financial instruments. The Infineon Group conducts derivative transactions according to the
+global netting agreement (Master Agreement) of the International Swaps and Derivatives Association (ISDA) and
+other comparable national framework agreements. Under the terms of these agreements, any netting arising from
+the occurrence of certain future events would have no material effect on the balance sheet presentation of these
+financial instruments.
+Derivative financial instruments and hedging activities
+Infineon holds derivative financial instruments exclusively for hedging purposes. This includes the use of forward
+exchange contracts and commodity swaps. The objective is to reduce the impact of exchange rate and commodity
+price fluctuations on future net cash flows.
+The nominal values and fair values of Infineon's derivative instruments as of September 30, 2016 and 2015 are
+as follows:
+€ in millions
+Forward exchange contracts sold
+Forward exchange contracts purchased
+Designated cash flow hedges
+Deal Contingent Forward
+Commodity swaps
+Total
+September 30, 2016
+September 30, 2015
+Nominal
+value
+Fair value
+Nominal
+value
+(35)
+24 Other financial commitments
+In addition to provisions and liabilities, Infineon also has other financial obligations, relating in particular to
+lease and long-term rental arrangements, and unconditional purchase commitments. These are explained in more
+detail below.
+Undiscounted future minimum operating lease and rental payments arising from operating lease contracts at
+September 30, 2016 amounted to €465 million (September 30, 2015: €446 million). The corresponding payment
+obligations fall due as follows:
+46
+57
+83
+446
+Total
+(72)
+(14)
+44
+(15)
+(15)
+(17)
+(148)
+from sub-lease contracts
+Payments arising
+249
+53
+(15)
+39
+177
+Total rental expenses under operating lease contracts amounted to €83 million and €67 million in the 2016 and
+2015 fiscal years, respectively, and related mainly to minimum lease payments.
+During the 2016 fiscal year, Infineon's business was structured on the basis of four operating segments, namely
+Automotive, Industrial Power Control, Power Management & Multimarket and Chip Card & Security. Additionally
+Infineon differentiates between Other Operating Segments and Corporate and Eliminations.
+There can be no certainty that the provisions recorded for Qimonda will be sufficient to cover all of the liabilities
+that could ultimately be incurred in relation to the insolvency of Qimonda and, in particular, the matters discussed
+above. In addition, it is possible that liabilities and risks materialize that are currently considered to be unlikely to
+do so, and accordingly represent contingent liabilities that are not included in provisions. This applies in particular
+to the legal dispute for alleged activation of a shell company and liability for impairment of capital described above.
+Should the alleged claims prove to be valid, substantial financial obligations could arise for Infineon which could
+have a material adverse effect on its business and its financial condition, liquidity position and results of operations.
+Any further statements about these matters by the Company could seriously compromise the Company's position
+in these proceedings.
+Identification of segments
+25 Segment reporting
+On December 23, 2003, the Company entered into a long-term lease contract with MoTo Objekt Campeon GmbH &
+Co. KG ("Moto"). This included an agreement to lease our office complex south of Munich, Campeon, whose con-
+struction was completed by MoTo in the second half of 2005. Infineon has no obligations with respect to financing
+MoTo and has taken over no guarantees related to the construction. The Company took on Campeon under an
+operating lease arrangement in October 2005 and completed the move of its employees to this new location in the
+2006 fiscal year. The complex was leased by the Company for a period of 20 years. After 15 years the Company has
+the option to acquire the complex or otherwise continue the lease for the remaining period of five years. Pursuant
+to the agreement, the Company placed a rental deposit of €75 million in escrow, which was included in cash depos-
+ited as collateral as part of other non-current assets in the Consolidated Statement of Financial Position as of Sep-
+tember 30, 2016. Lease payments are subject to limited adjustments based on specified financial ratios of Infineon.
+The agreement was classified as an operating lease, in accordance with IAS 17, with monthly lease payments
+expensed on a straight-line basis over the lease term. On November 17, 2016, Infineon entered into an agreement
+with Geneba RE 3 B.V. (Geneba) relating to the purchase of the latter's 93 percent shareholding in MoTo for an amount
+of €113 million. The purchase requires the approval of the responsible regulatory authorities. The transaction is
+expected to be completed towards the end of the 2016 calendar year and will result in the subsequent full consoli-
+dation of MoTo.
+Infineon, through certain of its sales and other agreements may, in the normal course of business, be obligated
+to indemnify its counterparties under certain conditions for warranties, patent infringement or other matters.
+The maximum amount of potential future payments under these types of agreements is not predictable with any
+degree of certainty, since the potential obligation is contingent on events that may or may not occur in the future,
+and depends on certain facts and circumstances specific to each agreement. Historically, payments made by
+Infineon under these types of agreements have not had a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+In total, Infineon has guarantees outstanding to third parties as of September 30, 2016 amounting to €33 million
+(September 30, 2015: €29 million) mainly related to rentals of buildings.
+174
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+In conjunction with its investing activities, Infineon receives government grants and subsidies related to the
+construction and financing of certain of its production facilities. Grants are also received for selected research and
+development projects. These amounts are recognized upon the achievement of specified criteria. Certain of these
+grants have been received contingent upon Infineon complying with certain project-related requirements, such
+as creating a specified number of jobs over a defined period of time. Infineon is committed to maintaining these
+requirements, and from today's perspective Infineon expects to be able to do so. Nevertheless, should such
+requirements not be met, as of September 30, 2016, a maximum of €66 million (September 30, 2015: €71 million)
+of these subsidies could be refundable. This amount does not include any potential liabilities for Qimonda-related
+subsidies (see note 23).
+Long-term purchase commitments are in place for the supply of commodities and raw materials, in particular for
+wafers, semiconductor intermediate products, electricity and gas. Overall, these minimum purchase commitments
+give rise to other financial obligations amounting to approximately €810 million as at the reporting date (Septem-
+ber 30, 2015: €728 million). These contracts generally have terms of between one and five years. Purchases under
+these agreements are recorded as incurred in the normal course of business. Infineon assesses its anticipated
+purchase requirements on a regular basis in order to meet customer demand for its products. An assessment
+of potential losses under these purchase contracts is made on a regular basis for example in the event that antici-
+pated purchase quantities fall below the minimum contractual quantities.
+Purchase commitments for planned investments in intangible assets at September 30, 2016 amounted to €1 million
+(September 30, 2015: €2 million).
+Contracts already entered into for commenced or planned investments in property, plant and equipment (purchase
+commitments) at September 30, 2016 amounted to €274 million (September 30, 2015: €200 million).
+The total income arising from sub-lease contracts amounted to €16 million for the years ended September 30, 2016
+and 2015, respectively.
+59
+61
+72
+100
+54
+56
+77
+91
+598
+from lease contracts
+Payments arising
+Payment obligations as of September 30, 2016
+After
+5 years
+4-5 years
+3-4 years
+2-3 years
+1-2 years
+Less than
+1 year
+Total
+(€ in millions)
+Payments due in
+Payments arising
+Consolidated Financial Statements
+from sub-lease contracts
+(15)
+594
+from lease contracts
+Payments arising
+Payment obligations as of September 30, 2015
+144
+39
+41
+62
+76
+103
+465
+Total
+(58)
+(15)
+(15)
+(15)
+(15)
+(133)
+Automotive
+Notes to the Consolidated Financial Statements
+In order to partly hedge against the exchange rate risk associated with the purchase price obligation arising from
+the planned acquisition of Wolfspeed (see note 3), the Company entered into two transaction-dependent Euro/
+US Dollar foreign currency forward contracts (Deal Contingent Forwards) in July 2016. Each had a nominal value of
+US$250 million and was accounted for as a cash flow hedge. As at September 30, 2016 the two Deal Contingent
+Forwards had a total fair value of negative €8 million. The change in value of negative €6 million was recorded in
+other reserves. In the 2016 fiscal year Deal Contingent Forward ineffectiveness totaling €2 million was recorded in
+the Consolidated Statement of Operations. When the acquisition of Wolfspeed is completed, which is expected
+to take place at the beginning of the 2017 calendar year, the effective part of the hedges will be recognized when
+the goodwill arising from the transaction is determined.
+financial liabilities
+2,906
+1,004
+46
+332
+970
+14
+Non derivative
+540
+financial liabilities:
+Cash outflow
+209
+209
+Cash inflow¹
+(201)
+(201)
+Derivative
+beyond 2020
+2020
+2019
+709
+Cash inflow¹
+(698)
+(698)
+Total
+3,148
+1,063
+352
+152
+52
+46
+1,483
+as of September 30, 2015
+Total
+2016
+2017
+2018
+Total
+709
+2,914
+46
+The insolvency administrator filed a request for declaratory judgment in an unspecified amount against Infineon
+Technologies AG and, by way of third party notice, Infineon Technologies Holding B.V. and Infineon Technologies
+Investment B.V., at Regional Court Munich I in November 2010. This requested that Infineon be deemed liable to
+make good the deficit balance of Qimonda as it stood when the insolvency proceedings in respect of the assets of
+Qimonda began, i.e., to refund to Qimonda the difference between the latter's actual business assets when the
+insolvency proceedings began and its share capital (in German: "Unterbilanzhaftung"). The insolvency administrator
+contended that the commencement of operating activities by Qimonda amounted to what is considered in case
+law to be the activation of a shell company (in German: "Wirtschaftliche Neugründung"), and that this activation
+of a shell company was not disclosed in the correct manner. On March 6, 2012, with respect to another matter, the
+German Federal High Court issued a ruling on principle that any liability resulting from the activation of a shell
+company only depends on the situation at the date of the activation of a shell company and not, as asserted by the
+insolvency administrator, on the situation at the date on which insolvency proceedings are opened.
+In addition to the request for declaratory judgment against Infineon in an unspecified amount, on February 14,
+2012 the insolvency administrator also lodged a request for payment based on an alternative claim (in German:
+"Hilfsantrag"), as well as making other additional claims. In conjunction with this alternative claim, the insolvency
+administrator has requested the payment of at least €1.71 billion plus interest in connection with the alleged
+activation of a shell company. On June 15, 2012 the insolvency administrator increased his request for payment
+of February 14, 2012 on the grounds of activation of a shell company to at least approximately €3.35 billion plus
+interest. Furthermore, the insolvency administrator continues to base a substantial part of his alleged payment
+claims, as already asserted out of court against Infineon in August 2011 for an unspecified amount, on so-called
+liability for impairment of capital (in German "Differenzhaftung"). This claim is based on the allegation that, from
+the very beginning, the carved-out memory products business had a negative billion euro value. The insolvency
+administrator therefore asserts that Infineon is obliged to make good the difference between this negative value
+and the lowest issue price (in German: "geringster Ausgabebetrag") of the subscribed stock. Additionally the
+insolvency administrator has asserted a claim for repayment of allegedly unjustly charged consultancy fees in an
+amount of €10 million in connection with the flotation of Qimonda.
+The alleged impairment of capital runs contrary to two valuations prepared as part of the preparatory documentation
+for the capital increase by independent auditing companies, one of which had been engaged by Infineon and the
+other of which was acting in the capacity of a court-appointed auditor of non-cash contributions and post-formation
+acquisitions. The auditing company engaged by Infineon concluded in its valuation that the business area contri-
+buted had a value of several times the lowest issue price of the shares issued, while the court-appointed auditor
+of non-cash contributions and post-formation acquisitions confirmed to the court that the lowest issue price of
+the shares issued was covered - as legally required - by the value of the non-cash contributions. Additionally, in
+the course of its defense against the claims asserted by the insolvency administrator, Infineon has commissioned
+several expert opinions all of which arrive at the same conclusion, that the objections raised by the insolvency
+administrator against the valuation of the non-cash contribution are not valid.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Alleged activation of a shell company and liability for impairment of capital
+171
+The legal dispute is being pursued with great effort by both parties, and many extensive written submissions have
+already been exchanged between the parties. Both sides have engaged numerous specialists and experts who
+are supporting the respective parties with assessments and opinions.
+Due to the highly complex nature of the issues to be decided and the level of the claims asserted, it is not clear at
+this stage if this legal dispute can be resolved with an out of court settlement, and, if this is not the case, when a
+first-instance court decision would be reached.
+Residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
+Infineon was a shareholder with personal liability of Qimonda Dresden until the carve-out of the memory business;
+as a result certain long-standing creditors have residual liability claims against Infineon. These claims can only
+be exercised by the insolvency administrator acting in the name of the creditors concerned. In the meantime settle-
+ments have been concluded with most of the major liability creditors.
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Infineon recognizes provisions and liabilities for such obligations and risks which it assesses at the end of each
+reporting period are more likely than not to be incurred (that is where, from Infineon's perspective at the end of
+each reporting period, the probability of having to settle an obligation or risk is greater than the probability of not
+having to) and the obligation or risk can be estimated with reasonable accuracy at this time.
+As described above, Infineon faces certain risks in connection with the insolvency proceedings relating to the assets
+of Qimonda and that entity's subsidiaries. As a result, Infineon recorded provisions and liabilities in connection
+with some of the above-mentioned matters totaling €32 million and €55 million as of September 30, 2016 and Sep-
+tember 30, 2015, respectively. Of the provisions recorded as of September 30, 2016, €12 million has been provided in
+connection with the residual liability as former shareholder of Qimonda Dresden. For the defense of the proceedings
+still pending for the alleged activation of a shell company and liability for impairment of capital, the Company has
+recorded a provision of €18 million as of September 30, 2016. Remaining provisions in connection with the Qimonda
+insolvency total €2 million as of September 30, 2016.
+The legal dispute has, in the meantime, focused on the claims asserted for alleged lack of value. On August 29, 2013
+the court appointed an independent expert to clarify the valuation issues raised by the insolvency administrator
+and to address technical matters.
+On September 11, 2014 the Company and the insolvency administrator reached a partial settlement including the
+acquisition by Infineon of Qimonda's patent business which was closed on October 9, 2014. On the closing day
+the Company paid €260 million to the insolvency administrator. With the partial settlement all claims made by the
+insolvency administrator have been settled, apart from those relating to the proceedings in connection with the
+alleged activation of a shell company and liability for impairment of capital as well as the residual liability of
+Qimonda Dresden.
+All significant assets, liabilities and business activities attributable to the memory business (Memory Products) were
+carved out from Infineon and transferred to Qimonda in the form of a non-cash contribution with economic effect
+from May 1, 2006. Qimonda filed an application at the Munich Local Court to commence insolvency proceedings
+on January 23, 2009. On April 1, 2009, the insolvency proceedings formally opened. The insolvency of Qimonda has
+given rise to various disputes between the insolvency administrator and Infineon.
+Proceedings in relation to Qimonda
+332
+970
+14
+540
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+23 Legal risks
+Litigation and government inquiries
+Smartcard antitrust litigation
+In October 2008 the EU Commission initiated an investigation into the Company and other manufacturers of chips
+for smartcards for alleged violations of antitrust laws. On September 3, 2014 the EU Commission imposed a fine of
+€83 million on Infineon which was paid in October 2014. Infineon rejects the allegations as unfounded. Moreover
+Infineon believes its procedural rights to have been violated by the EU Commission and brought an action against
+the decision to fine before the European Court of Justice in Luxembourg in mid-November 2014. An oral hearing
+took place on April 28, 2016.
+Two class actions for damages in connection with the EU Commission investigative proceedings have been filed in
+Canada: the first action was filed in the state of British Columbia in July 2013, and the second in the state of Quebec
+in September 2014. The actions followed the press reports on the investigation and subsequent decision of the
+EU Commission. No dates have been set for court proceedings.
+In December 2014, an indirect customer filed a lawsuit against Infineon and Renesas in London (Great Britain) which
+was served upon the Company on April 20, 2015. In this lawsuit the plaintiff claims for damages in an amount still
+to be determined in connection with the allegations of the EU Commission.
+Any further statements about these matters by the Company could therefore seriously compromise the Company's
+position in these proceedings.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+170
+1,012
+Cash outflow
+financial liabilities:
+Derivative
+Equity
++10%
+(10%)
++10%
+(10%)
+6
+(7)
+Profit or Loss
+(40)
+11
+(13)
+In accordance with IFRS 7 "Financial Instruments: Disclosures", interest rate risk is defined as the risk that the fair
+value or future cash flows of a financial instrument will fluctuate because of changes in interest rates.
+Infineon is exposed to interest rate risk through its financial assets and debt instruments resulting from bond issu-
+ances and debt financing. Due to the cyclical nature of its core business and the need to maintain high operational
+flexibility, Infineon holds a relatively high level of liquid financial assets that are invested in short-term fixed-interest
+instruments. These investments generally have a contract duration of between one and twelve months in order
+to achieve short-term interest rate returns. The risk to these assets of changing interest rates is partially offset by
+financial liabilities, some of which are based on variable interest rates.
+To reduce the net remaining risks caused by changes in interest rates, Infineon is able to make use of interest rate
+derivatives in order to align the fixed interest periods of assets and liabilities.
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market interest rates on profit or
+loss and equity. Infineon prepares this using the iteration method. Infineon does not hold any fixed-rate financial
+assets or liabilities that are measured at fair value through profit or loss. Furthermore, Infineon did not hold any
+fixed-rate available for sale financial assets either in 2016 or 2015.
+Changes in market interest rates affect interest income and interest expense on variable rate financial instruments.
+Assuming an increase (decrease) of 100 basis points in market interest rates in 2016, interest income in the 2016
+fiscal year would have been worse (better) by €2 million; assuming an increase (decrease) of 100 basis points in
+market interest rates in 2015, interest income in the 2015 fiscal year would have been worse (better) by €9 million.
+49
+Interest rate risk
+September 30, 2016
+September 30, 2015
+€ in millions
+To offset the price risks of highly probable gold purchases in the coming fiscal years, Infineon entered into swaps
+which are designated as cash flow hedges. The fair value of these swaps amounted to positive €1 million as of
+September 30, 2016 and negative €2 million as of September 30, 2015. €4 million of unrealized gains arose from
+these transactions in the 2016 fiscal year (2015: €3 million unrealized losses), these increased other reserves by
+a corresponding amount. At the same time, €1 million of gains were realized in the 2016 fiscal year on swap trans-
+actions concluded in the previous year (2015: €3 million of losses); this amount was transferred from other reserves
+into the Consolidated Statement of Operations. As in the previous year, no hedge ineffectiveness was recorded in
+the Consolidated Statement of Operations for these hedging relationships. As in the previous year, no gains or losses
+were transferred from other reserves to profit or loss as a result of cash flow hedges for future raw material pur-
+chases being cancelled following the decision that the occurrence of the hedged transaction had become unlikely.
+22 Financial risk management
+Infineon's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate
+risk and price risk), credit risk and liquidity risk. Infineon's financial risk management program seeks to minimize
+potential adverse effects on its profitability and liquidity. Infineon uses derivative financial instruments to hedge
+certain risks to which it is exposed. Financial risk management is carried out by the central Finance & Treasury (FT)
+department in accordance with policies approved by the Chief Financial Officer. The FT department identifies,
+evaluates and hedges financial risks in close cooperation with the operating units. The FT department's policy
+contains principles for overall risk management as well as policies covering specific areas such as foreign exchange
+risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the investment
+of excess liquidity.
+Market risk
+Market risk is defined as the risk of losses resulting from adverse changes in the market prices of financial instruments,
+including those related to foreign exchange rates, interest rates and other price risks.
+Infineon is exposed to various market risks in the ordinary course of business, primarily resulting from changes
+in foreign exchange rates and interest rates. Infineon enters into a range of derivative financial transactions with
+various counterparties to limit such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+Foreign exchange risk
+Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes to foreign exchange rates.
+Accordingly, foreign exchange risks are associated with monetary financial instruments that are denominated
+in a foreign currency that is one that does not correspond to the functional currency, and the foreign currency
+represents the relevant risk variable. Risks arising from the translation into Infineon's reporting currency are not
+risks within the meaning of IFRS 7.
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying but significant portion of its
+revenue as well as cost of goods sold, research and development and product distribution costs are denominated
+in currencies other than the euro, primarily the US dollar. Fluctuations in the exchange rates of these currencies
+compared to the euro had an effect on the results of Infineon in the 2016 and 2015 fiscal years.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+167
+The Management Board has established policies that require Infineon's individual legal entities to manage the
+foreign exchange risk with respect to their functional currency. Group entities prepare a monthly rolling cash flow
+forecast by currency in order to determine foreign exchange risks. The net foreign exchange positions determined
+in these forecasts are required to be hedged, usually by entering into internal hedging contracts. Infineon's policy
+with respect to limiting short-term foreign currency exposure is to hedge at least 75 percent of its estimated net
+cash flow for the following two months, at least 50 percent of its estimated net cash flow for the third month and,
+depending on the nature of the underlying transactions, a portion for the periods thereafter. Part of the foreign
+currency risk cannot be mitigated due to differences between actual and forecasted amounts. Infineon calculates
+this remaining risk based on net cash flows considering items in the Statement of Financial Position, actual orders
+received or placed and all other planned cash receipts and payments.
+For the net result related to foreign currency derivatives and foreign currency transactions included within net
+income see note 21.
+The following table shows the effects on profit or loss and equity for continuing operations of a 10 percent shift in
+exchange rates for the major foreign currencies (which can be found in note 2) as of September 30, 2016 and 2015.
+The assumed exchange rate changes relate only to financial instruments within the meaning of IFRS 7.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+as of September 30, 2016
+Total
+2017
+2018
+2019
+2020
+2021
+beyond 2021
+Non derivative
+financial liabilities
+3,137
+1,052
+352
+152
+52
+46
+1,483
+Due in
+166
+€ in millions
+169
+168
+Other price risk
+According to IFRS 7 "Financial Instruments: Disclosures", other price risk is defined as the risk that the fair value or
+future cash flows of a financial instrument could fluctuate because of changes in market prices (other than those
+arising from interest rate risk or currency risk), irrespective of whether those changes are caused by factors specific
+to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded
+in the market.
+Infineon held financial instruments that are exposed to market price risks. A change in the relevant market prices
+would have no significant impact on the result of the 2016 and 2015 fiscal years.
+Additionally, Infineon is exposed to price risks with respect to raw materials upon which it is dependent. Infineon
+seeks to minimize these risks through its procurement policy (including the use of multiple sources, where possible)
+and its operating procedures. In line with these measures Infineon concluded additional financial derivative
+contracts for certain commodity supplies (gold) for the following fiscal year in order to mitigate the remaining risk
+arising from the fluctuation of commodity prices. The change in relevant market prices as of September 30, 2016
+and September 30, 2015 had no significant impact on equity of the 2016 and 2015 fiscal years.
+Credit risk
+ANNUAL REPORT 2016
+Credit risk with respect to trade receivables is limited by the large number and geographic diversity of the customer
+base. Infineon controls credit risk through comprehensive credit evaluations for all major customers, the use of
+credit limits and monitoring procedures. New customers are evaluated for creditworthiness in accordance with
+Infineon guidelines. Credit limits are also in place for individual customers and creditworthiness and credit limits
+are constantly monitored. A further measure taken to reduce credit risk is the use of reservation of title clauses.
+However, despite continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising from the
+default of one of its contract parties.
+Worldwide foreign exchange and interest hedging contracts as well as the investment of liquid assets in cash
+equivalents and financial investments are entered into with major financial institutions worldwide that have high
+credit ratings. Infineon assesses the creditworthiness of banks using a methodology that establishes investment
+limits for individual banks that are updated on a daily basis based on current ratings (S&P, Moody's or Fitch) and
+credit default swap premiums. Any possible breaches of stipulated investment thresholds result in an immediate
+notification and a call to reduce the risk.
+Infineon has spread its cash investments over more than 10 banks. At September 30, 2016 no financial institution
+was responsible for more than 13 percent (2015: 15 percent) of Infineon's cash investments. This gives rise to
+a maximum risk of €177 million (2015: €203 million) in the event of the default of a single financial institution
+assuming no deposit insurance scheme is in place. Infineon also holds derivative financial instruments with
+a positive fair value of €1 million in 2016 and 2015, respectively.
+Financing and liquidity risk
+Financing and liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated
+with financial liabilities.
+Liquidity risk could arise from a potential inability of Infineon to meet maturing financial obligations. Infineon's
+liquidity management provides that sufficient levels of cash and other liquid assets are available as well ensuring
+the availability of funding through adequate levels of committed credit facilities.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+The following table discloses the maturity profile for non-derivative financial liabilities and a cash flow analysis for
+derivative financial instruments with negative fair values. The table shows the undiscounted contractually agreed
+cash flows that result from the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign currencies are translated using the
+closing rate at the reporting date. The value of financial instruments with variable interest payments is determined
+using the interest rate from the last interest fixing date before September 30, 2016. The cash outflows of financial
+liabilities that can be repaid at any time are assigned to the period in which the earliest redemption is possible.
+The Automotive segment designs, develops, manufactures and markets semiconductors for use in automotive
+applications.
+Infineon identifies reportable segments on the basis of the differences between the types of products and their
+applications.
+The Industrial Power Control segment designs, develops, manufactures and markets semiconductors for the
+conversion of electric energy in the medium to high power range. The components are used to generate energy,
+transmit it with low losses and use it efficiently.
+202
+Industrial Power Control
+The Chip Card & Security segment designs, develops, manufactures and markets hardware-based security products
+for card applications and connected systems.
+INFINEON TECHNOLOGIES
+Chip Card & Security
+The Power Management & Multimarket segment designs, develops, manufactures and markets semiconductors
+for energy-efficient power supplies as well as for mobile devices and cellular infrastructure.
+Power Management & Multimarket
+222.50
+2,031.23
+100
+Rotterdam, The Netherlands
+n. a.
+n. a.
+100
+Singapore, Singapore
+n. a.
+n. a.
+100
+Rotterdam, The Netherlands
+Taipei, Taiwan
+Maia, Portugal
+Infineon Technologies US HoldCo Inc.
+Hong Kong,
+People's Republic of China
+100
+20.81
+0.00
+0.13
+100
+3
+Rotterdam, The Netherlands
+0.76
+4
+15.10
+100
+Bangalore, India
+0.24
+1.61
+100
+People's Republic of China
+Hong Kong,
+5.00
+7
+Infineon Technologies U.K. Ltd.
+Infineon Technologies Taiwan Co., Ltd.
+Infineon Technologies Shared Service Center,
+Unipessoal Lda.
+Infineon Technologies Romania & Co. Societate
+in Comandita
+Neubiberg, Germany
+n. a.
+n. a.
+100
+Wilmington, Delaware, USA
+1.22
+(11.48)
+100
+8
+Wilmington, Delaware, USA
+Infineon Technologies Finance GmbH
+Infineon Technologies Federal Solutions Inc.
+Infineon Technologies Epi Services, Inc.
+3, 14
+0.00
+224.27
+100
+100
+Milan, Italy
+369.89
+3, 13
+Infineon Technologies Power Semitech Co., Ltd.
+Infineon Technologies Reigate Ltd.
+Infineon Technologies Philippines, Inc.
+Infineon Technologies North Carolina Inc.
+Infineon Technologies Newport Holding Limited
+Infineon Technologies Neu-Isenburg Vertriebs GmbH
+Infineon Technologies India, Pvt. Ltd.
+Infineon Technologies Investment B.V.
+Infineon Technologies Italia s.r.l.
+Infineon Technologies IT-Services GmbH
+Infineon Technologies Japan K.K.
+Infineon Technologies Korea Co., Ltd.
+Infineon Technologies Maasstad C.V.
+Infineon Technologies Hong Kong, Ltd.
+Infineon Technologies Hong Kong Sales Limited
+Infineon Technologies Holding Asia Pacific Pte. Ltd.
+Infineon Technologies Holding B.V.
+Infineon Technologies Holding 2 B.V.
+Infineon Technologies Nordic AB
+0.08
+11.52
+100
+3
+St. Denis, France
+Infineon Technologies France S.A.S.
+0.00
+3
+Consolidated Financial Statements
+1.82
+0.88
+1.77
+100
+3
+Bucharest, Romania
+7
+2.00
+3
+157.26
+Newport, Great Britain
+8.75
+17.58
+3
+100
+Cheonan, Republic of Korea
+(0.05)
+100
+100
+1.66
+0.32
+Name of company
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+GRI G4-17
+0.00
+3
+2,225.98
+100
+Wilmington, Delaware, USA
+3
+0.01
+0.56
+100
+Bristol, Great Britain
+1.22
+3.49
+100
+(0.36)
+100
+Muntinlupa City, Philippines
+8
+Rotterdam, The Netherlands
+0.95
+4.06
+100
+3
+Seoul, Republic of Korea
+5.07
+3
+15.09
+100
+Tokyo, Japan
+3
+3.91
+6.69
+100
+Klagenfurt, Austria
+0.49
+100
+Dresden, Germany
+n. a.
+Neu-Isenburg, Germany
+n. a.
+n. a.
+100
+Wilmington, Delaware, USA
+0.32
+5.52
+100
+Kista, Sweden
+0.00
+35.76
+100
+7
+Newport, Great Britain
+2.63
+10.56
+100
+5
+n. a.
+100
+6
+9.92
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The business address of each member of the Supervisory Board is: Infineon Technologies AG, Am Campeon 1-12,
+D-85579 Neubiberg (Germany).
+The members of the Company's Supervisory Board, individually or in aggregate, do not own, directly or indirectly,
+more than 1 percent of Infineon Technologies AG's outstanding share capital as of September 30, 2016.
+181
+Dr. Manfred Puffer
+INFINEON TECHNOLOGIES
+Prof. Dr. Renate Köcher
+Nomination Committee
+Jürgen Scholz
+Wolfgang Mayrhuber
+Dr. Susanne Lachenmann
+Hans-Ulrich Holdenried
+Peter Gruber
+Peter Bauer (Chairman)
+Wolfgang Mayrhuber (Chairman)
+ANNUAL REPORT 2016
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+DICE Danube Integrated Circuit Engineering
+GmbH & Co. KG
+Fully consolidated subsidiaries:
+note
+(€ in
+millions)
+(€ in
+millions)
+Foot-
+Net result
+Equity
+Share-
+holdings
+in %
+182
+Registered office
+Name of company
+Subsidiaries, joint ventures and other related companies as of September 30, 2016
+Notes to the Consolidated Financial Statements
+Other Operating Segments comprises the remaining activities of businesses that have been disposed of, and
+other business activities. Since the closing of the sale of the Wireless mobile phone business, supplies of product
+to Intel Mobile Communications under the corresponding production agreements, other than those assigned to
+discontinued operations, are included in this segment.
+Other Operating Segments
+175
+Strategy and Technology Committee
+Wolfgang Mayrhuber
+Annette Engelfried
+Johann Dechant
+Annual General
+Meeting 2020
+Annual General
+Meeting 2020
+41
+Diana Vitale¹
+72
+Dr. Eckart Sünner
+Annual General
+Meeting 2020
+54
+Kerstin Schulzendorf¹
+First authorized agent
+of IG Metall, Regensburg
+Annual General
+Meeting 2020
+55
+Jürgen Scholz¹
+Occupation
+Term expires
+Age
+Name
+Notes to the Consolidated Financial Statements
+Independent works council
+representative of the Infineon
+Works Council, Dresden,
+Infineon Technologies
+Dresden GmbH
+Independent Attorney
+Hitex GmbH
+Deputy Chairwoman
+of the Infineon Works
+Council, Warstein,
+Infineon Technologies AG
+Member of the Supervisory Board
+Dr. Eckart Sünner (Chairman)
+Investment, Finance and Audit Committee
+Hans-Ulrich Holdenried
+Gerhard Hobbach
+Johann Dechant
+Wolfgang Mayrhuber (Chairman)
+Executive Committee
+Jürgen Scholz
+Hans-Ulrich Holdenried
+Johann Dechant
+Wolfgang Mayrhuber (Chairman)
+Mediation Committee
+Supervisory Board committees
+1 Employee representative
+Member of the Supervisory Board
+> K+S AG, Kassel
+Member of the Administrative Board
+> BKK of BMW AG, Dingolfing
+> Krones AG, Neutraubling
+Membership of Supervisory Boards and
+comparable governing bodies of domestic and
+foreign companies (as at September 30, 2016)
+Infineon Technologies Dresden GmbH
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+Infineon Semiconductors (Wuxi) Co. Ldt.
+Infineon Technologies (Advanced Logic) Sdn. Bhd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Kulim, Malaysia
+520.53
+100
+0.20
+1.35
+100
+3
+55.68
+122.59
+193.40
+3
+n. a.
+n. a.
+100
+Wilmington, Delaware, USA
+Singapore, Singapore
+0.20
+6.77
+100
+3
+Infineon Technologies Batam PT
+Batam, Indonesia
+100
+Shanghai, People's Republic of China
+Infineon Technologies China Co., Ltd.
+0.27
+3.47
+100
+Shanghai, People's Republic of China
+Infineon Technologies Center of Competence
+(Shanghai) Co., Ltd.
+0.76
+3
+14.63
+100
+Cegléd, Hungary
+INFINEON TECHNOLOGIES
+1.69
+13.96
+100
+100
+6
+Xi'an, People's Republic of China
+6
+100
+1.48
+14.69
+100
+6
+Beijing, People's Republic of China
+Wuxi, People's Republic of China
+3,13
+0.00
+2.16
+100
+Karlsruhe, Germany
+1.88
+1.93
+72
+Linz, Austria
+Villach, Austria
+Bayswater, Australia
+19.66
+Infineon Technologies (Wuxi) Co., Ltd.
+Infineon Technologies (Xi'an) Co., Ltd.
+Infineon Technologies Americas Corp.
+Infineon Technologies Asia Pacific Pte Ltd
+Infineon Technologies Australia Pty. Ltd.
+Infineon Technologies Austria AG
+(2.70)
+Malacca, Malaysia
+10.02
+118.75
+100
+Wuxi, People's Republic of China
+15.70
+148.72
+100
+3
+Malacca, Malaysia
+3
+(11.78)
+125.34
+100
+3.29
+25.23
+100
+3
+9
+141.80
+Changchun, People's Republic of China
+Corporate and Eliminations
+Villach, Austria
+> Infineon Technologies Austria AG,
+Member of the Supervisory Board
+(since July 1, 2016)
+Tokyo, Japan (Chairman)
+> Infineon Technologies Japan K.K.,
+(since July 1, 2016)
+Singapore (Chairman)
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+(since July 1, 2016)
+Wilmington, Delaware, USA
+> Infineon Technologies Americas Corp.,
+Member of the Board of Directors
+Shanghai, People's Republic of China
+> Infineon Technologies China Co., Ltd.,
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+Singapore
+Wilmington, Delaware, USA
+> Infineon Technologies Americas Corp.,
+Member of the Board of Directors
+> Infineon Technologies Austria AG,
+Villach, Austria
+> EPCOS AG, Munich
+Member of the Supervisory Board
+> Infineon Technologies (Kulim) Sdn. Bhd.,
+Kulim, Malaysia (Chairman)
+(since June 14, 2016)
+Member of the Board of Directors
+> Infineon Technologies Dresden GmbH, Dresden
+Member of the Board of Directors
+Arunjai Mittal
+(since July 1, 2016)
+Member of the
+June 30, 2019
+48
+Jochen Hanebeck
+(until June 30, 2016)
+> Infineon Technologies Japan K.K., Tokyo, Japan
+(until June 30, 2016)
+Bangalore, India
+> Infineon Technologies India Pvt. Ltd.,
+(until June 30, 2016)
+Singapore (Chairman)
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+(until June 30, 2016)
+Wilmington, Delaware, USA
+> Infineon Technologies Americas Corp.,
+Member of the Board of Directors
+> tesa SE, Hamburg
+Member of the Supervisory Board
+(since August 12, 2016)
+Kulim, Malaysia
+> Infineon Technologies (Kulim) Sdn. Bhd.,
+(until June 15, 2016)
+> Infineon Technologies Austria AG,
+Villach, Austria (Chairman)
+Member of the Supervisory Board
+Membership of Supervisory Boards
+and governing bodies of domestic and
+foreign companies (as at September 30, 2016)
+Management Board and Supervisory Board
+Fees of €30 thousand were charged by KPMG in the 2016 fiscal year for other services.
+Fees for other services
+In addition to the amounts described above, KPMG charged the Company an aggregate of €0.4 million in the 2016
+fiscal year for tax consulting services.
+Fees for tax advisory services
+In addition to the amounts described above, KPMG charged an aggregate of €0.1 million in the 2016 fiscal year
+for other attestation services.
+At the Annual General Meeting held on February 18, 2016, the shareholders elected KPMG AG Wirtschaftsprüfungs-
+gesellschaft ("KPMG"), Munich, as auditor for the 2016 financial statements and the Consolidated Financial
+Statements of Infineon Technologies AG. The audit fees charged by KPMG in the 2016 fiscal year amounted to
+€1.7 million for the audit of the Consolidated Financial Statements and various separate financial statements.
+Fees for other attestation services
+Year-end audit fees
+Accounting fees pursuant to section 314, paragraph 1, no. 9 HGB
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the Management Board and
+the Supervisory Board and made permanently available to the public on the internet at www.infineon.com
+("About Infineon/Investor/Corporate Governance/Declaration of Compliance").
+Information pursuant to section 161 Stock Corporation Act (AktG)
+26 Additional information in accordance with HGB
+Non-current assets do not include financial instruments, deferred tax assets and assets from employee benefits.
+3,893
+3,840
+1,402
+1,279
+1,449
+1,286
+1
+2
+31
+38
+Management compensation in the 2016 fiscal year
+As required by section 314 (1), no. 6a, sentences 5 to 8 HGB, the remuneration of the individual members of
+the Management Board and the Supervisory Board is disclosed in the Compensation Report which is part of the
+Combined Management Report.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Member of the
+Management Board,
+Executive Vice President
+Management Board
+Member of the
+Management Board
+Member of the
+Management Board,
+Executive Vice President,
+Chief Financial Officer
+Chairman of the
+Management Board,
+Chief Executive Officer,
+Labor Director
+Position
+179
+(since July 1, 2016)
+June 30, 2019
+52
+Dr. Helmut Gassel
+45
+December 31, 2018
+Dominik Asam
+September 30, 2020
+60
+Dr. Reinhard Ploss
+Term expires
+Age
+Name
+The members of the Management Board during the 2016 fiscal year were as follows:
+Management Board
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+47
+939
+(until June 30, 2016)
+ANNUAL REPORT 2016
+1
+49
+Dr. Susanne
+Lachenmann
+Annual General
+Meeting 2020
+64
+Prof. Dr. Renate Köcher
+Annual General
+Meeting 2020
+65
+Hans-Ulrich Holdenried
+Annual General
+Meeting 2020
+54
+Gerhard Hobbach 1
+> Infineon Technologies (Kulim) Sdn. Bhd.,
+Kulim, Malaysia
+Member of the Board of Directors
+> Infineon Technologies Dresden GmbH, Dresden
+Member of the Supervisory Board
+> Infineon Technologies Dresden GmbH, Dresden
+Member of the Supervisory Board
+(since December 1, 2015)
+> Porsche Holding GmbH, Salzburg, Austria
+Member of the Advisory Board
+(since November 1, 2015)
+Anting, People's Republic of China
+Dr. Manfred Puffer
+> Shanghai Volkswagen Automotive Co., Ltd.,
+53
+Prof. Dr. Doris
+> Athene Life Re Ltd., Pembroke, Bermuda
+> Athene Holding Ltd., Pembroke, Bermuda
+Member of the Board of Directors
+> Athene Lebensversicherung AG, Wiesbaden
+Member of the Supervisory Board
+> Nestlé Deutschland AG, Frankfurt/Main
+> Robert Bosch GmbH, Gerlingen
+> BMW AG, Munich
+> Allianz SE, Munich
+> Wincor Nixdorf AG, Paderborn
+(until September 30, 2016)
+Member of the Supervisory Board
+Member of the Supervisory Board
+Munich Technical University,
+Munich
+Professor
+Management Consultant
+Development Engineer
+Managing Director
+Institut für Demoskopie
+Allensbach GmbH,
+Allensbach
+Infineon Technologies AG
+Management Consultant
+Infineon Works Council,
+Campeon,
+Member of the
+(until November 8, 2016)
+Annual General
+Meeting 2020
+Schmitt-Landsiedel
+63
+Annual General
+Meeting 2020
+Annual General
+Meeting 2020
+(since November 1, 2015)
+> FAW-Volkswagen Automotive Co., Ltd.,
+Member of the Board of Directors
+51
+Annette Engelfried¹
+Annual General
+Meeting 2020
+57
+Dr. Herbert Diess
+Annual General
+Meeting 2020
+56
+Peter Bauer
+Annual General
+Meeting 2020
+51
+Johann Dechant¹
+Deputy Chairman
+Management Consultant
+Annual General
+Meeting 2020
+Wolfgang Mayrhuber 69
+Chairman
+Occupation
+Term expires
+Age
+Name
+180
+The members of the Supervisory Board during the 2016 fiscal year, the Supervisory Board position held by them,
+their occupation, their membership of other supervisory and governing bodies and their ages are as follows:
+The Supervisory Board
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Annual General
+Meeting 2020
+Peter Gruber¹
+55
+Representative of
+(since December 23, 2015)
+> Porsche Retail GmbH, Salzburg, Austria
+(since December 3, 2015)
+> Porsche Holding GmbH, Salzburg, Austria
+> Porsche Austria GmbH, Salzburg, Austria
+(since December 23, 2015)
+Member of the Supervisory Board
+> OSRAM GmbH, Munich
+(Chairman)
+(Chairman)
+> OSRAM Licht AG, Munich
+Member of the Supervisory Board
+> BKK of Siemens AG, Heidenheim/Brenz
+INFINEON TECHNOLOGIES
+Member of the Administrative Board
+Member of the Board of Directors
+Gesellschaft AG, Munich
+> Münchener Rückversicherungs-
+> Deutsche Lufthansa AG, Cologne
+(Chairman)
+Member of the Supervisory Board
+Membership of Supervisory Boards and
+comparable governing bodies of domestic and
+foreign companies (as at September 30, 2016)
+Labor union secretary
+IG Metall district
+management, Berlin-
+Brandenburg-Saxony
+Senior Vice President
+Operations Finance
+Infineon Technologies AG
+Member of the
+Management Board
+Volkswagen AG,
+Wolfsburg
+Chairman of the Infineon
+Works Council, Regensburg,
+Infineon Technologies AG
+Management Consultant
+Senior Management
+Annual General
+Meeting 2020
+> Heico Corporation, Hollywood, Florida, USA
+834
+982
+1,095
+Impairment on assets including assets classified as held for sale, net of reversals
+Impact on earnings of restructuring and closures, net
+Plus/minus:
+897
+982
+2015
+2016
+Segment Result
+€ in millions
+The following table provides the reconciliation of Segment Result to income from continuing operations before
+income taxes:
+897
+982
+(3)
+(4)
+5
+1
+126
+135
+323
+328
+115
+126
+331
+396
+(16)
+2015
+(31)
+(13)
+4
+3
+Gain (loss) from investments accounted for using the equity method, net
+Income from continuing operations before income taxes
+(49)
+(67)
+10
+6
+555
+763
+Financial expenses
+Financial income
+Operating income
+(16)
+(6)
+(2)
+(4)
+Gains (losses) on sales of assets, businesses, or interests in subsidiaries, net
+Other income and expense, net
+(274)
+(191)
+Acquisition-related depreciation/amortization and other expenses
+(6)
+(9)
+Share-based compensation expense
+7
+2016
+Total
+Corporate and Eliminations
+Other Operating Segments
+Chip Card & Security
+Power Management & Multimarket
+Industrial Power Control
+Automotive
+Revenue:
+€ in millions
+The following tables present selected segment data:
+Segment information
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The exception to this approach is certain inventory information which is regularly analyzed at a segment level.
+Infineon also allocates depreciation and amortization expense to the operating segments based on production
+volume and products produced using standard costs.
+Neither assets, liabilities nor cash flows per segment are reported to the Management Board, nor is segment
+performance assessed on this basis.
+Decisions relating to financing and the investment of cash funds are taken at a Group level and not at a segment
+level. For this reason, financial income and financial expense (including interest income and expense) are not
+allocated to the segments.
+Segment Result is defined as the operating income (loss) excluding: asset impairments (net of reversals); impact
+on earnings of restructuring measures and closures; share-based compensation expense; acquisition-related
+depreciation/amortization and other expenses; gains (losses) on sales of assets, businesses, or interests in sub-
+sidiaries and other income (expense), including the costs of legal proceedings.
+Based on revenue and Segment Result, the Management Board assesses performance and defines operating targets
+and budgets for the segments.
+The Management Board, as joint Chief Operating Decision Maker, decides how resources are allocated to
+the segments.
+Chief Operating Decision Maker, definition of Segment Result and allocation of assets and liabilities
+to the individual segments
+Furthermore, raw materials, supplies and work in progress of the common production frontend facilities, and raw
+materials and supplies of the common backend facilities, are not under the control or responsibility of the operating
+segment management and are therefore allocated to corporate functions. Only work in progress of backend facilities
+and finished goods are allocated to the operating segments.
+Similarly, certain items are included in Corporate and Eliminations which are not allocated to the other segments.
+These include certain corporate headquarter costs and specific strategic technology initiatives, such as the
+300-millimeter thin-wafer technology, which are not allocated to the segments since they arise from corporate
+decisions not within the direct control of segment management.
+Corporate and Eliminations reflects the elimination of intragroup revenue and profits/losses to the extent that
+these arise between the segments.
+Corporate and Eliminations
+Total
+176
+2016
+Other Operating Segments
+Chip Card & Security
+Power Management & Multimarket
+Industrial Power Control
+Automotive
+Segment Result:
+€ in millions
+The operating segments do not currently have any trading relationships with one another. Accordingly, there was
+no intersegment revenue during the 2016 and 2015 fiscal years. Costs are recharged if applicable without impact on
+profit or loss.
+The business with XMC industrial microcontrollers developed by Automotive and Chip Card & Security was
+transferred to Power Management & Multimarket and Industrial Power Control with effect from October 1, 2015.
+The previous year's figures have been adjusted accordingly.
+5,795
+6,473
+705
+(1)
+14
+8
+665
+698
+1,796
+2,050
+971
+1,073
+2,350
+2,651
+2015
+(7)
+520
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+424
+1,337
+1,574
+2,666
+3,083
+942
+1,000
+2,020
+2,147
+2015
+2016
+Total
+Therein: USA
+Americas
+Japan
+Therein: China
+Asia-Pacific (without Japan)
+Therein: Germany
+Europe, Middle East, Africa
+Revenue:
+€ in millions
+The following is a summary of revenue and of non-current assets by geographic area for the years ended
+September 30, 2016 and 2015:
+Entity-wide disclosures in accordance with IFRS 8
+399
+819
+710
+661
+1,504
+1,718
+Septem-
+ber 30, 2015
+Septem-
+ber 30, 2016
+Total
+Therein: USA
+Americas
+Japan
+Therein: China
+Asia-Pacific (without Japan)
+Therein: Germany
+1,129
+Europe
+€ in millions
+No single customer accounted for more than 10 percent of Infineon's revenue during the 2016 and 2015 fiscal year.
+178
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The allocation of revenues from external customers is based on the customers' billing location. The average
+number of employees by geographic region is provided in note 6.
+5,795
+6,473
+568
+Non-current assets:
+Consolidated Financial Statements
+1,191
+434
+82
+82
+165
+186
+112
+120
+284
+302
+2015
+2016
+Depreciation and amortization allocated to the segments
+Depreciation and amortization not allocated to the segments
+Total depreciation and amortization
+Other Operating Segments
+Chip Card & Security
+Power Management & Multimarket
+Industrial Power Control
+Automotive
+Depreciation and amortization:
+€ in millions
+Of the €191 million (2015: €274 million) “acquisition-related depreciation/amortization and other expenses"
+incurred in the 2016 fiscal year, €96 million (2015: €143 million) is attributable to cost of goods sold, €10 million
+(2015: €15 million) to research and development expenses and €85 million (2015: €116 million) to selling, general
+and administrative expenses.
+In the 2016 fiscal year €6 million (2015: €3 million) of impairments of intangible assets, property, plant and
+equipment assets and assets classified as held for sale was allocated to the Automotive segment, €4 million (2015:
+€8 million) to the Industrial Power Control segment, €1 million (2015: €1 million) to the Power Management &
+Multimarket segment and €4 million (2015: €0 million) to the Chip Card & Security segment. €1 million (2015:
+€19 million) was allocated to Corporate and Eliminations.
+177
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+3
+3
+693
+646
+58
+49
+228
+255
+126
+115
+321
+338
+Septem-
+ber 30, 2015
+Septem-
+ber 30, 2016
+Total
+396
+Corporate and Eliminations
+Chip Card & Security
+Power Management & Multimarket
+Industrial Power Control
+Automotive
+Inventories:
+€ in millions
+Income from joint ventures accounted for using the equity method totaled €3 million and €4 million in the 2016 and
+2015 fiscal years, respectively, and was recognized in the Industrial Power Control segment. This allocated income
+is however not included in the Segment Result.
+760
+833
+114
+140
+Other Operating Segments
+Notes to the Consolidated Financial Statements
+Infineon Technologies Cegléd Kft.
+Molstanda Vermietungsgesellschaft mbH
+Rectificadores Internacionales, S.A. de C.V.
+Shanghai International Rectifier Trading, Ltd.
+Qimonda Asia Pacific Pte. Ltd.
+Qimonda AG in insolvency
+Qimonda (Malaysia) Sdn. Bhd. in liquidation
+Itarion Solar Lda.
+Celis Semiconductor Corp.
+Qimonda AG and its subsidiaries: 2
+Xi'an IR PERI Company, Ltd.
+TTTech Computertechnik AG
+Schweizer Electronic AG
+R Labco, Inc.
+Qimonda Belgium BVBA in insolvency
+Name of company
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+0.00
+0.02
+100
+3
+Neubiberg, Germany
+n. a.
+184
+Qimonda Beteiligungs GmbH in insolvency
+Qimonda Bratislava s.r.o. in liquidation
+Registered office
+Xi'an, People's Republic of China
+n. a.
+n. a.
+n. a.
+12
+Wien, Austria
+5.46
+51.45
+9
+Schramberg, Germany
+0.00
+0.00
+100
+8
+Wilmington, Delaware, USA
+Foot-
+note
+(€ in
+millions)
+(€ in
+millions)
+in %
+holdings
+Net result
+Equity
+Share-
+n. a.
+n. a.
+12
+Kaohsiung, Taiwan
+100
+4
+Bangalore, India
+3
+(0.01)
+(0.04)
+100
+São Paulo, Brazil
+0.03
+3
+0.20
+100
+Zurich, Switzerland
+0.03
+0.12
+6
+100
+Moscow, Russian Federation
+6
+0.00
+0.03
+100
+Bucharest, Romania
+0.16
+50
+0.00
+10
+6
+(0.32)
+1.72
+24
+Lippstadt, Germany
+0.00
+0.10
+100
+6
+Villach, Austria
+0.00
+0.00
+100
+8
+Wilmington, Delaware, USA
+0.00
+0.00
+100
+8
+Wilmington, Delaware, USA
+0.00
+0.92
+100
+Mumbai, India
+n. a.
+n. a.
+Qimonda Dresden GmbH & Co. OHG in insolvency
+2
+Wilmington, Delaware, USA
+Qimonda Taiwan Co. Ltd. in liquidation
+Qimonda Solar GmbH
+Qimonda Richmond LLC in insolvency
+77
+2
+Wilmington, Delaware, USA
+Qimonda North America Corp. in insolvency
+77
+77
+Suzhou, People's Republic of China
+Fort Lauderdale, Florida, USA
+2
+77
+Seoul, Republic of Korea
+77
+77
+Suzhou, People's Republic of China
+Padua, Italy
+2
+77
+2
+77
+2
+Dresden, Germany
+77
+GRI G4-17
+15 Infineon accounts for its interest using the equity method because there are certain contractual participation rights of the other joint venturer inhibiting
+Infineon from exercising control.
+14 Exemption pursuant to Section 264 (3) German Commercial Code from certain obligations to prepare annual financial statements and a management
+report pursuant to section 264 et seq. German Commercial Code and from the obligations to disclose the annual financial statements pursuant to
+Section 325 German Commercial Code.
+13 Exemption pursuant to Section 264 (3) German Commercial Code from the obligations to disclose the annual financial statements pursuant to Section 325
+German Commercial Code.
+12 Share of less than 5 percent.
+11 Equity and net result as of September 30, 2015 (period from October 16, 2014 until September 30, 2015).
+10 Equity and net result as of May 13, 2013 (period from April 1, 2013 until May 13, 2013).
+Infineon Technologies US InterCo LLC
+Infineon Technologies Vermögens-
+verwaltungsgesellschaft mbH
+International Rectifier HiRel Denmark Aps
+International Rectifier HiRel Products, Inc.
+International Rectifier Japan Co., Ltd.
+International Rectifier Malaysia Sdn Bhd
+International Rectifier Mauritius, Inc.
+IR Newport Limited
+9 Equity and net result as of December 31, 2015 (period from April 17, 2015 until December 31, 2015).
+8 Equity and net result as of September 30, 2015 (period from July 1, 2015 until September 30, 2015).
+7 Equity and net result as of September 30, 2015 (period from July 1, 2014 until September 30, 2015).
+6 Equity and net result as of December 31, 2015.
+5 Equity and net result as of June 30, 2015.
+4 Equity and net result as of March 31, 2015.
+3 Equity and net result as of September 30, 2015.
+2 On January 23, 2009 Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally
+opened on April 1, 2009. The equity and earnings of Qimonda AG and its subsidiaries are not disclosed due to the substantial and ongoing restriction
+of Infineon's rights as a result of Qimonda AG's insolvency. Additionally, Qimonda and its subsidiaries are not included in the Company's Consolidated
+Financial Statements. In addition, the list of subsidiaries held by Qimonda AG was based on information from September 30, 2010, since Infineon had not
+received any further information from the insolvency administrator of Qimonda AG with respect to the insolvency or liquidation of Qimonda companies.
+Since all Qimonda-related investments were written down in full in previous years, this has no effect on Infineon's net assets, financial position and
+results of operations.
+1 Certain subsidiaries were not consolidated due to immateriality.
+77
+2
+High Blantyre, Scotland
+Qimonda UK Ltd. in liquidation
+77
+Taipei, Taiwan
+Rotterdam, The Netherlands
+Qimonda Memory Product Development
+Center (Suzhou) Co., in liquidation
+Qimonda Licensing LLC
+Qimonda Korea Co. Ltd. in liquidation
+2
+77
+Munich, Germany
+2
+77
+Leuven, Belgium
+77
+Singapore, Singapore
+2
+77
+Munich, Germany
+77
+Malacca, Malaysia
+40
+Vila do Conde, Portugal
+17
+Colorado Springs, Colorado, USA
+2
+Qimonda Holding B.V. in insolvency
+Qimonda France SAS in liquidation
+Qimonda Flash GmbH in insolvency
+Qimonda Europe GmbH in liquidation
+Qimonda Finance LLC in insolvency
+Qimonda Flash Geschäftsführungs GmbH
+in liquidation
+Qimonda Dresden Verwaltungsgesellschaft mbH
+in insolvency
+Bratislava, Slovakia
+n. a.
+77
+77
+Qimonda IT (Suzhou) Co., Ltd. in liquidation
+Qimonda Investment B.V.
+Qimonda Italy s.r.l. in liquidation
+77
+Shanghai, People's Republic of China
+Qimonda International Trade (Shanghai) Co. Ltd.
+77
+Rotterdam, The Netherlands
+77
+2
+St. Denis, France
+77
+77
+יי
+Dresden, Germany
+Dresden, Germany
+77
+Wilmington, Delaware, USA
+2
+77
+Munich, Germany
+77
+Dresden, Germany
+Dresden, Germany
+n. a.
+ANNUAL REPORT 2016
+Warsaw, Poland
+(1.20)
+2.90
+100
+Shanghai, People's Republic of China
+8
+(0.58)
+9.03
+100
+Tijuana, Mexico
+6
+(12.64)
+1.92
+Share-
+Equity
+Net result
+Foot-
+holdings
+(€ in
+(€ in
+6
+Warstein, Germany
+Registered office
+183
+GmbH & Co. KG
+EPOS embedded core & power systems
+Verwaltungs GmbH
+eupec Thermal Management Inc. (in liquidation)
+Haus der Zukunft gGmbH
+Hitex (UK) Limited
+Infineon Technologies Austria Pensionskasse AG
+Infineon Technologies Bipolar Verwaltungs GmbH
+Infineon Technologies Canada, Inc.
+Infineon Technologies Delta GmbH
+Infineon Technologies Gamma GmbH
+Infineon Technologies Iberia S.L.U.
+Infineon Technologies Ireland Ltd.
+Infineon Technologies Mantel 24 GmbH
+Infineon Technologies Mantel 26 AG
+Infineon Technologies Mantel 27 GmbH
+Infineon Technologies Polska sp.z.o.o.
+Infineon Technologies Romania s.r.l.
+Infineon Technologies RUS LLC
+Infineon Technologies Schweiz GmbH
+note
+Infineon Technologies South America Ltda.
+IR Infotech Private, Ltd. (in liquidation)
+IR International Holdings China, Inc.
+IR International Holdings, Inc.
+KAI Kompetenzzentrum Automobil-
+und Industrieelektronik GmbH
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+MicroLinks Technology Corp.
+OSPT IP Pool GmbH
+GRI G4-17
+International Rectifier Power Management
+Private Limited (in liquidation)
+in %
+millions)
+millions)
+0.46
+0.02
+Curepipe, Mauritius
+100
+4.33
+(0.07)
+8
+Newport, Great Britain
+100
+7
+149.67
+Neubiberg, Germany
+100
+Joint ventures:
+Infineon Technologies Bipolar GmbH & Co. KG
+Infineon Technologies Bipoláris Kft.
+Other companies (non consolidated):1
+Advanced Power Electronics Corp.
+CHIL Semiconductors Corporation
+DICE Danube Integrated Circuit Engineering GmbH
+EPOS embedded core & power systems
+(5.22)
+100
+100
+0.35
+Wilmington, Delaware, USA
+100
+1,580.94
+(6.48)
+Neubiberg, Germany
+100
+0.03
+0.00
+3, 13
+Kuala Lumpur, Malaysia
+Skovlunde (Copenhagen), Denmark
+Wilmington, Delaware, USA
+Tokyo, Japan
+7
+1.58
+8
+100
+3.64
+0.20
+8
+100
+9.96
+100
+Cegléd, Hungary
+0.09
+67.88
+Madrid, Spain
+3
+0.00
+0.02
+100
+Neubiberg, Germany
+0.00
+0.02
+100
+3
+Neubiberg, Germany
+0.00
+100
+3
+St. John, New Brunswick, Canada
+0.00
+0.03
+60
+3
+Warstein, Germany
+0.00
+6
+100
+0.04
+0.04
+0.00
+Neubiberg, Germany
+100
+0.03
+0.00
+11, 13
+60
+100
+0.14
+3
+3
+0.00
+0.02
+100
+Neubiberg, Germany
+0.12
+0.41
+100
+Dublin, Ireland
+Neubiberg, Germany
+(0.05)
+3
+100
+Duisburg, Germany
+0.00
+0.10
+3
+72
+Linz, Austria
+0.00
+100
+Wilmington, Delaware, USA
+3
+n. a.
+0.85
+0.97
+3, 15
+n. a.
+60
+1.80
+0.22
+Hsinchu County, Taiwan
+12
+n. a.
+100
+0.00
+0.18
+0.50
+n. a.
+n. a.
+Coventry, Great Britain
+3
+88
+1.60
+n. a.
+Berlin, Germany
+3
+12
+0.27
+Duisburg, Germany
+0.00
+0.05
+0.00
+100
+51
+(0.03)
+Villach, Austria
+Wilmington, Delaware, USA
+@www.infineon.com/cms/en/about-
+infineon/investor/corporate-governance/
+12
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Details of Management Board compensation - in particular the amounts paid to individual
+members in the 2016 fiscal year - can be found in the comprehensive Compensation Report
+in the Annual Report.
+Report of the Supervisory Board to the Annual General Meeting
+The German Corporate Governance Code recommends subjecting management board
+compensation systems to regular review. The most recent review at Infineon took place in
+2014. During the fiscal year under report, the Supervisory Board again engaged an external
+independent compensation expert to review the compensation system and the target annual
+incomes of the individual members of the board. The compensation expert concluded that
+the compensation system complies with both the legal requirements and the recommendations
+set out in the German Corporate Governance Code (DCGK). In particular, the expert concluded
+that the compensation of Infineon's Management Board is commensurate with market
+conditions and that the variable compensation component is oriented towards promoting
+the sustainable growth of the enterprise. Furthermore, the target annual incomes of the
+individual members of the Management Board were found to be appropriate. The compensa-
+tion expert did, however, point out the existence of some scope for maneuverability. The results
+of the compensation expert's review, presented in a final report in the fall, were discussed in
+detail at the Executive Committee meeting held on October 24, 2016 and by the full Supervisory
+Board at its meeting held on November 15, 2016. The Supervisory Board concurs with the
+assessment of the compensation expert.
+Management Board compensation
+P see page 106
+11
+Management Board and Supervisory Board
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+During the fiscal year under report, in light of Infineon's growth, the Supervisory Board took
+the decision to enlarge the Management Board from three to four members. Infineon's revenue
+has practically doubled since the beginning of the decade. The demanding nature of the
+duties performed by the Management Board has increased massively. We had deliberated for
+some time on how to best maintain the level of momentum within an increasingly complex
+environment and also to relieve our Chief Executive Officer Dr. Reinhard Ploss from certain
+responsibilities, and thought the time had come to bolster the management team. In the
+course of filling the newly created Management Board position and finding a suitable successor
+for Mr. Mittal, the Supervisory Board gave consideration to both internal and external solutions,
+including focusing on potential female candidates. A human resources consultant was engaged
+to conduct the external search and also to evaluate potential internal candidates. At the
+conclusion of this process, the decision to appoint managers from within the organization was
+seen as the best option for Infineon. The choice fell on two highly experienced people, both
+of whom have outstanding track records in responsible positions at Infineon over many years:
+Jochen Hanebeck, previously Division President Automotive, was appointed Member of the
+Board for the newly created "Operations" function, effective July 1, 2016 and for a period of
+three years. Dr. Helmut Gassel, previously Division President Industrial Power Control, was
+appointed Member of the Management Board and Chief Marketing Officer. He is responsible
+for Sales & Marketing, Regions, Strategy Development, Mergers & Acquisitions and Intellectual
+Property, also effective July 1, 2016 and for a period of three years. The Supervisory Board
+wishes these two new members of the Board every success.
+It was with the deepest regret that the Supervisory Board accepted the request of Arunjai Mittal,
+Member of the Management Board, to leave Infineon at the end of the 2016 fiscal year due to
+family reasons. At a personal level, Mr. Mittal was highly esteemed by staff, the Management
+Board and members of the Supervisory Board alike. He has received highly deserved recognition
+for his outstanding work in various key positions at Infineon. Over a period of many years, he
+helped build up Infineon's power semiconductor business and continued this valuable work
+with outstanding success after becoming a member of the Management Board at the beginning
+of 2012. Mr. Mittal played a significant role in developing Infineon's position in major growth
+markets and, with the takeover of International Rectifier, successfully oversaw the largest
+acquisition in the company's history. We would like to express our particular thanks to Mr. Mittal
+and wish him well for the future in both his private and professional life.
+Personnel matters
+The Supervisory Board continues to appreciate the importance of devoting one meeting per
+year exclusively to strategic topics. Accordingly, at the meeting held on August 3, 2016, the
+key elements of Infineon's strategy, the principal technological trends currently shaping the
+sector, and the requirements and political framework for doing business in the USA und China,
+including Infineon's positioning in these regions, were all discussed at considerable length.
+Furthermore, the Supervisory Board addressed the impact and potential opportunities arising
+in view of the trend towards consolidation within the semiconductor industry.
+declaration-of-compliance/
+Report of the Supervisory Board to the Annual General Meeting
+10
+The Supervisory Board decided to adapt the pension arrangements for Dr. Reinhard Ploss,
+the Company's Chief Executive Officer, who had previously been contractually entitled to
+receive a pension based on a defined benefit fixed amount. This entitlement, however, was
+based on him leaving Infineon at the age of 60 and did not reflect the fact that Dr. Ploss'
+appointment as Chief Executive Officer runs until 2020. The Supervisory Board's recognition of
+the need to take action was confirmed in the report drawn up by the external compensation
+expert. In accordance with the compensation system for the Management Board in place since
+2010, Mr. Asam, Mr. Mittal, Dr. Gassel and Mr. Hanebeck - all of whom took up office after
+approval of the new system – have received a defined contribution pension commitment
+(rather than a defined benefit pension commitment based on the number of years of service),
+which is essentially identical to the Infineon pension plan applicable to all employees. Dr. Ploss'
+service contract was also changed in line with this defined contribution basis.
+Supervisory Board compensation
+Report on the work of the Supervisory Board's Committees
+Litigation
+14
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+In the extraordinary meetings, the Executive Committee prepared the amendment to the
+Supervisory Board compensation system. It also drew up the full Supervisory Board's
+resolutions relating to Mr. Mittal's resignation, the enlargement of the Management Board,
+and the appointments of Dr. Gassel and Mr. Hanebeck.
+The ordinary meeting focused on preparing the Supervisory Board's resolutions with respect
+to the measurement of the Management Board's variable compensation. The main aspects
+of this work were to determine the degree to which targets for the 2015 fiscal year had been
+achieved and to set new target levels for the 2016 fiscal year.
+The Executive Committee held one ordinary and five extraordinary meetings during the
+year under report.
+Executive Committee
+The Mediation Committee did not need to convene.
+The Nomination Committee convened once during the year under report to deliberate in
+general terms on succession planning and the future composition of shareholder represen-
+tatives in the Supervisory Board and the necessary measures. As a result, there have been
+various discussions between the Nomination Committee's chairperson and the committee
+members regarding ongoing developments in this process.
+Nomination and Mediation Committee
+The committees draw up resolutions or prepare topics that need to be dealt with by the full
+Supervisory Board. Certain decision-making powers have been delegated to the committees,
+to the extent permitted under German law. The chairpersons of each committee routinely
+report on committee meetings at the next relevant full Supervisory Board meeting.
+The Supervisory Board compensation system was also subjected to a thorough review by an
+independent compensation expert during the year under report. The system was subsequently
+amended in line with a proposal put forward by the Management Board and Supervisory
+Board to the Annual General Meeting on February 18, 2016. The objective of the amendment
+was to remove the previous variable compensation component and to determine Supervisory
+Board compensation purely on the basis of fixed amounts in future. Due to the removal of the
+variable compensation component, the fixed compensation component was simultaneously
+increased to a commensurate market level. Shareholders approved the proposals put forward
+by the Management Board and the Supervisory Board to the 2016 Annual General Meeting
+by a large majority. The corresponding amendment to the Articles of Association was entered
+in the commercial register in March 2016, at which stage it became valid. The compensation
+rule took effect retrospectively as from October 1, 2015.
+Further information on corporate governance at Infineon can be found in the joint
+Corporate Governance Report of the two boards, which has been made publicly available
+on Infineon's website.
+The Supervisory Board examines the efficiency of its activities annually. Based on the
+questionnaire tried and tested in past examinations, in summer 2016 Supervisory Board
+members were again requested to provide comprehensive feedback regarding their work
+and the extent of cooperation between the two boards. The results of this survey were
+discussed in detail at the Supervisory Board meeting held on August 4, 2016. No noteworthy
+shortcomings were identified.
+Efficiency review for Supervisory Board activities
+corporate-governance-report
+@www.infineon.com/
+13
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The original versions of all Declarations of Compliance can be found on Infineon's website.
+In the most recent Declaration of Compliance, issued in November 2016, the Board of Manage-
+ment and the Supervisory Board declared that Infineon Technologies AG has complied and
+continues to comply with all of the Code's recommendations.
+Updated Declaration of Compliance 2015 and Declaration of Compliance 2016
+The Declaration of Compliance issued in November 2015 was updated by the declaration
+issued in March 2016, to the extent that the previously reported deviation relating to section
+5.4.6 of the German Corporate Governance Code (compensation of the Supervisory Board)
+was eliminated. The deviation had been declared in connection with the performance-related
+compensation component paid to the members of the Supervisory Board. Due to the fact
+that this compensation component was not based on a multi-year assessment, it was unclear as
+to whether it fully complied with the Code's requirements. Following the amendment made
+to the Supervisory Board compensation system, namely the elimination of performance-related
+compensation, the Code's recommendation on supervisory board compensation is now being
+fully complied with.
+Corporate governance
+The Supervisory Board was provided with regular and comprehensive information regarding
+major legal disputes during the 2016 fiscal year, which were then thoroughly discussed with
+the Management Board. The main items addressed were the Company's appeal against the
+fine imposed by the EU Commission in 2014 relating to antitrust proceedings and the dispute
+with the insolvency administrator of Qimonda AG pertaining to alleged residual liability claims.
+The Supervisory Board again addressed the issue of potential conflicts of interest during
+the year under report, concluding that no such conflict of interest exists for Infineon. In
+particular, consent was given for Dr. Ploss to take on a mandate in the Board of Trustees of
+the Technische Universität München.
+ANNUAL REPORT 2016
+Chief Financial Officer
+Acquisitions - whether previously implemented or currently planned - were a key topic of
+focus for the Supervisory Board during the fiscal year under report. Concerning the acquisition
+of International Rectifier, the Management Board reported on the highly successful conclusion
+of the integration process. Moreover, following the issuance of two corporate bonds ("euro
+bonds") during the 2015 fiscal year to repay the euro-denominated portion of the initial loan
+to finance the acquisition, the US dollar-denominated loan was also refinanced in the 2016
+fiscal year in the form of a US Private Placement of notes. These new financing arrangements
+have enabled Infineon to take advantage of the favorable interest environment, put fixed
+long-term interest rates in place and further improve the company's debt maturity profile.
+Above all, however, at several ordinary and two extraordinary meetings, the Supervisory Board
+spent a significant amount of time considering the planned acquisition of Wolfspeed, a division
+of the US semiconductor manufacturer Cree. The Supervisory Board was extensively briefed
+on possible alternatives to the deal and on the rationale for the acquisition. Following extensive
+consultations, the Supervisory Board approved the acquisition and the related financing
+arrangements. The Supervisory Board shares the Management Board's positive assessment of
+the excellent fit of Infineon's and Wolfspeed's business and know-how as well as the expectation
+that the acquisition will strengthen Infineon's leading position in major growth markets.
+Jochen Hanebeck
+Helmut Gassel was born on March 13, 1964
+in Dortmund, Germany. He studied at
+the Ruhr-University in Bochum and received
+a degree in physics and a doctorate in
+electrical engineering. He joined Infineon
+(Siemens AG until 1999) in 1995.
+Helmut Gassel has been a member of the
+Management Board and Chief Marketing Officer
+of Infineon Technologies AG since 2016. He is
+responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions
+and Intellectual Property.
+Chief Marketing Officer
+Dr. Helmut Gassel
+Dominik Asam was born on March 6, 1969
+in Munich. He studied at the Technical
+University of Munich and the École Centrale
+in Paris. He is a graduate mechanical
+engineer and an "Ingénieur des Arts et
+Manufactures". In addition, he completed an
+MBA at INSEAD in Fontainebleau, France.
+Dominik Asam joined Infineon in 2003.
+Dominik Asam has been the Chief Financial
+Officer of Infineon Technologies AG since
+2011, responsible for Accounting & Reporting,
+Financial Controlling, Financial Planning,
+Investor Relations, Tax, Treasury, Audit,
+Compliance, Export Control, Risk Manage-
+ment, Business Continuity and Information
+Technology.
+Dominik Asam
+Reinhard Ploss was born on December 8, 1955
+in Bamberg. He studied process engineering
+at the Technical University of Munich and in
+1986 received his doctorate. He began his
+career at Infineon (Siemens AG until 1999) in
+the same year.
+Reinhard Ploss has been a member of the
+Management Board of Infineon Technologies AG
+since 2007. He has been Chief Executive Officer
+since October 1, 2012, responsible for Segments,
+Group Strategy, Communications & Government
+Relations, Human Resources (Labor Director),
+Legal, Research & Development.
+Chief Executive Officer
+Dr. Reinhard Ploss
+The Management Board
+Management Board and Supervisory Board
+The Management Board
+Member of the Management Board
+ANNUAL REPORT 2016
+ор
+Chief Executive Officer
+Dr. Reinhard Ploss
+Rihaal Dys
+Snicerely,
+We sincerely hope you will continue to accompany us on this path also in the future.
+Our solutions address the central challenges of our time: energy efficiency, sustainable mobility
+and security in an increasingly connected world. This means we are used to thinking in terms of
+long timelines and to planning our actions well in advance. And we consider their long-term
+impacts. This is why sustainability is an essential component of our corporate culture. On the
+one hand, sustainability is an important demand driver, since energy-efficient power semi-
+conductors account for approximately 60 percent of our revenue. On the other hand we also
+emphasize using resources diligently in manufacturing and constantly try to improve the
+sustainability of our own business activities. As a company we want to do our part in passing
+on a livable world to future generations. In recognition of the significance of this topic we will
+in the future publish an independent Sustainability Report. You will find this year's Sustain-
+ability Report on our website. We have reduced the scope of the Annual Report in comparison
+with previous editions so that we can provide you with all the relevant information in an even
+more concise way, in response to the desire expressed by a large number of our shareholders.
+What lies ahead of us? Infineon will continue to grow. For the 2017 fiscal year, we expect
+revenue to increase by 6 percent year-on-year - plus or minus 2 percentage points. At the
+mid-point of the forecast revenue range the Segment Result Margin will be approximately
+16 percent. Going forward, the further ramp and utilization of our 300-millimeter site in
+Dresden will have a positive impact on our earnings. Additionally, we will benefit from cost
+advantages due to the integration of International Rectifier's manufacturing landscape as
+well as from a stronger US dollar. Considering these factors, we have decided to raise our
+margin target throughout the cycle from previously 15 percent to now 17 percent of revenue.
+sustainability
+reporting
+@www.infineon.com/
+Management Board and Supervisory Board
+Letter to shareholders
+5
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Investment, Finance and Audit Committee
+INFINEON TECHNOLOGIES
+INFINEON TECHNOLOGIES
+Jochen Hanebeck has been a member of the
+Management Board of Infineon Technologies AG
+since 2016. He is responsible for Operations,
+including Manufacturing, Logistics, Quality,
+Customs and Purchasing.
+6.
+At its meeting held on November 17, 2015, the Supervisory Board approved the financial
+and investment budget, including the overall investment budget and the borrowing limit
+determined for the 2016 fiscal year, as presented by the Management Board.
+Financial and investment planning, acquisitions, business strategy
+The full Supervisory Board Committee convened for six ordinary and two extraordinary
+meetings during the 2016 fiscal year. Attendance at the meetings of the full Supervisory Board
+averaged nearly 94 percent, while attendance at Supervisory Board committee meetings was
+100 percent.
+In my capacity as Chairman of the Supervisory Board, I maintained regular contact with the
+Management Board, as did the respective chairpersons of the Investment, Finance and Audit
+Committee and the Strategy and Technology Committee. I was informed without delay by the
+Chief Executive Officer of all significant events relevant to the business.
+9
+Chairman of the Supervisory Board
+Wolfgang Mayrhuber
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The Supervisory Board was provided with written quarterly reports on Infineon's business
+performance, key financial data, risks and opportunities, major areas of litigation and other
+important topics. Between quarterly reports, the Management Board also kept us informed of
+current developments in the form of monthly reports.
+During the 2016 fiscal year, the Supervisory Board diligently performed all the duties incumbent
+upon it in accordance with the law, the Company's statutes and its own terms of reference.
+Throughout the year, we consulted extensively with the Management Board and diligently
+oversaw its activities in both an advisory and a monitoring capacity. Our input was based on
+the detailed information provided to us by the Management Board at Supervisory Board and
+committee meetings relating to business developments, significant transactions, the quarterly
+financial reports and corporate planning. In addition to coordinating its overall strategy with
+us, the Management Board sought our advice on a range of relevant specific measures. The
+Supervisory Board was given ample opportunity to thoroughly examine any reports and reso-
+lutions proposed by the Management Board at all times. In this context, we undertook various
+measures to assure ourselves that the governance of Infineon's corporate affairs was lawful,
+compliant and appropriate.
+Main activities of the Supervisory Board
+Jochen Hanebeck was born on February 2,
+1968 in Dortmund. He received a degree
+in electrical engineering from RWTH Aachen
+University. He has been with Infineon since
+1994 (Siemens AG until 1999).
+Infineon has grown strongly in recent years, and - contrary to many of its competitors and
+despite the current contraction of the semiconductor market – remains firmly on growth
+course. Infineon's success story is attributable in particular to its strategic focus on fast-growing,
+future-oriented technologies such as energy efficiency, electro-mobility, driver assistance
+systems, renewables, and the Internet of Things. Following the successful integration of
+International Rectifier, the largest acquisition in Infineon's corporate history, we are now on
+the verge of securing a decisive long-term technological lead for ourselves in precisely
+these rapidly growing markets with our planned purchase of the Wolfspeed division of the
+US company Cree. We greatly look forward to writing the next chapter in Infineon's success
+story, not least due to the momentum provided by a partially reorganized and strengthened
+management team.
+men
+Ladies
+Report of the Supervisory Board
+to the Annual General Meeting
+8
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+7
+Dominik Asam, Dr. Reinhard Ploss, Jochen Hanebeck, Dr. Helmut Gassel
+From left to right:
+The Management Board
+Management Board and Supervisory Board
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+and Gentlem
+The Investment, Finance and Audit Committee convened five times during the year under review.
+Its activities centered on monitoring the financial reporting process, reviewing the half-year
+and quarterly financial statements, conducting the preliminary audit of the Separate Financial
+Statements, Consolidated Financial Statements and Combined Management Report for
+Infineon Technologies AG and the Infineon Group, and discussing the audit reports with the
+auditor. The committee also examined and deliberated on the financial and investment
+budget as well as the borrowing limit for the 2016 fiscal year. Furthermore, the committee
+considered the effectiveness of the internal control system, internal audit system and risk
+management system. The committee's members also received reports from the Compliance
+Officer on a regular basis as well as regular updates on significant legal disputes.
+Potential conflicts of interest
+Other duties performed by the committee included specifying key areas to be examined
+by the external auditor, monitoring the auditor's independence, and considering the scope
+of non-audit-related services performed by the auditor. In this context, the committee
+gave detailed consideration to the new statutory requirements for fiscal year-end audits,
+particularly the stricter rules that will apply in future to non-audit-related services provided
+by the auditor.
+The auditor attended the meetings of the Investment, Finance and Audit Committee and
+reported in detail on its audit activities.
+Moreover, the committee took time to address various financing issues (the restructuring of
+loans originally raised to finance the acquisition of International Rectifier and the financing of
+the planned acquisition of Wolfspeed) and made recommendations for the corresponding
+Supervisory Board resolutions.
+The committee prepared the Supervisory Board's proposal to the Annual General Meeting
+regarding the selection of the auditor and issued the contracts for the corresponding
+audit engagements. The relevant fee arrangements were also considered.
+The committee (and the full Supervisory Board) gave lengthy consideration to the report
+drawn up by KPMG on the statutorily prescribed audit regarding compliance with the so-called
+EMIR Directive, which, among other things, imposes certain requirements on entities such
+as Infineon with regard to derivatives management.
+INFINEON TECHNOLOGIES
+From the Greek epi "upon" and taxis "arrangement" or "orien-
+tation". Epitaxy is a form of crystalline growth that occurs
+both in nature (such as in minerals) and in the technical world.
+In semiconductor technology, epitaxy is the artificial growth
+of crystalline layers on a substrate, which is usually a wafer.
+Epitaxy enables various doping profiles for transistors to be
+created, which are not feasible using other methods such as
+diffusion or ion implantation.
+Epitaxy
+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.
+Converter
+In contrast to silicon-based semiconductors, compound
+semiconductors consist of several chemical elements. The
+combination of materials from the chemical main group III
+(e.g. gallium) and V (e.g. nitrogen) have the electrical conduc-
+tivity of semiconductors. This also applies to the combination
+of materials from the main group IV (carbon, silicon). These
+compound semiconductors (e.g. gallium nitride or silicon
+carbide) are therefore of highest importance in technical
+applications in semiconductor technology, especially for
+power semiconductors.
+Compound Semiconductor
+Complementary Metal Oxide Semiconductor. Standard semi-
+conductor manufacturing technology used to manufacture
+microchips with low power usage and a high level of integration.
+CMOS
+A power bipolar transistor is a specialized version of a bipolar
+transistor that is optimized for conducting and blocking large
+electric currents (up to several hundred amperes) and very
+high voltages (up to several 1,000 volts). In industry, the power
+bipolar transistor - like the power MOSFET (see MOSFET) often
+used as an alternative - constitutes an important industrial
+semiconductor component for influencing electric current.
+Bipolar
+Bare die
+The part of the semiconductor manufacturing process that
+happens after the wafer has left the cleanroom (frontend
+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.
+Backend manufacturing
+Authentication means the ability to prove one's own identity,
+i.e., proof of the authentic original. However, authentication
+does not necessarily refer to people only, but also to any
+tangible or intangible object, such as a device or an electronic
+document. A user can be authenticated in any one of three
+different ways: 1.) By providing a certain piece of information,
+i.e., the user knows something, such as a password; 2.) Through
+the use of a possession, i.e., the user possesses something,
+such as a key; 3.) Through the direct presence of the user,
+i.e., the user is someone or something, such as in the form of
+a biometric feature.
+Authentication
+Application Specific Integrated Circuit. Logic IC specially
+constructed for a specific application and customer;
+implemented on an integrated circuit.
+ASIC
+"Mixed-signal" is a generic term for integrated circuits that
+operate simultaneously with analog and digital signals. Owing
+to similar requirements in terms of development and manu-
+facturing processes, they are generally grouped together with
+integrated circuits operating exclusively with analog signals,
+hence giving rise to the combination "analog-mixed-signal".
+Analog-mixed-signal
+ANNUAL REPORT 2016
+A bare die is a single, unpackaged chip. Bare die business
+means the sale of fully processed, unpackaged chips. The
+packaging and subsequent testing of the packaged chips
+is performed by the customer. Bare die business is mostly
+conducted with IGBT module manufacturers that produce
+their own modules but not their own semiconductors.
+189
+Comprehensive term for the manufacture and processing of
+wafers with a diameter of 300 millimeters.
+INFINEON TECHNOLOGIES
+Micro-electro-mechanical system. A micro-electro-mechanical
+system, or simply a microsystem, is a miniaturized device,
+assembly or part that contains components of minute dimen-
+sions (only measurable in micrometers) that work together
+as a system. Usually a microsystem consists of one or more
+sensors, actuators and control electronics on one chip.
+Infineon manufactures microphones as MEMS. Due to their
+diminutive size, low power consumption, good shielding from
+interfering signals and low-cost production, these types of
+microphone are being increasingly installed in mobile devices
+such as smartphones, tablets, cameras, and accessories such
+as headsets and hearing aids.
+MEMS
+An inverter, also called a DC/AC converter, is an electrical
+device for converting DC voltage into AC voltage, or direct
+current into alternating current. Inverters are used in solar
+power plants, for example, for converting the DC voltage
+generated in the solar modules into AC voltage, which is then
+fed into the electricity network.
+Inverter
+Integrity Guard (IG) is a revolutionary security technology
+designed for chip cards and security applications, with which
+Infineon is ringing in a new era in the field of hardware-based
+security. IG was specially developed for sophisticated, long-
+life applications such as payment cards and government
+identification documents. IG enables a security controller for
+the first time to provide complete error detection and com-
+prehensive encryption of all chip functions across the entire
+data path within the chip. For this reason it is known as “digital
+security”. IG is used in the security controllers of the SLE 77
+and 78 families and has won numerous international awards.
+Integrity Guard
+Insulated Gate Bipolar Transistor Module. IGBTs are semi-
+conductor 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.
+IGBT Module
+Integrated Circuit. Electronic Component parts composed of
+semiconductor materials such as silicon; numerous compo-
+nents, including transistors, resistors, capacitors and diodes
+can be integrated into ICs and interconnected.
+IC
+High-voltage direct-current transmission. HVDC transmission
+is a method of transmitting electrical energy at high direct-
+current voltages of up to 800,000 volts over distances of more
+than 1,000 kilometers. HVDC transmission is also used for
+connecting offshore wind farms to the electricity grid on the
+mainland.
+HVDC
+A sensor based on the Hall principle, used for measuring
+magnetic fields, named after the US physicist Edwin Herbert
+Hall (1855-1938). Hall sensors are used in automobiles,
+for example, for detecting pedal positions or for measuring
+the speed at which shafts rotate.
+Hall sensor
+Gallium nitride (abbreviated to GaN) is a compound semicon-
+ductor material made from gallium (chemical symbol Ga) and
+nitrogen (chemical symbol N). GaN is used for components
+including radio-frequency power MOSFETs (see MOSFET) on
+account of the material's special properties (such as good
+thermal conductivity and high electron mobility).
+Gallium nitride
+Frontend process is the designation for all process steps in
+cleanrooms 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 frontend process, the wafer may
+have been through as many as 500 individual process steps.
+After the conclusion of the frontend manufacturing, the
+processed wafers are transferred to backend manufacturing
+for testing and packaging (see Backend manufacturing).
+Frontend manufacturing
+Flexible AC Transmission System - control systems used in
+electrical engineering. They are used in the field of electrical
+power supply to specifically control power transmission and
+distribution in AC networks, in which in principle components
+of power electronics and therefore power semiconductors
+such as IGBT modules are used. The controlling of power
+transfers can be implemented in alternating current networks
+by changing the idle and active power by means of capacitor
+batteries or compensation coils.
+FACTS
+Further Information
+Technology Glossary
+300-millimeter technology
+Technology Glossary
+ANNUAL REPORT 2016
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Financial
+Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and
+the Combined Management Report includes a fair review of the development and performance of the business and
+the position of the Group, together with a description of the principal opportunities and risks associated with the
+expected development of the Group.
+186
+Responsibility Statement by the
+Management Board
+Further Information
+Responsibility Statement by the Management Board
+Further Information
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Jochen Hanebeck
+Neubiberg, November 29, 2016
+Dr. Helmut Gassel
+Dr. Reinhard Ploss
+185
+Management Board
+Infineon Technologies AG
+Neubiberg, November 22, 2016
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Dominik Asam
+Infineon Technologies AG
+Dominik Asam
+Dr. Helmut Gassel
+Technology Glossary
+Further Information
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Wirtschaftsprüfer
+Wirtschaftsprüfer
+Wolper
+Braun
+Wirtschaftsprüfungsgesellschaft
+KPMG AG
+Munich, November 22, 2016
+In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSS, as
+adopted by the EU, the additional requirements of German commercial law pursuant to § 315a Abs. 1 HGB and give
+a true and fair view of the net assets, financial position and results of operations of the Group in accordance with
+these requirements. The Group Management Report is consistent with the consolidated financial statements and
+as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of
+future development.
+Our audit has not led to any reservations.
+We conducted our audit of the consolidated financial statements in accordance with § 317 HGB and German
+generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer
+[Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such
+that misstatements materially affecting the presentation of the net assets, financial position and results of opera-
+tions in the consolidated financial statements in accordance with the applicable financial reporting framework
+and in the Group Management Report are detected with reasonable assurance. Knowledge of the business activities
+and the economic and legal environment of the Group and expectations as to possible misstatements are taken
+into account in the determination of audit procedures. The effectiveness of the accounting-related internal control
+system and the evidence supporting the disclosures in the consolidated financial statements and the Group
+Management Report are examined primarily on a test basis within the framework of the audit. The audit includes
+assessing the annual financial statements of those entities included in consolidation, the determination of entities
+to be included in consolidation, the accounting and consolidation principles used and significant estimates made
+by management, as well as evaluating the overall presentation of the consolidated financial statements and Group
+Management Report. We believe that our audit provides a reasonable basis for our opinion.
+We have audited the consolidated financial statements prepared by the Infineon Technologies AG, Neubiberg,
+comprising the statements of financial position, operations, comprehensive income, cash flows and changes
+in equity, together with the management report of the Company and the Group for the business year from
+October 1, 2015 to September 30, 2016. The preparation of the consolidated financial statements and the Group
+Management Report in accordance with IFRSS, as adopted by the EU, and the additional requirements of German
+commercial law pursuant to § 315a Abs. 1 HGB [Handelsgesetzbuch "German Commercial Code"] are the respon-
+sibility of the Managing Board of the Company. Our responsibility is to express an opinion on the consolidated
+financial statements and on the Group Management Report based on our audit.
+Auditor's Report
+187
+Further Information
+Auditor's Report
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Jochen Hanebeck
+188
+Further Information
+Technology Glossary
+Dr. Reinhard Ploss
+Metal-Oxide-Semiconductor Field-Effect Transistor. MOSFET
+is currently the most widely used transistor architecture.
+MOSFETs are used both in highly integrated circuits and in
+power electronics as special power MOSFETs.
+f
+8+
+t
+in
+You
+Tube
+Published by:
+Editors:
+Copy deadline:
+Fiscal year:
+Independent auditors:
+Designed by:
+Photography:
+Printing:
+Infineon Technologies AG, Neubiberg (Germany)
+Investor Relations, Accounting, Consolidation & Reporting
+November 29, 2016
+October 1 to September 30
+KPMG AG Wirtschaftsprüfungsgesellschaft, Berlin (Germany)
+HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg (Germany)
+Werner Bartsch, Hamburg (Germany): page 3, 7
+G. Peschke Druckerei GmbH, Parsdorf (Germany)
+Note
+Forward-looking statements
+This Report contains forward-looking statements about the business, financial condition and earnings
+performance of the Infineon Group.
+These statements are based on assumptions and projections resting upon currently available information
+and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development
+may therefore differ materially from what has been expected.
+Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update
+forward-looking statements.
+INFINEON TECHNOLOGIES AG
+Headquarters:
+Contact for Investors and Analysts:
+Media Contact:
+Visit us on the web:
+Am Campeon 1-12, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+www.infineon.com
+MOSFET
+Imprint
+Visit us on the web: www.infineon.com
+The following were brand names of Infineon Technologies AG in the 2016 fiscal year: Infineon,
+the Infineon logo, AURIX, CoolMOS, Hybrid PACK, MIPAQ, OPTIGA, OptiMOS, PrimePACK, REAL3.
+fiscal year 2017 results
+NFC
+1 preliminary
+Near field communication. An international communication
+standard for contactless data exchange over short distances.
+The initial drafts of the communication standard appeared
+several years ago, but the technology did not break through
+until 2011 when it was included in the first smartphones. NFC
+can be used as an access key to content on terminals and
+for services such as cashless payment and paperless ticketing.
+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).
+Schottky diode
+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).
+Switch-mode power supply
+A switch-mode power supply is an electronic module that
+transforms an AC voltage into a DC voltage. Switch-mode
+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. Switch-mode power supplies are mainly used in PCs,
+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.
+Thin wafer
+A wafer is typically around 350 microns (µm) thick when
+sawn into individual chips. A thin wafer is one that has been
+polished down to less than 200 microns thick (a human hair
+or a sheet of paper, by comparison, is about 60 microns thick).
+Thin wafer technology offers benefits: Thinner chips mean
+losses can be reduced and the heat generated can be dissipated
+more effectively. Another advantage is that electrically active
+patterns can be produced on the backside as well, enabling
+the chip to provide completely new functions. Thin wafer chips
+also allow more compact packages.
+TPM
+Trusted Platform Module. A chip that adds elementary security
+functions such as license and data protection to a computer
+or similar device. TPMs can be integrated into tablet PCs,
+smartphones and consumer electronics as well as PCs and
+notebooks. A trusted computing platform (see Trusted Com-
+puting) can be created by combining a specially configured
+operating system and appropriate software with a device
+containing a TPM.
+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 (see Silicon Carbide). 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 the
+German physicist Walter Schottky (1886-1976).
+Trusted Computing means that the hardware and software
+used in PCs, as well as other computer-controlled 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.
+Trusted Computing
+Publication of fourth quarter and
+Publication of third quarter 2017 results
+Tuesday, August 1, 2017¹
+Tuesday, November 14, 2017¹
+Thursday, May 4, 2017'
+ICM - International Congress Center Munich
+(Germany)
+Publication of second quarter 2017 results
+Thursday, February 16, 2017
+Publication of first quarter 2017 results
+Thursday, February 2, 20171
+Financial calendar
+190
+Annual General Meeting 2017
+(Start 10:00 a.m. CET)
+6.9
+6.8
+8.8
+9.7
+12.3
+STMicroelectronics
+Toshiba
+NXP
+Samsung
+Micron
+Avago
+Qualcomm
+SK Hynix
+Intel
+15.3 14.1 ****
+16.5 16.5
+6.7
+0
+Texas Instruments
+6.1
+nVidia
+5.3
+42%
+13%
+Global semiconductor sales 2015
+by region (total market size
+US$347 billion)
+Analog Devices
+5% market share
+10% market share
+ON Semiconductor
+AMD
+SanDisk
+5.7
+Sony
+Source: IHS Markit, "2016 Competitive Landscaping Tool", August 2016. Foundries and subcontractors are not included in this market analysis.
+Apple
+MediaTek
+Infineon
+3.4
+3.5
+3.9
+4.4
+5.0
+Renesas
+10
+10
+30
+P see page 95 ff.
+1 Proposal to the Annual General Meeting to be held
+on February 16, 2017.
+2010 2011 2012 2013 2014 2015 2016
+Radio-frequency
+221
+13%
+12 12 12
+18
+20
+The net cash position (see the chapter "Internal Management System" for definition) increased
+by 114 percent to stand at €471 million at the end of the 2016 fiscal year (September 30, 2015:
+€220 million), in line with the increase in the gross cash position.
+in € cents
+P see page 60
+20
+20
+2016 fiscal year
+Finances and strategy
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+The gross cash position (see the chapter "Internal Management System" for definition) totaled
+€2,240 million as of September 30, 2016, an increase of 11 percent compared to the previous
+year's reported figure of €2,013 million. The free cash flow from continuing operations of
+€490 million described above exceeded the dividend payment of €225 million for the 2015
+fiscal year.
+Dividend per share for the
+2010 to 2016 fiscal years
+20
+Planned dividend increases by 10 percent
+Based on earnings generated in the 2016 fiscal year and Infineon's positive business outlook, a
+proposal will be made to the Annual General Meeting, which will be held on February 16, 2017,
+to pay a dividend of €0.22 per share, an increase of 2 cents compared to the previous year.
+40.2
+40
+50
+51.4
+60
+Revenue in billion US$
+Top 20 semiconductor manufacturers for the 2015 calendar year
+The 20 largest companies account for 69.8 percent of global revenue. The remaining 30.2 percent
+is spread over approximately 2,000 other semiconductor companies. These figures highlight
+the extremely fragmented structure of the semiconductor sector. In the meantime, however, a
+certain degree of consolidation is taking place within individual product categories. By acquiring
+International Rectifier, Infineon added momentum to the latest wave of consolidation in the
+power semiconductor sector. The planned acquisition of Wolfspeed is another important step
+in this field. Similarly, ON Semiconductor's acquisition of Fairchild on September 19, 2016 will
+contribute to further consolidation. This transaction has not yet been taken into account in
+the market figures for the 2015 calendar year.
+The semiconductor market is highly fragmented. Only the two largest players had a market
+share in excess of 10 percent in the 2015 calendar year with a market size of US$347.118 billion
+(source: market research company IHS Markit), with Intel taking a 14.8 percent share with
+revenue of US$51.420 billion and Samsung Electronics taking an 11.6 percent share with
+revenue of US$40.156 billion. The market share of all other competitors was below 5 percent.
+Infineon finished in 11th place with a 2.0 percent market share with revenue of US$6.813 billion.
+Intel is market leader for processors, Samsung Electronics for memory. Infineon does not
+operate in either of these categories. Hence, neither of these companies competes directly
+with Infineon in these two product categories. Of the top 20 semiconductor manufacturers,
+the following compete with Infineon: Samsung (only in the field of chip card ICs, with revenue
+accounting for only approximately 1 percent of Samsung's revenue), Texas Instruments, NXP,
+Toshiba, STMicroelectronics, Renesas and ON Semiconductor.
+Our dividend policy is aimed firstly at enabling our shareholders to participate appropriately
+in the success of the business and secondly to at least keep the dividend at a constant level in
+times of flat or declining earnings.
+21
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Semiconductor revenues worldwide totaled €295.996 billion in the 2016 fiscal year (source:
+World Semiconductor Trade Statistics). This reflects a decrease of 0.1 percent compared to the
+revenue of €296.353 billion for the 2015 fiscal year. During the same period Infineon could
+generate an organic growth of revenue of 6.6 percent.
+Developments in the semiconductor industry
+The purchase agreement with Cree also includes core competencies in wafer substrate manu-
+facturing for SiC, as well as for SiC with a monocrystalline GaN layer for RF power applications.
+Covering the entire value chain will enable us to optimize the combination of materials used
+in our power semiconductor components as part of our strategic "Product to System" approach.
+Also, after the acquisition of Wolfspeed, Infineon will be in a position to meet the capital
+structure targets it has set itself. Furthermore, the long-term credit rating received for the
+first time in February 2016 will not change as a result of the planned acquisition (see the
+chapter "Treasury and capital requirements" for detailed information on Infineon's capital
+structure targets and its credit rating).
+The acquisition will enable us to provide the broadest offering in compound semiconductors
+based on SiC and GaN and further strengthen our position as a leading supplier of power and
+RF power components in high-growth markets such as electro-mobility, renewables, and
+next-generation cellular infrastructure relevant for the Internet of Things. We will therefore
+become the number one market player for SiC-based power semiconductors and intend to
+become number one in RF power components by 2020.
+On July 14, 2016, Infineon and Cree Inc. ("Cree"), USA, signed a contract relating to the purchase
+of Cree's Wolfspeed Power and RF division ("Wolfspeed"). Infineon intends to acquire Wolf-
+speed (including the related wafer substrate business) for a purchase price of US$850 million.
+Wolfspeed, which is based in Research Triangle Park, North Carolina, USA, and employs
+approximately 550 people worldwide, is a leading provider of power semiconductors based
+on silicon carbide (SiC) and high-frequency (RF) power components based on gallium nitride
+on silicon carbide (GaN-on-SiC).
+Acquisition of Wolfspeed
+2016 fiscal year
+10%
+Security
+Looking at the regional spread of semiconductor sales, China has been the dominant factor
+for many years. In the 2015 calendar year, 41.5 percent of all semiconductors were absorbed
+there. EMS (Electronic Manufacturing Services) play a special role in China. These contract
+manufacturers assemble electronic products predominantly for Western customers. This
+business model plays a significant role for durable consumer goods on the one hand and
+information and telecommunications sector-related products such as servers, PCs, notebooks
+and cellular phones on the other. A large proportion of the semiconductors sold to China are
+later on re-exported as part of a finished product.
+Fairchild
+Mitsubishi
+Infineon
+CCS
+PMM
+IPC
+ATV
+Manufacturing
+Sensor systems
+Embedded control
+World discrete power semiconductor
+and modules market share 2015
+Power control
+Power
+Core competency
+Infineon makes use of its core competencies across all segments
+This concept can be clearly illustrated by a number of examples: Demands for the reduction
+of CO2 emissions in the automobile promote the development of electric vehicles. At the same
+time, the desire for better road safety is helping the breakthrough of radar-based assistance
+systems. Both of these developments result in higher demand for semiconductors. Furthermore,
+our power semiconductors are making all kinds of power supplies more efficient and more
+compact: New materials such as silicon carbide make it possible for example to design power
+inverters for photovoltaic systems that are significantly smaller than previous models and
+approximately 20 percent less expensive to manufacture - while the value of the power semi-
+conductors they contain increases. Radio-frequency components based on gallium nitride
+are a prerequisite for fast mobile communication networks compliant with the 5G standard.
+Sensor technologies open up new application fields such as Augmented Reality in smartphones
+and intuitive operation of a large number of devices by gesture control. Security controllers
+ensure protection of data traffic in an increasingly connected world.
+Not only does Infineon rely on the right growth drivers, it also has the expertise and the strategic
+concepts needed to benefit from these drivers. Our strategy is based on three pillars. First,
+we focus on those markets in which we can achieve a leading position: automotive, power
+supplies, industrial power electronics, radio-frequency technologies and security. Second,
+we establish the basis for these leading positions with comprehensive expertise on technology,
+products and applications which we constantly expand both within existing as well as new
+application areas. The third pillar is our strategic approach "Product to System". Based on
+far-reaching system understanding we want to offer customers solutions that will make them
+more successful and will increase potential sales and profits for Infineon. Here we expect
+our knowledge to drive innovations that can change markets and clearly differentiate us from
+our competition in the long term.
+The three pillars of our strategy: Focus, technology leadership and
+system understanding
+automation. Thanks to digitalization, agriculture for example can achieve higher yields
+with more environmentally friendly methods; at the same time new possibilities open up for
+consumers. This also includes protection of data exchange from abuse, thus ensuring the
+acceptance of the ever-increasing degree of networking in our society. Infineon benefits from
+these trends because they stimulate long-term demand in our target markets.
+STMicro-
+electronics
+Vishay
+18.7%
+As illustrated above, our strategic approach "Product to System" goes well beyond thinking
+in terms of technologies and products. We want to understand what markets demand and how
+they are changing. Only then will we be able to understand how we can change the markets
+ourselves. Thus we consider more than just the direct sales opportunities for our products and
+solutions: We also look at our customers' success factors and the development of end-markets.
+By doing so, we recognize at an early stage when the foundation of our business is changing.
+This is a prerequisite for timely reaction, guaranteeing sustainable differentiation in growth
+applications and increasing profit. For example, we ask ourselves how we can help make the
+next generation of radar systems for assisted driving both less expensive and more precise at
+the same time. Our optimized chip set and a new assembly technology that simplifies overall
+The strategic approach "Product to System" defines our actions
+We have established a stable foundation in recent years by focussing on core competencies
+that are in higher demand today than ever in the face of global megatrends. Over the years we
+have built and systematically expanded the technical expertise needed to do so. And since
+good ideas do not become innovations until they have been successful in the market, we have
+also developed the appropriate concepts for turning our strategy into entrepreneurial success.
+At the center of all this is our strategic approach "Product to System", which we apply along our
+entire value chain, oriented towards the success of our customers. This approach is supported
+by additional elements: A strong innovation culture, continuous pursuit of technology leader-
+ship, well-developed quality consciousness, differentiated manufacturing and tailor-made
+go-to-market strategies fitting the various individual markets. This puts us in a position to offer
+our customers leading products as well as the highest possible quality and supply reliability.
+In doing so we achieve the objective of growing profitably and faster than the market.
+Success factors in strategy
+These are also the criteria we used in evaluating the planned acquisition of Wolfspeed, which
+we announced on July 14, 2016 and which we expect to close at the beginning of the 2017
+calendar year. Wolfspeed will strengthen our position in important growth markets such as
+electro-mobility, renewable energies and next generation mobile communications infrastruc-
+ture for the Internet of Things. The transaction also includes the related silicon carbide wafer
+substrate business. We want the future-oriented technology of silicon carbide-based power
+semiconductors and gallium nitride-based radio-frequency power components to help us
+grow faster than the market and secure a leading position in the corresponding segments or
+work towards a leading position within the foreseeable future. We expect the acquisition to
+be immediately accretive to Infineon's adjusted earnings per share. And Wolfspeed's culture,
+in which the development of leading technology know-how is highly regarded, fits excellently
+with Infineon.
+We supplement our organic growth with targeted acquisitions. These acquisitions have to meet
+three criteria: They must be strategically viable, financially reasonable and culturally fitting.
+An acquisition thus has to strengthen Infineon's market position according to our strategic
+orientation and has to be a viable addition to our range of expertise. The business acquired
+has to increase our profit, contribute to our margin target of 17 percent (previously 15 percent)
+throughout the cycle and must earn a return at least equal to the capital costs. And finally
+the corporate culture of a potential acquisition candidate must be a good fit with Infineon's
+culture, ideally contributing valuable elements to it.
+Acquisitions add to organic growth
+24
+24
+23
+Group strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Infineon has continued to develop and expand its traditional core competencies in the area of
+power semiconductors, hardware-based security, radio-frequency technologies and embedded
+control and has added to these competencies expertise in adjacent fields such as sensor tech-
+s
+nologies. We utilize the know-how of the entire corporate network in each application area,
+including our leading manufacturing technology. Today we are the clear market leader in power
+semiconductors as well as the system leader in automotive and leader in security solutions.
+Source: IHS Markit, "Power Semiconductor Discretes
+& Modules Report", October 2016
+5.0%
+5.7%
+6.1%
+6.3%
+The Return on Capital Employed (ROCE) in the 2016 fiscal year amounted to 15.0 percent,
+well up on the previous year's figure of 12.8 percent. The improvement was mainly due to the
+year-on-year increase in operating income from continuing operations from €664 million to
+€799 million. For a definition of, and details relating to, the calculation of ROCE, see the chapters
+"Internal Management System" and "Review of financial condition".
+Finances and strategy
+Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+Compound annual growth rate of the main semiconductor target markets, 2015 to 2020
+Today Infineon addresses the three fastest growing segments of the semiconductor market for
+the period from 2015 to 2020: Market researchers predict a compound annual growth rate of
+8.2 percent for industrial power semiconductors, 7.3 percent for chip card ICs and 5.8 percent
+for automotive semiconductors. Demand in these segments is driven by long-term, global
+megatrends.
+Infineon's objective is sustainable profitable growth. This is why we focus on markets in which
+we can be successful with our core competencies in the long term and pursue the leading
+position in these markets. In an effort to always offer the best solutions on the market to our
+customers we achieve three things: We continuously increase the enterprise value for our
+shareholders, offer our employees a safe and attractive working environment and also help
+make life easier, safer and greener.
+22
+Group strategy
+Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+8.2%
+INFINEON TECHNOLOGIES
+Source: IHS Markit, "Application Market Forecast
+excluding Japan)
+(excluding China,
+Americas
+Asia-Pacific
+Japan
+Middle East, Africa
+China
+Europe,
+Tool", June 2016
+22%
+7.3%
+|||ili
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Semiconductors are essential in tapping renewable energy sources. They reduce the power
+consumed by electric devices and enable systems that make transportation safer and cleaner.
+Furthermore, semiconductor technology is the backbone of modern communication and data
+technologies. Answers to the challenges of our time would be unthinkable without the use of
+semiconductors. And this becomes even more true as the real and digital worlds converge,
+generating new potentials. Digitalization increases the productivity of industrial manufacturing
+processes. This development, also referred to as the Industrial Internet, reaches far beyond
+Opportunities in the convergence of the real and digital worlds
+According to the United Nations, the world's population numbered approximately 7.3 billion
+people in 2015. This figure is expected to climb to 7.8 billion by 2020 and to reach 8.5 billion
+by 2030. World population continues to grow at a fast pace, accompanied by a corresponding
+rise in the demand for energy, nutrition, sustainable concepts for traffic within and between
+expanding metropolitan areas and high-performance communications infrastructure. At the
+same time natural resources such as fossil fuels and arable land are growing more and more
+scarce. New solutions are called for if we are to continue providing a constantly growing popu-
+lation with energy and nutrition and a higher standard of living while minimizing the impact
+on the environment. The key is making "more from less". Microelectronics plays a key role in
+achieving this goal.
+Global megatrends drive core business
+Strategic fundamentals
+2 Source: ABI Research, "Secure Smart Card & Embedded Security IC Technologies", July 2016; microcontroller ICs
+1 Source: IHS Markit, "Worldwide Semiconductor Shipment Forecast", October 2016
+cations¹
+5.8%
+conductor Market' Processing'
+Data
+Consumer¹
+Chip Card ICs 2 Automotive'
+Industrial¹
+Total Semi-
+1.4%
+2.8%
+3.4%
+3.4%
+Communi-
+Free cash flow from continuing operations (see the chapter "Internal Management System"
+for definition) totaled a positive amount of €490 million in the 2016 fiscal year, an improvement
+of €2,144 million compared to the negative amount of €1,654 million reported in the previous
+fiscal year. During that reporting period, free cash flow from continuing operations had been
+negatively impacted by the payment of the purchase price consideration for International
+Rectifier, payments to the Qimonda insolvency administrator (partial settlement) and payments
+to the EU Commission (fine imposed in conjunction with chip card antitrust proceedings)
+totaling €2,047 million. After adjusting for these exceptional items, free cash flow from continu-
+ing operations in the 2015 fiscal year was a positive amount of €393 million. Compared to
+this figure, the year-on-year improvement was 25 percent. Net cash provided by operating
+activities amounting to €1,313 million (2015: €957 million) thereby exceeded additions to
+property, plant and equipment and intangible assets in the reporting period totaling €826 million
+(2015: €785 million).
+2014
+Despite ongoing expenses in conjunction with the acquisition of International Rectifier, net
+income benefited from the earnings contribution provided by revenue growth of €678 million
+(see the chapter "Review of results of operations") and amounted to €743 million for the
+fiscal year ended September 30, 2016, an increase of 17 percent on the previous year's figure
+of €634 million.
+78
+Significant events after the end of the reporting period
+78
+Effective October 1, 2015, business with XMC
+industrial microcontrollers - developed by
+Automotive and Chip Card & Security - was
+transferred to Power Management & Multimarket
+and Industrial Power Control. The previous
+year's figures have been adjusted accordingly.
+This report combines the Group Management
+Report of the Infineon Group ("Infineon" or
+"Group") - comprising Infineon Technologies AG
+(hereafter also referred to as "the Company")
+and its consolidated subsidiaries - and the
+Management Report of Infineon Technologies AG.
+The Combined Management Report contains
+forward-looking statements about the business,
+financial condition and earnings performance
+of the Infineon Group. These statements are
+based on assumptions and projections based
+on currently available information and present
+estimates. They are subject to a multitude of
+uncertainties and risks. Actual business devel-
+opment may therefore differ materially from
+what has been expected. Beyond disclosure
+requirements stipulated by law, Infineon does
+not undertake any obligation to update forward-
+looking statements.
+75 Review of liquidity
+73 Review of financial condition
+68 Review of results of operations
+68 Group performance
+Our 2016 fiscal year
+66 The Infineon share
+61 Our employees
+61 Sustainability at Infineon
+57 Internal management system
+55 Operations
+Report on expected developments, together with
+associated material risks and opportunities
+79 Outlook
+83 Risk and opportunity report
+17
+ང་
+106 Compensation report
+106 Declaration on Corporate Governance
+106 Corporate Governance Report
+section 315, paragraph 4, of the German Commercial Code (HGB)
+102 Information pursuant to section 289, paragraph 4, and
+53 Research and Development
+102 Corporate Governance
+99
+as of the date of this report
+with respect to Infineon's financial condition
+Overall statement of the Management Board
+98
+Treasury and capital requirements
+95
+Infineon Technologies AG
+49 Locations
+47 Chip Card & Security
+44 Power Management & Multimarket
+INFINEON TECHNOLOGIES
+At the meeting of the Investment, Finance and Audit Committee held on November 14, 2016,
+intensive discussions were held with the auditor regarding the Separate Financial statements,
+the Consolidated Financial Statements prepared in accordance with IFRS, the Combined
+Management Report, the proposed profit appropriation, and the auditor's findings. Based on
+these discussions, the Investment, Finance and Audit Committee resolved to propose to the
+Supervisory Board to approve the financial statements after being drawn up by the Management
+Board and to consent to the proposed profit appropriation.
+KPMG AG Wirtschaftsprüfungsgesellschaft, Munich, audited the Separate Financial Statements
+of Infineon Technologies AG and the Consolidated Financial Statements as of September 30,
+2016 as well as the Combined Management Report for Infineon Technologies AG and the
+Infineon Group, and issued unqualified audit opinions thereon. KPMG also reviewed Infineon's
+half-year and quarterly financial reports.
+Separate and Consolidated Financial Statements
+In May 2016, Prof. Dr. Schmitt-Landsiedel ceased to be a member of the Strategy and Technol-
+ogy Committee and accordingly also gave up the chair. The position has been taken over by
+Mr. Bauer, who has both the technical expertise and the necessary practical experience in
+setting strategies for a technology company operating in a fiercely competitive environment.
+Beginning of November 2016, Prof. Dr. Schmitt-Landsiedel has for personal reasons also ceased
+to be a member of the full Supervisory Board. Prof. Dr. Schmitt-Landsiedel has been a member
+of the Supervisory Board since 2005 and, particularly as longtime chairperson of the Strategy
+and Technology Committee, substantially contributed to the board's successful work. We
+would like to express our thanks to Prof. Dr. Schmitt-Landsiedel and wish her well for the future.
+The committee was provided with information on the current status of patents within the
+semiconductor industry, including details of Infineon's strategy in this field. It also closely
+examined International Rectifier's product portfolio and, as part of the integration process,
+inquired into the progress being made to achieve uniform customer interfaces in the areas of
+sales, marketing, logistics and finance. It also focused its attention on the Chip Card & Security
+and Power Management & Multimarket segments and inquired into the quality improvement
+initiatives as well as measures aimed at raising customer satisfaction.
+under report.
+ANNUAL REPORT 2016
+year
+15
+Strategy and Technology Committee
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Earnings per share for the 2016 fiscal year amounted to €0.66 (basic and diluted), 18 percent
+up on the previous fiscal year's figure of €0.56 (basic and diluted). Adjusted earnings per share
+(diluted) improved year-on-year from €0.60 to €0.76 (see the chapter "Review of results of
+operations" for details of the calculation of adjusted earnings per share).
+The Strategy and Technology Committee convened three times during the
+INFINEON TECHNOLOGIES
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+At the meeting of the Supervisory Board held on November 15, 2016, the Chairman of the
+Investment, Finance and Audit Committee reported on the committee's recommendations. In
+the course of this meeting, all topics relevant for the financial statements and all significant
+audit issues were discussed in detail with the auditor and examined by the Supervisory Board.
+The examination also covered the proposal to pay a dividend of €0.22 per entitled share.
+The Separate Financial Statements, the Consolidated Financial Statements prepared in
+accordance with IFRS, the Combined Management Report, the Management Board's proposal
+for the appropriation of unappropriated profit (all prepared by the Management Board) and
+KPMG's long-form reports on the audits of the Separate Financial Statements, the Consolidated
+Financial Statements and the Combined Management Report were all made available to the
+Supervisory Board at its meeting held on November 29, 2016. Taking into account the insights
+gained at the meeting held on November 15, 2016, the Supervisory Board concluded that it
+has no objections to the financial statements and the audits performed by the auditor. In its
+opinion, the Combined Management Report complies with legal requirements. Likewise, the
+Supervisory Board concurs with the assertions regarding Infineon's future development made
+therein. The Supervisory Board therefore concurred with the results of the audit and approved
+the Separate Financial Statements of Infineon Technologies AG and the Consolidated Financial
+Statements of the Infineon Group. The Separate Financial Statements were accordingly
+adopted. The Supervisory Board also approved the Management Board's proposal for the
+appropriation of unappropriated profit.
+42 Industrial Power Control
+40 Automotive
+40 The segments
+31 Growth drivers
+22 Group strategy
+18 Finances and strategy
+Our Group
+16
+Group Management Report
+Content
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Chairman of the Supervisory Board
+Wolfgang Mayrhuber
+On behalf of the Supervisory Board
+Neubiberg, November 2016
+The Supervisory Board wishes to thank the Management Board and the entire staff for their
+unfailing commitment and outstanding achievements during the 2016 fiscal year.
+Combined
+ANNUAL REPORT 2016
+18 2016 fiscal year
+2016 fiscal year
+6%
+7%
+7%
+13%
+12%
+11%
+100%
+100%
+100%
+Infineon revenue by region
+2016 fiscal year
+Finances and strategy
+Combined Management Report | Our Group
+P see page 60
+P see pages 59 and 75
+20%
+23%
+24%
+23%
+Improvement in key performance indicators
+Combined Management Report | Our Group
+Finances and strategy
+19
+18%
+Americas
+Japan
+Germany
+China
+P see page 59
+2016
+2015
+Europe (excluding Germany), Middle East, Africa
+Asia-Pacific (excluding China, excluding Japan)
+19%
+15%
+16%
+24%
+23%
+19%
+P see page 72
+20%
+ANNUAL REPORT 2016
+4 Chip Card & Security
+3 Power Management & Multimarket
+2 Industrial Power Control
+1 Automotive
+5%
+CCS4
+PMM3
+13%
+ATV¹
+Revenue growth of the
+> Good performance enables higher dividend
+> Organic growth of 7 percent achieved despite difficult market
+conditions; Segment Result Margin within forecast range
+2016 fiscal year
+18
+P see page 68 f.
+Finances and strategy
+individual segments in the 2016 fiscal
+year compared to the previous year
+11%
+IPC2
+Revenue by segment in the 2016
+fiscal year
+INFINEON TECHNOLOGIES
+Corporate and Eliminations: €1 million
+14%
+Other Operating Segments,
+Chip Card & Security: €698 million
+€2,050 million
+Industrial Power Control: €1,073 million
+Automotive: €2,651 million
+16%
+Power Management & Multimarket:
+The Segment Result for the 2016 fiscal year totaled €982 million, 9 percent up on the
+€897 million reported one year earlier. At 15.2 percent (2015: 15.5 percent), the Segment
+Result Margin ended up within the range forecast at the beginning of the fiscal year (see
+the chapter "Outlook" P page 79 f.).
+China has been Infineon's most important sales market for several years now and, with a figure
+of €1,574 million, accounted for 24 percent (2015: 23 percent) of Infineon's revenue during
+the fiscal year under report. Germany followed once again with revenue of €1,000 million and
+a revenue share of 15 percent (2015: 16 percent).
+Revenue up on the back of organic growth, currency effects and acquisition
+of International Rectifier; Segment Result Margin within forecast range
+Infineon generated revenue of €6,473 million in the 2016 fiscal year, a 12 percent increase
+on the previous year's figure of €5,795 million. Revenue growth primarily reflects strong sales
+performances across all segments (see the chapter "The segments" P page 40 ff.) and the
+first-time inclusion of International Rectifier for a full twelve-month period, compared with
+the previous fiscal year, when revenue was included only for the period after closing of the
+acquisition on January 13, 2015. Considering this fact, Infineon managed to achieve 7 percent
+organic growth in a difficult economic environment and despite a generally contracting
+semiconductor market. Infineon's strong business performance was also influenced by cur-
+rency factors, most notably the appreciation of the US dollar against the euro. Approximately
+2 percent of the 12 percent revenue growth was attributable to currency factors.
+41%
+32%
+0%
+11%
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Finances and strategy
+Individual mobility
+In the previous chapters we have described Infineon's strategy in detail. One of its key elements
+is a focus on markets in which we can be successful in the long term. In the following we will
+outline the most important growth drivers for our business, grouped according to four higher-
+level trends: individual mobility, efficient power management, mobile communication as well
+as sensor technologies and security.
+Growth drivers
+31
+INFINEON TECHNOLOGIES
+Growth drivers
+Our shareholders benefit from this positive performance. We also pursue a dividend policy
+aimed at letting shareholders adequately participate in Infineon's economic development and
+at paying out at least a constant dividend even in periods of slower growth.
+04|2016 05|2016
+-SOX
+DAX
+Infineon
+07|2016 08|2016 09|2016
+06|2016
+03|2016
+02|2016
+Increasing prosperity usually leads to the desire for individual mobility. This is particularly
+evident in newly industrializing countries: The middle classes in India and China are growing
+annually by around ten million people each, a development which also drives rising demand
+for automobiles. In Africa the transition from the bicycle or moped to the car is also a sign of
+increasing prosperity. An average annual growth rate of 2.6 percent is expected for worldwide
+automobile production for the years 2015 to 2020 (Source: IHS Markit).
+01|2016
+Dow Jones US Semiconductor Index
+Worldwide light vehicle production by region
+15.2
+CAGR (2015-2020): +2.6%
+12|2015
+2018 e
+2017e
+2016 e
+2015
+22.7
+29.3
+20.9
+12.8
+23.7
+in millions of vehicles
+8.8
+17.5
+18.8
+5.0
+88.7
+6.1
+92.8
+91.4
+95.0
+98.3
+100.7
+8.6
+11|2015
+29
+90
+The rating agency S&P Global Ratings (S&P) has evaluated Infineon's creditworthiness as
+"BBB" (outlook "stable") (see the chapter "Treasury and Capital Requirements"). At present
+this gives Infineon the best S&P rating of any European semiconductor manufacturer.
+The upper limit on our gross financial debt is twice Earnings Before Interest, Tax, Depreciation
+and Amortization (EBITDA). Our moderate debt level and the well distributed maturity profile
+reaching until 2028 allow us to reliably service our debt, independent of the current capital
+markets environment.
+Our gross cash target is €1 billion plus 10 to 20 percent of revenue. The fixed basic amount
+of €1 billion provides a solid liquidity reserve for contingent liabilities and retirement fund
+liabilities which are independent of revenue. Furthermore, 10 to 20 percent of revenue means
+we always have access to enough cash to be able to finance the operating business during all
+phases of the business cycle.
+It is important to our customers that Infineon remains a dependable partner that will also be
+able to supply reliably for many years to come. As an employer, we also want to give this kind
+of long-term reliability to our employees, even well beyond their active working lives in the
+form of retirement benefits. As a result we give a high priority to solid creditworthiness. This is
+reflected by our conservative capital structure targets.
+Capital structure targets demonstrate our reliability
+We will also continue to expand our partnerships with contract manufacturers in non-differ-
+entiating areas of backend manufacturing, i.e. package assembly, in particular for standard
+packages. This will mean a corresponding reduction in the amount of investment as well.
+And we also increase output by continuously increasing the productivity of all our manufac-
+turing processes. Taken together, all these strategies work towards achieving the target
+of investing an average of approximately 13 percent of revenue over the cycle. This includes
+approximately 2 percent of capitalized development costs. In the fiscal year just completed
+the investment ratio amounted as targeted to 13 percent. Our investment volume is
+defined so that it will help us realize our target objective of an average growth in revenue
+of 8 percent annually.
+For products manufactured using standard CMOS technologies with structures of 65 nanometers
+or less we work together with contract manufacturers, developing the necessary technology
+modifications together with them. The essential differentiation of these products lies in the
+design and less so in the process technology, which is why we no longer manufacture them
+in our own facilities, thereby eliminating the investments in frontend manufacturing which
+would otherwise be necessary.
+Up to now our capital intensity has been characterized by existing 200-millimeter technologies.
+However, compared with 200-millimeter manufacturing, the new 300-millimeter thin wafer
+technology requires less investment relative to the capacity provided. This reduces the amount
+of investment in manufacturing capacities for power semiconductors that is necessary in order
+to achieve growth targets.
+Psee page 97
+2019 e
+Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+When expanding our manufacturing capacities we only invest in our own manufacturing facili-
+ties when it makes a fundamental contribution to the differentiation of our products. This is
+true in particular of power semiconductors, radio-frequency components and MEMS-based
+sensors. When this is not the case, we outsource an increasing amount of our wafer processing
+and our package assembly to manufacturing partners.
+Target 3: Investments amounting to 13 percent of revenue
+Growth is only one prerequisite for sustainable success. Another criterion is profitability.
+Here the margin achieved by our products is an indicator for the value our products create for
+the customer. When we work profitably on a sustainable basis, it means that we steer our
+developments to the point where they provide the highest benefit to our customers. Working
+profitably means using innovative strength effectively by meeting the demand of the customer
+and the markets. In addition, we want to continue our development and sales achievements
+at unabated speed even in difficult market phases. Going forward, we want to achieve an
+average Segment Result Margin of 17 percent of sales through the cycle (the previous target
+was 15 percent). Today, we are benefiting from a stronger US dollar, giving us some margin
+tailwind compared to the situation when we published our previous targets. In order to achieve
+this goal on a sustainable basis, we are relying among other things on cost advantages from
+the integration of International Rectifier's manufacturing Landscape as well as from the
+further ramp and utilization of our 300-millimeter site in Dresden (Germany). We also leverage
+economies of scale in research and development and sales through leading positions in our
+target markets. And technology leadership and the strategic approach "Product to System"
+enable us to maintain a higher degree of differentiation. In the 2016 fiscal year we achieved a
+Segment Result Margin of 15.2 percent.
+Target 2: 17 percent Segment Result through the cycle
+Infineon's current business has grown at an average rate of approximately 9 percent annually
+since the company was established as an independent corporation in fiscal year 1999 -
+excluding the revenue growth due to acquisitions. We remain active in the same markets and
+our four segments are positioned to capitalize on the megatrends mentioned earlier, which
+are driving a steady demand momentum for our products. We therefore expect to be able to
+continue growing in the future at a pace very close to the historical rate. A detailed description
+of the individual growth drivers follows in the next chapter. Here our strategic approach
+"Product to System" helps us develop better solutions with our broad technology and product
+expertise and thus to create significant added value for our customers who are willing to pay
+more for solutions that are worth more. Furthermore, we are using tailor-made go-to-market
+strategies to broaden our customer base and generate more business. In doing so we want
+to continue to grow at an average of 8 percent per year.
+Target 1: 8 percent average annual growth in revenue
+Our strategy is based on sustainable, profitable growth, reflected in the ambitious targets we
+have set for ourselves. They emphasize on the one hand the high level of expectations we place
+on ourselves, and on the other hand ensure that we achieve the necessary balance between
+growth in sales, profitability and investment volume.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Finances and strategy
+Group strategy
+9.05
+100
+110
+120
+130
+140
+150
+160
+10.06
+11.06
+10|2015
+12.07
+14.08
+15.08
+16.09
+September 30, 2015 = 100
+Infineon share price in €
+Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia Semiconductor Index (SOX)
+and the Dow Jones US Semiconductor Index for the 2016 fiscal year (daily closing prices)
+Our strategy has paid off: Infineon continues its path of sustainable, profitable growth. Our
+operating profitability and our sound capital structure give us the financial flexibility to
+invest in future growth. This continuous value creation has been manifested in past years
+in constantly increasing earnings per share as well as in the appreciation of our company
+in the capital market.
+We are convinced that organic growth in the medium to long term creates the highest value.
+A good indicator here is the spread between the Return on Capital Employed (ROCE) and
+the Weighted Average Cost of Capital (WACC). Even after the acquisition of International
+Rectifier in the previous fiscal year our Returns on Capital Employed exceed our capital
+costs. In periods without effects related to acquisitions, our ROCE corresponds to approxi-
+mately twice the amount of the WACC when our financial targets are achieved. We intend
+to continue to achieve this kind of return on every euro we invest in organic growth and in
+doing so to continuously increase our enterprise value.
+Sustainable value creation for our shareholders
+30
+13.07
+2020 e
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Japan
+Group strategy
+27
+In addition to innovation, delivery reliability, quality and cost reduction are essential factors
+in the orientation of our manufacturing landscape. Innovation activities are centered in Europe.
+Our Asian sites focus on efficiency and will support further growth. As an example, we suc-
+cessfully launched an additional production module in Kulim (Malaysia). This helps us ensure
+our delivery reliability, particularly important to our customers in the automotive industry.
+This means we are well prepared for further expansion in the area of electro-mobility, also
+associated with increased demand for power semiconductors.
+Another milestone in terms of manufacturing technologies is the introduction of a larger wafer
+diameter for power semiconductor manufacturing. The use of 300-millimeter thin wafer tech-
+nology provides significant advantages in productivity and reduces use of capital. However,
+the technical challenges are substantial. Infineon is as yet the only company to successfully
+complete this step. The advantages in terms of productivity will manifest themselves as soon
+as we reach 20 to 30 percent of the currently planned full capacity, a level we expect to reach
+by the end of 2017.
+Flexible go-to-market strategies accommodate rapidly changing markets
+Going forward we will address our customers with more flexibility and innovative go-to-market
+strategies. Historically, Infineon has grown through close collaboration with key customers, with
+whom we have successfully defined products that enabled us to penetrate the broad market
+thereafter. We reach many of our smaller customers through distributors. We will increase our
+leverage of the enormous potential of the distribution channel with standardized but flexible
+products for the mass market. Here we benefit from the acquisition of International Rectifier,
+which has for quite some time successfully used this model, characterized by short-term
+delivery reliability, continuous and pragmatic adjustment of the product portfolio and close
+partnership with distributors. Digitalization and the Internet of Things will create new challenges.
+From the thermostat all the way to the car, today more and more devices are connected with
+the internet and as a result offer new functionality. The manufacturers usually concentrate on
+making these devices “smart” with the best possible sensing and data processing capability.
+They are neither able nor interested in dealing with the underlying semiconductor technologies.
+We want to make our products and solutions more easily available to these vendors, for example
+through optimized product bundles and support in the form of reference designs. Here in
+particular our system understanding makes the difference. This broad sales strategy lets us
+maximize revenues with existing technologies while at the same time increasing the yield of
+our investments in research and development.
+Digitalization changes the way we work
+Digitalization does not only play a major role in our markets: The way we manufacture, develop
+and interact with markets is changing as well. Today we are already successfully adopting
+the concept of the Industrial Internet: Automation is linked to the use of big-data methods in
+operations. The computer evaluates data on over 1,000 manufacturing steps to detect atypical
+deviations and point out possible causes. This will also help us meet the high quality require-
+ments demanded by the automotive industry in the future as well, requirements which will
+become ever more stringent with each step towards autonomous driving and the associated
+necessary system reliability. Digitalization will change the way we work in all areas, be it
+logistics, at the customer site or in research and development. For example we want to
+accelerate learning and knowledge building in development, where we already make very
+extensive use of computer-based methods. This will help us keep our technological lead in
+spite of growing challenges and will let us successfully master the complexity involved in
+thinking in terms of systems.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Finances and strategy
+Finances and strategy
+Group strategy
+Financial targets underline our claim to grow
+Today Infineon is excellently positioned. We are addressing the fastest growing market segments
+and benefit from long-term megatrends. Our investments in recent years have yielded a solid
+foundation for the realization of economies of scale and scope and for increasing our profit-
+ability. As the clear number one in power semiconductors, system leader in automotive and
+leader in security solutions we achieve correspondingly high production volumes and can
+invest in retaining and expanding our technology leadership.
+Charging stations for electric vehicles
+The need for an appropriate charging infrastructure grows as electric vehicles become
+more widely adopted. A well-developed network of charging stations is another incentive for
+purchasing electric vehicles. In order to raise the level of electro-mobility acceptance, China
+has begun operation of charging stations along the country's eight most important highways,
+including the important connection between Beijing and Shanghai. By 2020 as many as
+10,000 charging stations with 120,000 charging points will be in operation, with a correspond-
+ing investment volume of approximately US$770 million. The charging stations are rated at
+up to 100 kilowatts and each one requires power semiconductors worth from US$200 to
+US$300. The network of publicly accessible charging stations can be expected to grow in other
+countries in the years to come as well. In addition to dedicated electric service stations, it is
+also possible to integrate charging stations in street lights.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Finances and strategy
+Growth drivers
+34
+28
+World market for standard IGBT
+modules in solar energy
+Combined Management Report | Our Group
+In many application areas, for example in power electronics and sensor technologies, our
+manufacturing methods and our process expertise give us a strategic advantage because we
+can offer components that can only be produced using highly demanding manufacturing
+technologies. Several years ago we were the first company in the world to develop highly-
+integrated circuits for the 77 gigahertz frequency range based on innovative silicon germanium
+technology. This cuts the cost of radar systems which as a result are used more widely in
+vehicles outside of the premium segment, making street traffic safer.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Finances and strategy
+Group strategy
+25
+system assembly enable more progress than when we concentrate only on cutting costs of
+individual products. The situation is similar for the example of silicon carbide technologies in
+photovoltaic inverters discussed above. Thinking in terms of systems characterizes all aspects
+of our entrepreneurial actions, from our differentiated manufacturing to specific sales concepts
+for dynamic sub-markets and close collaboration with customers, tailored to meet the respec-
+tive requirements. This way we want to make sure that Infineon takes optimum advantage
+of its leading position in the various markets and key technologies. Extensive resources are
+necessary in order to provide both a broad portfolio and in-depth system expertise. This means
+Infineon can offer the product with the best possible price/performance ratio for every appli-
+cation at competitive costs.
+Technology leadership means added value for customers
+Customers choose Infineon because we stand for competitive cutting edge technology in terms
+of the highest possible quality and reliability. Our engineers anticipate many challenges even
+before our customers are affected by them. We meet the highest quality requirements of the
+automotive industry, achieve the highest efficiency in power switching and deliver solutions
+for the most challenging security projects in the world. We are also capable of applying this
+specific expertise throughout the entire corporate network. As an example our barometric
+pressure sensors, which make indoor navigation possible for mobile devices, are based on the
+same technology as those used in cars for determining the optimum gasoline-air mixture.
+And beyond payment cards and government IDs, our expertise in security is in higher demand
+than ever in the age of the Internet of Things (IoT): In this area customers concentrate on opti-
+mizing the interaction of networked devices and prefer to purchase the performance feature
+"Security" as a solution that is easy to implement. Infineon recognized this trend at an early
+stage and now offers the corresponding controllers and software as well as the comprehensive
+know-how of the Infineon Security Partner Network. The network partners develop security
+solutions custom-tailored to meet the needs of individual industry sectors and markets. The
+service range covers the entire value chain, from consulting and design all the way to system
+integration and service management.
+Furthermore, we systematically expand our abilities, for example whenever the requirements
+of our markets change, or when we see long-term growth potential in a new business segment.
+Thus, as the market leader, we began researching new materials for power semiconductors
+at an early stage. Silicon carbide and gallium nitride are particularly well-suited for use in the
+field of power electronics. The planned acquisition of Wolfspeed will increase our strengths in
+this area. At the same time, in sensor technologies we intentionally moved into new territory
+some time ago, fully aware of the fact that detection of environmental data would become
+increasingly important in our target markets. Today we have a comprehensive portfolio of
+sensors for a wide range of systems in automotive applications, for mobile devices, consumer
+electronics and the Internet of Things. We have increased our share in the market for silicon
+microphones, one example of acoustic sensors, from 1.5 percent in calendar year 2007 to a
+current 31.1 percent.
+We continuously enhance our expertise in order to be able to always offer the best solution in
+every business segment. Our strategic approach "Product to System" goes beyond incremental
+continuous improvement of products and lets us leverage potential enhancements for our
+customers at the system level.
+China
+INFINEON TECHNOLOGIES
+Combined Management Report | Our Group
+Finances and strategy
+Group strategy
+26
+Innovation drives differentiation
+Innovation is one of the most fundamental success factors in the semiconductor industry
+and is for us an important basis for differentiating Infineon from competition. Infineon has
+shown time and again that our technological and product innovation lets us grow faster than
+the market and increase profitability. But challenges are growing as well: Competition is
+intensifying. Competitive coverage of the application areas in our markets calls for a wider
+and wider technology portfolio. And development efforts are increasing disproportionally
+as technologies gradually approach physical barriers. This fact underlines the significance of
+economies of scale and the connection between technology leadership and size. Previous
+concepts for success are too shortsighted under these conditions and have to be either
+expanded or rethought.
+This is why innovation and system thinking ideally complement one another. We think about
+what the key factors are and how we can combine several innovative, sometimes at first sight
+minimal steps to form a larger whole that will in turn provide an additional and substantial
+benefit for the customer. Thus today our claim to innovation covers all areas of our company:
+logistics, operations, technology, products, system solutions and partnership with the customer.
+Depending on particular market demands we focus on different aspects. Several units within
+the company act like start-ups, while others use a comprehensive approach to leverage new
+areas of differentiation. Of course in doing so we implement the entire spectrum of possibilities
+and expertise that Infineon has to offer. This is all driven by a well-developed culture of collab-
+oration which is one of our permanent differentiating features.
+The development of the 3D image sensor REAL3™ is a good example of a start-up concept. It
+all began with the idea of a highly innovative technology, without a clear specific idea of which
+applications would make best use of its potential. A team worked together with key customers
+to develop and test a variety of applications. In the meantime we have seen initial successes
+in the smartphone business and with automotive safety applications that help protect fatigued
+or distracted drivers from accidents. In the field of industrial power semiconductors we are
+following a different approach: Our MIPAQTM Pro power module addresses inverters for wind,
+solar and industrial power applications. Here our customers' requirements are clearly defined
+and we differentiate ourselves in the market by means of a combination of leading technologies,
+system understanding and security expertise. The module enables compact designs, provides
+high reliability and is also equipped with a security controller that makes it possible to
+authenticate original components.
+Strategic advantages through in-house manufacturing
+All our actions are aimed at creating value for the customer and at opening up opportunities for
+differentiation to us. This also applies to manufacturing. We manufacture in-house provided
+we can thereby differentiate ourselves from the competition in the market. On the other hand,
+when it comes to standard technologies, usually in the case of highly-integrated products
+such as microcontrollers and chipcard ICs, we primarily work with contract manufacturers. We
+thereby utilize our invested capital in the most efficient way possible and optimize our invest-
+ments in research and development.
+ANNUAL REPORT 2016
+US$ in millions
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+222
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Another important trend is the continuously rising degree of interconnection between
+vehicles. This development opens up opportunities for many new services, but also increases
+the danger of unauthorized access to systems by a third party. This means secure data
+exchange among the various on-board systems as well as with other vehicles and the infra-
+structure has to be maintained. Vehicle and personal safety on the one hand and data and
+information security on the other hand can no longer be provided independently of one
+another. The vehicle is becoming a "connected computer on wheels". The need for data and
+IT security in the vehicle will thus continue to grow. Infineon is ideally positioned to benefit
+from this trend, with decades of experience in this area in the Chip Card & Security segment.
+Networking, data and IT security
+Our components strongly contribute to supporting vehicle drivers and bringing us closer to
+autonomous driving. And the connection to the internet makes it possible to equip vehicles with
+more and more new functions and services. Once again, semiconductors play an important role.
+Actuators are also safety-critical applications. One of the most important requirements for
+partially and fully automated driving is that the system continues to work reliably even in case
+of a defect. In order to achieve this, Infineon offers ISO 26262-certified components for these
+applications with redundancy in case of failure: Safety-critical components and subsystems have
+to be highly available, i.e. protected against failure. This is why such sensors, microcontrollers
+and
+power semiconductors are deployed redundantly, also increasing the level of demand for
+semiconductors.
+The microcontrollers of our AURIXTM family ensure the reliability of the systems. In its function
+as main controller, AURIXTM sends out the commands for the actuators in automated operations.
+Furthermore, it has another key role as safety anchor in that it safeguards the components
+not qualified according to automotive industry standards.
+In spite of the constantly increasing number of vehicles on the road, the number of traffic
+fatalities in developed nations has dropped over the course of several years. More than
+anything this is the result of safety systems. Active safety systems constitute an especially large
+growth market. By directly intervening in driving actions, these systems can either completely
+prevent accidents or significantly reduce their consequences. Examples here are pedestrian
+detection, adaptive cruise control and blind spot detection. In the meantime these functions
+can be found not only in the luxury class, but also increasingly in medium-class vehicles.
+Active safety systems are then enhanced to become driver assistance systems, which are of
+increasing importance for road safety, since they provide the driver with extensive support
+while driving. For example, they assist in critical situations and help correct driving errors
+when necessary, thus reducing the risk of accidents. Systems for partial and completely auto-
+mated driving consist essentially of sensors (such as radar, interior and exterior cameras), a
+central high-performance computer (the intelligence of the system, so to speak) for evaluation
+of the sensor data and the calculation of the driving strategy, and lastly of actuators (steering,
+braking, engine control and transmission). As a leading provider of system solutions Infineon
+has an extensive product portfolio for assistance systems and automated driving.
+32
+Finances and strategy
+Combined Management Report | Our Group
+"Vision Zero" is one of the most ambitious objectives of the automotive industry: Vehicles
+are to become so safe that serious or even fatal traffic accidents no longer occur; today
+approximately 90 percent of such accidents are attributable to human error. Safety systems
+can prevent such errors or at least limit their consequences.
+"Vision Zero" and Automated Driving
+And the number of electronic applications in the vehicle itself also continues to rise, with
+approximately 90 percent of the innovations now based on electronics. According to forecasts
+by market experts, this rate will remain unchanged in the years to come. Overall, a constant
+increase in electronic equipment in vehicles can be observed across all regions. Innovative
+solutions for safety and comfort functions typically first penetrate premium-class vehicles,
+after which they are then gradually introduced in mid-range and compact classes, increasing
+the semiconductor value per vehicle.
+1 CAGR = Compound Annual Growth Rate
+Source: IHS Markit, "Annual Light Vehicle Production Forecast", August 2016
+Asia-Pacific (excl. China, excl. Japan)
+Europe
+Other countries
+North America
+CAGR¹ (2015-2020):
++9.2%
+Finances and strategy
+Growth drivers
+Growth drivers
+Average semiconductor content
+of various types of vehicles
+192
+33
+157
+164
+172
+244
+2015 2016 e 2017e 2018 e 2019 e 2020 e
+1 CAGR = Compound Annual Growth Rate
+Source: IHS Markit, "Power Semiconductor
+Intelligence Service", September 2016
+Renewable energy
+For both environmental and economic reasons it is not possible to meet the increasing need
+for electric power using fossil fuels to a similar extent as in the past. Europe, the USA, China and
+Japan have therefore defined development targets for renewable energy that will reduce CO2
+emissions in the coming decades to their respective target values. In December 2015 at the
+World Climate Conference in Paris the participating nations reached a climate protection agree-
+ment which for the first time anchors the upper limit for global warming in international law at a
+mandatory maximum of two degrees Celsius. Furthermore, greenhouse gas neutrality is to be
+achieved in the second half of this century. The agreement took effect as of November 4, 2016.
+Decarbonizing through the use of renewable energy sources is the key to a sustainable supply
+of energy. Infineon benefits from the rise in construction of wind farms and photovoltaic
+systems, since for every gigawatt of power generated these systems require many times more
+power semiconductors than the amount found in conventional power plants. In contrast to coal,
+gas or nuclear power plants, wind and photovoltaic power plants don't have turbines whose
+steady operation generates a constant 50 hertz alternating current allowing energy to be fed
+directly into the power grid. Power electronic systems are required to perform the necessary
+conversion.
+Wind: We expect steady growth in the wind energy sector in the mid- to long-term. For each
+megawatt generated, wind parks require approximately 30 times more semiconductor content
+than conventional coal-fired power plants. China and the USA are promoting wind energy.
+Furthermore, the refurbishment of older, lower-performing wind power turbines with modern,
+high-performance wind turbines, referred to as “repowering", will continue for some time.
+Stronger generators are also being used in initial installations, driving higher demand for semi-
+conductors for each wind power turbine. This development is especially evident in China, where
+we have been collaborating with the Chinese wind turbine manufacturer Goldwind since 2011.
+While in the past primarily turbines generating up to 1.5 megawatts were installed, today an
+increasing majority of turbine generators producing 2 to 3 megawatts is being used.
+Photovoltaics: The market researcher IHS Markit expects an average annual growth rate of
+9.2 percent for power semiconductor modules for solar energy until 2020. For several years
+now we have been observing a structural change resulting from the gradual migration of the
+business from Europe to Asia and the USA. Infineon enjoys a very broad international presence
+and has been partnering for years with the world's leading manufacturers of photovoltaic
+inverters. Among other things, we benefit from the growth of Chinese inverter manufacturers,
+both in terms of the expansion of photovoltaics in China itself and from the export of inverters
+to other regions. Furthermore, we are working together closely with leading European manu-
+facturers who are also very successful in the USA. Efficient conversion and low system costs help
+cut power generation costs in photovoltaic systems while helping reach grid parity in comparison
+to conventionally generated power. This makes it possible to pursue further expansion while
+eliminating the need for subsidies. The advantages of power semiconductors based on silicon
+carbide can be fully exploited in inverters. The transition to this new technology will cut system
+costs for manufacturers in the future, while the value of the semiconductors used to build the
+inverters will rise. The planned acquisition of Wolfspeed will let us accelerate this develop-
+ment and in doing so help us win further market share.
+Efficient power conversion
+Optimization of the internal combustion engine alone will not be enough in order to achieve
+defined objectives and service customer demands for sustainable mobility. Above and beyond
+this, the efficiency of electric power consumption within the vehicle will have to be improved
+and hydraulic or mechanical solutions will have to be replaced with more efficient electrical
+and therefore semiconductor-based solutions. Furthermore a rise in the number of hybrid and
+electric vehicles will be a necessity in the effort to reduce the fleet average of many vehicle
+manufacturers to the required target value. Hybrid and electric vehicles are characterized by
+significantly higher semiconductor content than conventional vehicle models. Today's solutions,
+from mild and plug-in hybrid vehicles up to completely electric vehicles, convert the battery's
+direct current into the alternating current required by the electric drive. Infineon offers a wide
+variety of power semiconductor components for these various systems. While a car with a
+conventional internal combustion engine contains an average semiconductor value of US$352,
+the value contained in an average hybrid or electric vehicle is approximately US$700. Here
+approximately three quarters of the incremental semiconductor content is accounted for by
+power semiconductors. They are the decisive factor in the high power electric drives and
+are also the key to cutting costs. Innovative system solutions and in particular the use of silicon
+carbide-based components have an enormous potential when it comes to making electric
+driving more affordable.
+in US$
+712
+704
+Internal Plug-in- Pure electric
+combustion hybrid vehicle
+engine vehicle
+352
+Source: Strategy Analytics, "Automotive Semi-
+conductor Demand Forecast 2014-2023", May 2016
+CO₂ reduction
+The automotive industry is constantly working to reduce emissions. These efforts are in part
+required by legal regulations: Thus, for example a new European Commission rule requires the
+reduction of average fleet emissions to 95 grams CO2 per kilometer by the year 2021. A lively
+discussion is currently taking place surrounding exhaust gas testing procedures under more
+realistic conditions. If the legislature should decide on regulations for new, more realistic
+testing procedures, it would implicitly mean tighter CO2 reduction rules, which would in turn
+increase the demand for semiconductors. Furthermore, today customers increasingly make
+purchase decisions while fully aware of the fact that reduced fuel consumption saves money,
+minimizes impact on health and the environment and thus contributes to improving the
+quality of life, especially in metropolitan areas.
+vehicle
+Combined Management Report | Our Group
+37
+Growth drivers
+Networking and sensor systems
+Radio-frequency power components
+Radio-frequency (RF) power components form the foundation for modern communication
+technologies. One of the main application areas is mobile communications infrastructure.
+Mobile data traffic is constantly increasing: While 5.3 exabytes (5.3 billion gigabytes) were
+transferred each month using mobile communications in the year 2015, experts expect the
+values for the year 2021 to reach 52 exabytes per month. At the beginning of the internet era
+downloading (downlink) was the prevalent data traffic direction. This has changed as a result
+of mass adoption of the smartphone and the rise of social media. Data traffic in uplink has
+risen drastically due to uploading pictures and videos as well as messaging services, making
+both directions almost symmetrical today.
+Every new mobile communication standard needs to accommodate increasing numbers of
+mobile communication subscribers as well as an exponential increase in data traffic. Cell sizes
+are shrinking, and as a result more network access nodes are being installed. The infrastructure
+for upcoming mobile communications standards such as 5G and its successors will use
+frequencies of up to 80 gigahertz. Only the most advanced compound semiconductors can
+provide the necessary output power at these high frequencies. Compound semiconductors
+based on gallium nitride-on-silicon (GaN-on-Si) offer a high degree of integration and make it
+possible to use frequencies as high as 10 gigahertz. The acquisition of International Rectifier
+approximately two years ago specifically strengthened us in this area. Semiconductors based
+on gallium nitride-on-silicon carbide (GaN-on-SiC) even make it possible to use frequencies as
+high as 80 gigahertz. The planned acquisition of Wolfspeed will expand our portfolio to
+include this future-oriented technology as well, making us the provider of the most compre-
+hensive product range and creating the foundation for us to become market leader in
+radio-frequency power components.
+Radio-frequency small-signal components
+RF components are not only required in the base stations of cellular infrastructures, but also
+in mobile devices. With every new smartphone generation more and more frequency ranges
+have to be supported. During the transition from one mobile communications standard to the
+next the requirements on signal quality and thus on the RF properties of many components
+rise. As an example, closely adjacent frequency bands require more precise frequency filters,
+more sensitive signal amplifiers and a larger number of faster antenna switches. Today's
+smartphones and tablets use our RF CMOS switches for switching between various antennas,
+among other things.
+We are currently substantially benefiting from the increasing number of LTE (Long-Term Evolu-
+tion)-capable smartphones. This fourth-generation transmission standard has a significantly
+higher level of complexity compared to the third generation (UMTS). LTE-capable smartphones
+contain more RF components with a higher degree of integration than earlier smartphone
+generations. The transition to the 5G standard will mean an increase in this complexity.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Finances and strategy
+INFINEON TECHNOLOGIES
+38
+Radio-frequency and optical sensors
+RF components play an important role in sensor technologies as well. In addition to automotive
+applications we also see a wide variety of interesting use cases in mobile devices and consumer
+electronics. For example, radar chips can be used to precisely control devices with hand
+movements. Gesture recognition technology thus opens a whole range of new possibilities
+for the interaction between humans and machines.
+On the other hand our REAL3TM image sensor chip works based on infrared light. It lets devices
+see in three dimensions using the time-of-flight principle. For each pixel the chip determines
+how long the light transmitted takes to travel from the source to the object and back again, and
+uses this data to calculate the distance to the object. Infineon is the only provider worldwide
+whose image sensor chip meets the requirements of the Google technology platform Tango. The
+technology is featured in the PHAB2 Pro smartphone from Lenovo and enables three-dimen-
+sional images of the surrounding environment. This makes it possible to represent objects in
+what is referred to as Augmented Reality. Other applications are for example alertness assistants
+and fatigue detection in partially automated driving as well as gesture recognition in vehicles.
+MEMS (Micro-Electromechanical Systems) sensors
+MEMS-based silicon microphones are our most important product family when it comes to
+sensors for mobile devices. The latest generation of mobile devices requires several differing
+microphone variants with increasingly better signal-to-noise ratios. Improved acoustic capa-
+bilities not only mean the potential to differentiate for the smartphone manufacturer, but also
+an entirely new range of possible applications for high-performance microphones. Thus for
+example additional microphones significantly improve voice control even in scenarios with high
+background noise levels and improve the acoustic quality of telephone calls. Furthermore,
+microphones fulfilling the highest technical requirements are installed next to the camera in
+order to achieve even higher audio quality for video recordings made with the smartphone.
+On top of unit growth in terms of devices and the growing number of microphones installed
+per device, we also significantly benefit from the fact that besides smartphones, tablets and
+notebook computers are also switching to silicon microphones. And entirely new device classes
+are emerging as potential application areas, including for example headphones featuring
+active noise cancellation.
+At the same time devices are being designed to include more and more functions that require
+detection of additional physical parameters. This further drives demand for new sensors.
+Barometric pressure sensors support new functions such as indoor navigation in high-rise
+buildings and shopping centers. Gas sensors can monitor air quality: An appropriately equipped
+smartphone could for example warn the user of potentially harmful smog levels. We see
+enormous growth opportunities in the application areas of consumer electronics, automotive
+electronics and the Internet of Things.
+Security
+There are two fundamental application areas for our security controllers: Classic applications
+such as payment cards, government IDs and public transportation tickets on the one hand,
+and on the other the rapidly growing field referred to as embedded security applications. This
+includes for example making mobile payment transactions secure, preventing the manipula-
+tion of computers and the authentication of connected devices. Here in particular the Internet
+of Things with all its facets promises long-term growth potential.
+ANNUAL REPORT 2016
+Finances and strategy
+Growth drivers
+Combined Management Report | Our Group
+Finances and strategy
+INFINEON TECHNOLOGIES
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Growth drivers
+35
+Traction systems
+One of the key topics of the 21st century is sustainable and optimally connected mobility
+within urban metropolitan areas as well as mobility between cities. Today reliable and fast
+public transportation is more important than ever for the quality of life and competitiveness
+of many regions and cities around the world. Our components are used both in local public
+transportation trains, subway trains and trams as well as in high-speed trains.
+By now China has become the largest railway vehicle market in the world. Here in particular
+high-speed trains, overland trains and urban rail play a major role. We also expect a more
+vibrant market for traction systems in the rest of Asia. Here industrialization is leading to rising
+demand in particular for urban and regional rail systems. Further growth markets are South
+Africa, South America, the Middle East and most probably in the future the USA. Our customers
+are the world's largest manufacturers in the traction sector, including Bombardier Transportation,
+China's CRRC and Siemens.
+Automation
+Industrial motors are at the heart of a large number of systems, for example cranes, conveyor
+belts and robots. They are used wherever objects need to be moved or transported. Electric
+motors are also used in refrigeration pumps and air conditioning and the simple production of
+compressed air. The strongest industrial electric drives are found in sluices, cement mills,
+pumps in municipal waterworks, in air compressors used in the production of technical gases
+and in compressors for natural gas pipelines. Approximately 300 million electric motors have
+been installed around the world in industrial applications alone, accounting for approximately
+two thirds of commercially consumed electric power. This constitutes a substantial lever when
+it comes to savings resulting from improvements in the degree of efficiency. One possibility
+to reduce the energy consumed by an electric motor is to use an electronic control system to
+regulate speed, i.e. adapting performance to suit current needs. The market penetration of
+speed-regulating motor controls can thus be expected to increase. Modern manufacturing
+facilities in which constant adjustment of rotation speed is necessary are not even possible
+without regulated electric motors. The next level of automation will be achieved with the
+Industrial Internet, which will give rise to a new investment cycle. At present only around
+15 percent of the electric drives in use are controlled electronically. This is good news for
+Infineon: The realization of a speed-controlled motor unit requires a large number of the power
+semiconductors we provide to the market. Their number and value depend on the performance
+class of the motor.
+Brushless DC motors
+One important model type of electric drives is referred to as the brushless direct current motor
+(BLDC motor). In BLDC motors commutation is electronic; depending on the rotor position,
+rotor rotation speed and torque. Rotor position and rotation speed can for example be detected
+using sensors (e.g. magnetic field sensors). The windings that generate the torque on the rotor
+are controlled via power semiconductors based on this position information. The electronic
+commutation avoids losses in BLDC motors, in contrast to motors with brush-based commuta-
+tion. Because of their high energy efficiency and their low weight to power ratio, brushless
+direct current motors are frequently used among other things in battery-operated systems.
+Power tools: Millions of households around the world rely on cordless power tools when
+making repairs. Since the end customer expects robust and reliable portable tools, the purchase
+decision is based not only on price, but especially on ease of use and long battery life. Battery-
+operated power tools also have to be equipped with diagnostic and safety functions in order
+to create user confidence in the application through quality and safety. The demand for suitable
+semiconductor solutions is correspondingly high.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Finances and strategy
+Growth drivers
+36
+Multicopters are finding increasing
+use for commercial purposes and
+require a large number of various
+semiconductor components
+Multicopters: Multicopters represent a relatively new application area with very large growth
+potential. The popularity of these remote-controlled aircraft has long grown beyond the ranks
+of hobby pilots, finding increasing utilization in commercial applications. Initial tests with
+delivery drones have already been conducted, focusing on use not only for parcel delivery but
+also for time-critical transportation of medication. In agriculture multicopters are already
+being used to monitor farm land. Multicopters require a large number of semiconductors for
+controlling their direct current motors, from microcontrollers to sensors and MOSFET power
+transistors, all the way to radio-frequency components for navigation, collision avoidance and
+communication.
+Major home appliances
+More and more manufacturers are switching to controlled motors in order to increase the
+efficiency of their products, whether because of stricter efficiency regulations or to be able
+to offer the consumer more efficient devices with lower noise emissions and longer service
+lives. Applications in which a motor could only be switched on or off in the past are now
+making way for systems in which motor controls ensure load-driven speed control. Application
+examples here are washing machine and dishwasher motors, refrigerator compressors and
+air conditioner fans. The underlying principle is simple: In order for a device to function
+efficiently, sensors constantly measure data, e.g. the temperature, air humidity and motor
+rotation speed of a refrigerator. A microcontroller then uses this data to calculate the optimum
+rotation speed. Power semiconductors amplify the control signals from the microcontroller
+and form the interface to the motor.
+Power supplies
+Power supplies for electric equipment essentially consist of two stages. First the power unit
+converts the alternating current (AC) from the grid into direct current (DC), referred to as
+AC-DC conversion. In a second step this direct current is precisely converted directly at the
+point of load to suit the respective requirements, for example for the processor of a server.
+This second step is referred to as DC-DC conversion.
+AC-DC conversion: Growth in the power supply sector depends on the performance and even
+more so on the unit growth of the devices. In addition to smartphones, for several years the
+highest unit growth has been found in the area of computer servers, a situation not expected
+to change in the foreseeable future. This is a result of the installation and expansion of data
+centers and cloud solutions for storing data of all types in the internet. The high demand here
+also means corresponding demand for the power semiconductors used in the associated
+power supplies. Demand for computing power and storage capacity is currently being driven
+by social networks; going forward the primary driver will be the Internet of Things and the
+Industrial Internet. Furthermore we expect growth opportunities in business with compact
+chargers for tablets and lightweight notebooks (also called portables). However, we do not
+expect growth associated with PCs and notebook computers in the upcoming years.
+DC-DC conversion: In the field of DC-DC conversion, intelligent point-of-load power manage-
+ment is becoming increasingly important. Servers, PCs and communication devices are
+supplied with higher voltages, which are then stepped down to the voltages needed directly
+at the processor. This is more practical, since as a rule a large number of different voltages
+is needed, while on the other hand direct supply with a lower voltage and high performance is
+technically not possible. The performance requirements of a processor range from a just few
+watts to over 100 watts. An additional growth driver is the digitalization of the control loop.
+The requirements regarding dynamic, efficiency levels and standby consumption are continu-
+ously growing. Analog control loops are increasingly meeting their limitations and are being
+replaced with digital systems.
+ANNUAL REPORT 2016
+Finances and strategy
+Development of Segment Result
+39
+2016
+Segment Result
+In the 2016 fiscal year business with components for renewable energy sources developed
+particularly well. During this period, wind power turbines with Infineon technology were
+installed around the world, totaling a capacity of more than 23 gigawatts. We have also been
+highly successful with a module series especially designed for the challenging conditions in
+wind turbines. It combines our PrimePACK™ packaging technology with IGBT5 power transis-
+tors and the new .XT interconnection technology, making the module particularly efficient,
+compact and durable. Fully in line with our strategic "Product to System" approach they also
+cut system costs for our customers while increasing the value of the built-in semiconductors.
+Also the leading manufacturers of photovoltaic inverters rely on our application understanding
+and our outstanding technologies. The strengths of power semiconductors based on silicon
+carbide (SiC) can be particularly well exploited in this market. Today we already offer SiC
+diodes and hybrid modules; we have also announced a SiC MOSFET. The planned acquisition
+of Wolfspeed will enable us to accelerate the trend towards SiC-based power semiconductors
+and will further strengthen our competitive position in the market.
+We also benefit from the growing electrification of commercial and agricultural vehicles, where
+electronic components are subjected to strong temperature fluctuations, heavy vibrations and
+dirt. In addition to efficiency and power density, in this market the ruggedness and reliability
+of our components are also strong and compelling sales arguments for our customers. The
+same is true for hybrid and electric busses. For example, several tens of thousands of electric
+busses are already driving on the streets of China with modules from Infineon, and the number
+continues to grow.
+Revenue development
+The Industrial Power Control segment generated revenues totaling €1,073 million in the
+2016 fiscal year, an increase of 11 percent compared to €971 million in the previous year. The
+segment contributed 16 percent of Group revenue.
+The revenue increase was primarily driven by renewable energies. The worldwide increase
+in wind and photovoltaic power capacities continued. The development targets of several
+important countries such as China, the USA or India drove the increased demand. The dispro-
+portionally high growth rates of recent years in this area also led to a change of revenue
+distribution by end-markets. In the meantime renewable energies account for approximately
+one fifth of the segment's revenues.
+The segment also benefited from the rise of electro-mobility. Revenue from IGBT modules
+for hybrid and electric busses increased significantly, in particular with Chinese customers. In
+other areas,
+such as drives and traction systems as well as in natural gas and oil production,
+we saw flat or slightly declining demand. Furthermore, for the first time International Rectifier
+contributed to revenue throughout the entire 2016 fiscal year, compared with only about eight
+and a half months in the previous year.
+In the first half of the 2016 fiscal year, the major home appliance business was characterized
+by weakness due to inventories held by Chinese customers. Outside of China demand was
+satisfying, especially in Korea. Nevertheless, the year-on-year growth rate turned out to be
+disproportionately high. As a result major home appliances became the third largest business
+of the segment.
+Development of Segment Result
+The Segment Result totaled €126 million, an increase of 10 percent compared to the previous
+year's figure of €115 million. The Segment Result Margin stood at 11.7 percent (previous year:
+11.8 percent) of revenue.
+The Segment Result was positively influenced by higher revenues. This was partly offset by
+currency effects and temporary ramp-up costs for the new frontend manufacturing facility
+Kulim 2 (Malaysia).
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+The segments
+Industrial Power Control | Power Management & Multimarket
+44
+Charging stations for
+electric vehicles
+Energy transmission
+> FACTS (Flexible AC
+Transmission Systems)
+> Offshore wind farm
+HVDC lines
+Applications
+126
+Home appliances
+> Air conditioners
+› Dishwashers
+2015
+971
+7.0%
+Market position
+In spite of the strong growth in the still relatively small application areas of driver assistance
+systems and electro-mobility and the overall rise in demand for automotive semiconductors,
+in the 2015 calendar year the world market shrank slightly by 0.6 percent to US$27.363 billion,
+down from US$27.537 billion in the 2014 calendar year (source: Strategy Analytics). The reasons
+were essentially currency effects (on the one hand the strengthening of the Yen to the US dollar
+and on the other hand the strengthening of the Euro to the US dollar). There were major
+differences in growth rates in the individual regions. The markets in North America, Europe
+and Korea developed uniformly and declined by 2 to 3 percent. However, the market in Japan
+shrank by 11.2 percent, dropping behind the Chinese market. The market in China itself grew
+by 17.0 percent and has become the third largest market in the world for the first time.
+Renesas lost 1.7 percentage points of market share, dropping behind Infineon. However, the
+NXP acquisition of Freescale created a new number 1. This meant that Infineon maintained
+the number 2 position with a market share of 10.4 percent (previous year: 10.5 percent). The
+five largest competitors together held 49.6 percent of the market.
+In terms of power semiconductors for automotive applications, Infineon was able to strengthen
+its number 1 position by 0.4 percentage points to reach a market share of 25.2 percent. For
+microcontrollers Infineon remained in third place with an almost unchanged market share of
+8.6 percent (previous year: 8.7 percent). In sensors Infineon gained 0.4 percentage points of
+market share to reach 11.9 percent, strengthening its number 2 position. Infineon is not present
+or hardly present in the remaining product categories, including among other things memory,
+optical components and analog ICs not related to power semiconductors.
+REVENUE
+€1,073 million
+SEGMENT RESULT
+€126 million
+Industrial Power Control
+The Industrial Power Control segment in the 2016 fiscal year
+The core competence of the Industrial Power Control segment is the conversion of electrical
+energy for medium to high power performance. Applications range from the refrigerator, with a
+few hundred watts, all the way to natural gas compressors with as much as 50 megawatts. The
+product portfolio includes discrete IGBTs, IGBT modules, drivers and controllers as well as their
+combination in so-called Intelligent Power Modules (IPMs) or pre-fabricated stack units. Infineon
+is the world market leader for IGBT-based power semiconductors (discretes and modules).
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+The segments
+Industrial Power Control
+43
+The PrimePACKTM module series
+is especially configured for the
+demanding conditions found in
+wind power turbines
+1
+44
+Revenue and Segment Result of the
+Industrial Power Control segment
+€ in millions
+Revenue
+1,073
+115
+> Induction cookers
+> Microwave ovens
+> Refrigerators
+20.6%
+Fuji Electric
+12.5%
+Semikron
+Fairchild
+7.6%
+4.9%
+Market position
+The world market for IGBT-based power semiconductors - discrete IGBT power semiconductors
+and IGBT modules - reached US$3.944 billion in the 2015 calendar year, a decline of 11.8 percent
+compared to the previous year value of US$4.473 billion (source: IHS Markit). Infineon was
+able to increase its market share from 26.5 percent in the previous year to 27.6 percent in the
+2015 calendar year and increased the distance to the number 2 in the market to 7.0 percentage
+points (previous year: 4.9 percentage points). The five largest competitors together held
+73.2 percent of the market.
+Source: IHS Markit, "Power Semiconductor Discretes
+& Modules Report", October 2016
+REVENUE
+€2,050 million
+SEGMENT RESULT
+€328 million
+The 800 Volt CoolMOST P7 series
+is optimized with regard to
+efficiency, ease of application
+and system costs
+Infineon
+TO-247
+CoolMOST P7
+800V
+Power Management & Multimarket
+The Power Management & Multimarket segment
+in the 2016 fiscal year
+The Power Management & Multimarket segment includes business with power semiconductors
+for power supplies, components for cellular infrastructure and mobile devices as well as
+high-reliability components for applications in harsh environments.
+Infineon is the clear number one in the global MOSFET market. Based on leading base tech-
+nologies, we offer a broad product portfolio including drivers, controllers and MOSFET power
+transistors for low-voltage (up to 40 volts), mid-range (from 40 volts up to 500 volts) and
+high-voltage applications (over 500 volts). Our products set the standard for the two central
+requirements of the market: conversion efficiency and power density. One important field of
+application in the low-voltage range is power supplies for servers. We are excellently positioned
+here with our system solution for digital DC voltage regulation. It includes an integrated power
+stage as well as digital controllers which comply with the standard specifications (VR12.5,
+VR13) and which are used together with our OptiMOS™ power transistors by the leading server
+manufacturers. Our highly successful CoolMOS™ family for high voltages is typically used in
+AC-DC power supplies. In the previous fiscal year we expanded our portfolio to include a variant
+with an optimized price/performance ratio for the mass market (800 volt CoolMOSTM P7) and a
+derivative for high-end applications (CoolMOSTM C7 Gold). These are just two of many examples
+for the extensive breadth of our portfolio, ranging from standard products to highly developed
+and differentiating components.
+Mitsubishi
+27.6%
+Infineon
+World IGBT-based power
+semiconductor market share 2015
+> Washing machines
+1 Including motors, compressors, pumps and fans.
+Industrial drives¹
+> Air conditioning technology
+> Automation technology
+› Drives
+> Elevator systems
+> Escalators
+> Materials handling
+> Robotics
+> Rolling mills
+7.7%
+Industrial vehicles
+› Construction vehicles
+> Forklifts
+> Hybrid busses
+Renewable energy
+generation
+> Photovoltaic systems
+> Wind power turbines
+Traction
+> High-speed trains
+> Locomotives
+› Metro trains
+› Trams
+Uninterruptable
+power supplies
+> Agricultural vehicles
+Growth drivers
+10.3%
+14.2%
+The Automotive segment in the 2016 fiscal year
+Infineon is the leading provider of system solutions for automotive electronics, with over
+40 years of experience and the industry's most comprehensive portfolio of power semi-
+conductors, sensors and microcontrollers. Following the guiding principle of "clean, safe
+and smart" the Automotive segment addresses the industry's current megatrends: Electro-
+mobility, automated driving as well as connectivity and advanced security. Our profound
+system understanding helps car manufacturers in their efforts to reduce CO2 emissions
+and to avoid accidents. Electro-mobility and automated driving increase the semiconductor
+bill-of-material per vehicle and are expected to account for 50 percent of our growth in
+Automotive on a 5-years horizon. Infineon is the only semiconductor manufacturer to benefit
+from both of these megatrends.
+Over the last two years the market for electric vehicles has finally reached the tipping point
+and gained considerable momentum. In China alone production tripled in calendar year 2015
+to approximately 340,000 units. Long treated as a vision of the distant future, electro-mobility
+has now reached a significant market size. Today's hybrid and electric vehicles contain an
+average semiconductor bill-of-material of approximately US$700, more than twice as much
+as cars with internal combustion engines. Hybrid vehicles have to accommodate a compact
+and high-performance inverter in the already crowded motor compartment. In the previous
+fiscal year we introduced the HybridPACK™ DSC (double sided cooling) module, reducing the
+size and weight of the inverter by approximately 60 percent compared to previous solutions
+while maintaining the same performance levels. We therefore expect a lot of interest from
+car manufacturers. Power semiconductors based on silicon carbide will enable even more
+compact inverters and on-board chargers in the future. The planned acquisition of Wolfspeed
+will significantly strengthen our portfolio in this area.
+Advanced Driver Assistance Systems (ADAS) support the driver with the increasingly complex
+task of driving: While passive systems such as seatbelt tensioners and airbags reduce the impact
+of a possible collision, active systems such as emergency braking assistants even intervene
+independently in the driving process to prevent collisions altogether. The next level is cars that
+drive autonomously - first only in certain environments, later on completely without a driver.
+The first models that can park automatically are already on the market. Infineon offers a
+comprehensive product portfolio for driver assistance systems. In addition to our sensors and
+power semiconductors, our AURIX™ microcontrollers are being used more and more frequently
+in ADAS applications.
+Another important trend is that vehicles are getting more and more connected. This enables
+many new services, while entailing the danger of unauthorized access by third parties.
+The exchange of data among the various on-board systems as well as with other vehicles and
+infrastructures has therefore to be secured. We offer the right solutions for a secure vehicle
+architecture with our IT security expertise and the chips from our Chip Card & Security segment.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+The segments
+Automotive
+41
+Revenue and Segment Result
+of the Automotive segment
+€ in millions
+Revenue
+2,651
+2,350
+331
+396
+2015
+2016
+Segment Result
+Revenue development
+Automotive
+The Automotive segment generated revenues totaling €2,651 million in the 2016 fiscal year, an
+increase of 13 percent on the previous year's figure of €2,350 million. The segment contributed
+41 percent of Group revenue.
+FF4DOROTA01E3 56
+is ideal for use in main inverters
+and generators for hybrid and
+electric vehicles
+Contactless payment with a ring:
+A security controller from Infineon,
+including antenna, is built into
+the ring
+Government identification documents
+Government IDs include passports, national identity cards and in the broader sense driver's
+licenses and health care cards. These documents are increasingly being equipped with security
+chips. The market penetration of chip-based official government documents is steadily on
+the rise. More and more countries are making the transition to the chip-based documents
+or increasing the range of such documents in use. Infineon is the leading provider of security
+solutions for ID projects in Europe. Furthermore, according to the US Government Publishing
+Office (US GPO) Infineon is one of the main suppliers for the security technologies used in
+electronic passports in the USA. Infineon has been supplying the US GPO since the beginning
+of the project in 2005.
+Security for mobile devices
+Today payment services can be integrated in mobile devices thanks to the development of
+smartphones and wearables, the mobile internet and Near Field Communication (NFC)
+technologies. However, cash-free payment is only one of the many mobile device functions
+involving the storage and processing of sensitive information. For example, people are experi-
+encing new forms of comfort when travelling on public transportation with mobile tickets
+instead of using coins and physical tickets.
+Infineon supplies the security chip, known as the Secure Element (SE), for all these applications.
+The SE can either be built into the smartphone (referred to as "embedded SE"), integrated in
+a SIM/UICC card or located on a microSD card. Infineon offers the necessary solutions for all
+three alternatives.
+Security for the Internet of Things
+The Internet of Things refers to devices and machines connected to the internet, thus enabling
+data exchange and device control (for example home appliances, electricity meters, sensors,
+webcams). The trend towards increased levels of networking is having the greatest impact in
+the areas automotive, Industrial Internet, Smart Home and information and communications
+infrastructure. Here security plays a decisive role. The increasing number of hacking attacks
+underlines the importance of the appropriate precautions. In order to secure electronic systems,
+it is important that only authorized devices are connected with one another so that they can
+be protected against data manipulation and cyberattacks. Security thus has to be ensured at as
+many critical end-points as possible, often referred to in this context as the topic of embedded
+security. Infineon supplies the OPTIGA™ product family of various security chips and security
+solutions for authentication of electronic systems: From complex IT infrastructures with large
+numbers of servers and computers all the way down to tablets such as the Microsoft Surface
+Pro 4 or routers such as the Google OnHub.
+Security as cross-segment expertise
+Infineon uses its access and the relationship to its customers to market security products and
+offer them in combination with other components as system solutions. We see our opportu-
+nity in this area in the field of hardware-based security in the form we offer with our security
+controllers - either as an individual component or in the form of a feature integrated in our
+automotive or industrial microcontrollers: Our hardware-based security solutions have put us
+in the lead position. Furthermore we can offer to our customers the broad expertise of the
+Infineon Security Partner Network, covering the entire value chain from consulting and design
+all the way to system integration and service management.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+The segments
+Automotive
+The segments
+40
+40
+REVENUE
+€2,651 million
+SEGMENT RESULT
+€396 million
+The power module Hybrid PACK™
+DSC (double sided cooling)
+Infineon
+10.4%
+As in the previous year, the megatrends electro-mobility and automated driving were key
+growth drivers in the 2016 fiscal year. Furthermore, for the first time International Rectifier
+contributed to revenue throughout the entire 2016 fiscal year instead of only approximately
+eight and a half months in the previous year.
+The ever increasing penetration of driver assistance systems for automated driving led to an
+increase in demand for our radar sensor ICs and our AURIX™ family 32-bit multi-core micro-
+controllers. Design-wins secured in previous years in the areas of active safety systems as well
+as for camera-based driver assistance systems resulted in a significant revenue increase for
+AURIX™ microcontrollers in the 2016 fiscal year.
+> Hatchback
+> Lighting
+> Power window
+> Steering
+> Lane departure warning system
+› Sunroof
+> Tire pressure monitoring system
+> Suspension
+> Windshield wipers
+› Generator control
+> Start-stop system
+> Transmission control
+manipulation (e.g. odometer)
+> Protection against
+software manipulation
+World automotive semiconductor
+market share 2015
+NXP
+Infineon
+Renesas
+STMicro-
+electronics
+Texas
+Instruments
+Source: Strategy Analytics, "Automotive Semi-
+conductor Vendor Market Shares", April 2016
+> Electronic stability control
+Worldwide demand for hybrid and electric vehicles soared. This was especially true in China,
+which has in the meantime become the world's largest market for electro-mobility. Another
+record-breaking year for production and sales is expected for the 2016 calendar year for vehicles
+with plug-in hybrid or pure electric drives.
+> Electronic power steering
+> Distance warning systems
+The increasing demand for radar sensor ICs was due on the one hand to the increasing market
+penetration of radar-based driver assistance systems and on the other hand to the higher
+number of radar sensors per vehicle. In particular our 77 gigahertz radar solutions for driver
+assistance systems were in very high demand. At present Infineon is the leading supplier to
+the most important manufacturers of radar systems in the Europe, North America and Asia
+regions. As a result of the rising demand for 77 gigahertz radar sensor ICs, we sold more than
+12 million units in the completed fiscal year and thus about the same number compared with
+the two preceding years taken together. In order to be able to continue meeting these rising
+demands in the future, expansion of the frontend manufacturing capacities has begun for this
+product in Regensburg (Germany).
+Sales figures for the vehicle markets in Europe, North America and China were up. The high
+demand for vehicles in the upper middle class, in particular sports utility vehicles (SUVs)
+continued globally. This vehicle type is characterized by a comparably high level of additional
+features for safety and comfort functions. Furthermore, vehicles from German car manufac-
+turers, in particular premium class vehicles, were in particularly high demand in all regions.
+The Segment Result totaled €396 million, an increase of 20 percent to the previous year's figure
+of €331 million. The Segment Result Margin stood at 14.9 percent (previous year: 14.1 percent)
+of revenue.
+The Segment Result was positively influenced by higher revenues. In addition, improved
+productivity, in particular in the second half of the 2016 fiscal year, helped increase the
+Segment Result Margin. However, this was partly offset by temporary ramp-up costs for the
+new frontend manufacturing facility Kulim 2 (Malaysia).
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+The segments
+Automotive Industrial Power Control
+42
+Assistance and safety systems
+> Airbag
+> Electronic chassis control
+> Anti-blocking system
+> Automatic parking
+Applications
+Comfort electronics
+> Air conditioning
+> Door electronics
+> Electronic control units
+> Electronic seat adjustment
+Powertrain
+› Battery charging control
+› Battery management
+> Combustion engine control
+> Electric motor control
+Security
+> Communication (car-to-car,
+car-to-infrastructure)
+> Digital tachograph
+> Original spare parts
+authentication
+EFFE
+› Blind spot detection
+> Protection against hardware
+Another indication of the innovation power and long-term competitiveness of Infineon is the
+number and quality of our patents. In the 2016 fiscal year we applied for approximately 2,000
+patents worldwide, compared to approximately 2,200 patent applications in the previous year.
+At the end of the 2016 fiscal year the worldwide patent portfolio consisted of approximately
+27,000 patents and patent applications (previous year: approximately 25,000 patents and patent
+applications). The planned acquisition of Wolfspeed will add approximately 2,000 patents and
+patent applications.
+Patents
+for microcontrollers, ASICS, sensors
+and chip card ICs
+After the payment card business benefited extraordinarily strongly from the delivery of chip-
+based credit cards in the USA and China in the 2015 fiscal year with an increase of approxi-
+mately 50 percent, this business was expected to decelerate in the 2016 fiscal year. It showed,
+therefore, growth only in the high single-digit range. After the initial roll-out phase, now the
+replacement phase will begin, as is typical for the payment cards market.
+48
+Chip Card & Security
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Compared with the 2015 fiscal year, in which almost all business segments contributed to
+revenue growth, individual business segments developed quite differently during the previous
+fiscal year. The largest contribution to revenue growth came from business with government
+IDs. We were also able to win new projects in Europe, Asia and South America.
+The Chip Card & Security segment generated revenues totaling €698 million in the 2016 fiscal
+year, an increase of 5 percent compared to the previous year's figure of €665 million. The
+segment contributed 11 percent of Group revenue.
+Revenue development
+The continuous evolution of the Internet of Things makes security functions embedded in
+connected devices more and more important. Embedded security is used to secure mobile
+devices such as laptop computers, tablets and wearables, as well as securing information and
+communication infrastructures, industrial facilities and connected vehicles. Awareness of the
+need for hardware-based security technologies is continuously growing in this area. Solutions
+which are easy to implement, such as our successful OPTIGA™ TPM chip, are particularly
+attractive to our customers. Furthermore we provide support in the certification of security
+solutions, provide reference designs and offer software that is closely related to our security
+controllers (for example firmware, driver software and hardware-related application software).
+With these services we reduce the development costs of our customers and accelerate the
+market launch of their products.
+The main challenge in many application areas is realizing the highest possible level of security
+while using the least amount of space. Here we have an excellent position: This summer
+the company NFC Ring presented a ring with a contactless payment function using a security
+controller from Infineon. It communicates with the payment terminal in a matter of milliseconds
+using a tiny antenna and initiates the secure payment transaction while using encryption
+procedures. The ring can be used for payment in the same manner as a chip-based credit card
+but is much more convenient. Infineon is the world's first and as of yet only semiconductor
+company to fulfill the requirements of the international EMV (Europay International, Master-
+Card and VISA) standard.
+Traditional application areas include payment cards, electronic government IDs, SIM cards
+for mobile communication and ticketing solutions. Particularly the business with government
+IDs continued to grow during the previous fiscal year. In Europe we supply around 70 percent
+of all ID document projects. We not only won further business in Europe but also in Asia and
+South America. We are also successful in smaller and regional security projects by which we
+further diversified our customer portfolio. During the summer, the operators of the Korean
+civilian airports KAC (Korea Airports Corporation) began to implement a new building access
+control system for example. Airports are among the best protected premises in the world,
+therefore security requirements are particularly high. The solution now being implemented is
+based on the open CIPURSE™ security standard; Infineon supplies the chips for the employee IDs.
+The project is another milestone on the road to establishing CIPURSE™, after two major cities
+in Europe and South America have started using the standard for their public transportation
+ticketing systems. Infineon provided crucial support in the development and introduction of
+CIPURSE™ as we are convinced of the advantages of open standards.
+The Chip Card & Security segment has around 30 years of experience with the largest and
+most demanding security projects in the world. As a leading provider of security solutions
+we address the classic smart-card applications, while also offering solutions for embedded
+security within larger electronic systems.
+The Chip Card & Security segment in the 2016 fiscal year
+Chip Card & Security
+Segment Result
+2016
+2015
+135
+126
+665
+698
+Revenue
+€ in millions
+of the Chip Card & Security segment
+Revenue and Segment Result
+With the advent of the Internet
+of Things, the awareness of the
+need for hardware-based security
+technologies for connected
+systems is continuously rising
+High-end SIM cards with mobile payment functionality benefited in the 2015 fiscal year from
+the market launch of several very successful smartphones. There was no such special effect
+in the 2016 fiscal year. In the same manner, in the Pay TV business, typically characterized by
+project business, major projects also ended with the 2015 fiscal year. Thus, there was a
+decline in revenue in the 2016 fiscal year compared to the previous year.
+However, demand for notebooks and tablets containing our TPM (Trusted Platform Module)
+chip was very positive. Also demand from smartphones and smartwatches for our embedded
+Secure Element (eSE) security chips was strong. Overall, we expect the highest long-term growth
+rates in the area of embedded security, which includes authentication solutions in addition
+to the two other applications mentioned above.
+Development of Segment Result
+The Segment Result totaled €135 million, an increase of 7 percent on the previous year's figure
+of €126 million. The Segment Result Margin stood at 19.3 percent (previous year: 18.9 percent),
+the highest profitability of this segment since the inception of the company. The Segment Result
+improved with higher revenues which was partly offset by currency effects.
+> Mobile payment
+> Machine-to-machine
+communication
+› Conventional SIM cards
+> High-end SIM cards
+Mobile communications
+> Smart Home
+> IT
+(Industry 4.0)
+Healthcare cards
+› Passports
+> National identity cards
+> Driver's licenses
+> Industrial Internet
+> Credit/debit cards
+SEGMENT RESULT
+€135 million
+> Connected driving
+Government identification
+documents
+Payment systems
+(e.g. odometer, digital tachograph)
+> Protection against manipulation
+> Electronic toll collection
+› Connected vehicles (e.g. eCall,
+car-to-car, car-to-infrastructure)
+Automotive
+› Spare parts
+> Industrial control systems
+› Game consoles
+› Accessories
+Authentication
+Applications
+Internet of Things
+REVENUE
+€698 million
+47
+Chip Card & Security
+Fairchild
+Infineon
+World standard power MOSFET
+market share 2015
+› Base stations
+Cellular infrastructure
+> Tablets
+> Smartphones
+> Navigation devices
+› Activity trackers
+Mobile devices
+> Tablets
+> Smartphones
+> Servers
+Renesas
+> PCs and notebooks
+> Home appliances
+› Consumer electronics
+Power management
+LED and conventional
+lighting systems
+> Submarine telecommunications
+› Space systems
+> Oil and natural gas exploration
+> Defense technologies
+> Commercial aviation
+HiRel
+Applications
+The Segment Result increased with higher revenues. This was largely offset by higher operating
+expenses, especially for research and development, as well as by temporary ramp-up costs
+for the new frontend manufacturing facility Kulim 2 (Malaysia), impacting the Segment Result
+margin negatively.
+The Segment Result totaled €328 million, an increase of 2 percent compared to the previous
+year's figure of €323 million. The Segment Result Margin was 16.0 percent (previous year:
+18.0 percent) of revenue.
+> IT and telecom
+> NFC-based contactless
+payment
+STMicro-
+Toshiba
+The segments
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+July 2016
+Source: ABI Research, "RF Power Semiconductors",
+3.6%
+8.1%
+10.6%
+24.1%
+34.8%
+Wolfspeed
+Sumitomo
+electronics
+Infineon
+NXP
+The world market for radio-frequency power transistors reached US$1.513 billion in calendar
+year 2015 (source: market research firm ABI Research. A comparison with the previous year
+was not available, since no market study was conducted for calendar year 2014). With a market
+share of 10.6 percent Infineon was in third place in the market (no specification available
+regarding the previous year). The five largest competitors together accounted for an 81.2 percent
+market share.
+Radio-frequency power transistors
+The world market for standard MOSFET power transistors (low-voltage and high-voltage
+MOSFETs) reached US$5.484 billion in the 2015 calendar year, an 8.8 percent decline compared
+to the previous year's value of US$6.012 billion (source: IHS Markit). With a 26.4 percent market
+share Infineon continues to be the clear market leader (previous year: 25.3 percent). The
+distance to number 2 was 16.9 percentage points (previous year: 14.1 percentage points).
+The five largest competitors together held 60.1 percent of the market.
+Standard MOSFET power transistors
+Market position
+World RF power semiconductors
+market share 2015
+Source: IHS Markit, "Power Semiconductor Discretes
+& Modules Report", October 2016
+7.3%
+8.0%
+8.9%
+9.5%
+26.4%
+Ampleon
+Development of the Segment Result
+Secure NFC transactions
+World microcontroller-based
+- Analog and mixed-signal components
+Radio-frequency
+FE
+- Technology development for sensors
+- Competence center for preassembly and
+package development
+sales
+- Power electronics
+Pavia
+- IC, software and system development
+- Design flow and library development
+headquarters, sales - Technology integration
+- Hitex software development tools
+for embedded systems
+sales
+-System-on-chip development
+- Power semiconductors
+Neu-Isenburg
+Regensburg
+near Munich
+Neubiberg
+Hanover
+sales
+Karlsruhe
+distribution center
+Groẞostheim
+sales
+Erlangen
+sales
+Duisburg
+- Power semiconductors
+BE -Chip card modules
+- Power semiconductors
+- Sensors
+sales
+Milan
+Italy
+sales
+Dublin
+Ireland
+- Package pathfinding
+- Package concept development
+- Microcontroller systems for automotive
+applications
+sales
+Research and Development
+Function
+Hungary
+Cegléd
+- 200 mm and 300 mm manufacturing
+Newport
+Reigate
+Great Britain
+50
+Combined Management Report | Our Group
+Locations
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+49
+GRI G4-17
+- Assembly and package technology for
+IGBT modules
+- IGBT modules
+BE
+- Product development IGBT modules
+sales
+Warstein
+Bristol
+FE
+- CMOS derivative technologies for RF
+and sensors, among others
+Dresden
+- Power semiconductors
+- Sensor products
+- Chip card applications
+FE
+Research and Development
+Function
+Graz
+Austria
+Europe
+Locations
+Combined Management Report | Our Group
+Locations
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Infineon grew the fastest among all other market participants and was able to acquire 1.1 per-
+centage points of market share. The distance to the market leader was reduced to 5.7 percentage
+points (previous year: 7.0 percentage points). The five largest competitors together held
+97.0 percent of the market.
+Klagenfurt
+The world market for microcontroller-based chipcard ICs includes contact-based and contact-
+less ICs for applications in SIM cards, payment cards, government IDs, access control, transport
+as well as machine-to-machine communication. This market grew by 2.6 percent in the 2015
+calendar year,
+from US$2.65 billion in the 2014 calendar year to US$2.72 billion (source: IHS
+Markit). Infineon held a market share of 24.8 percent in the 2015 calendar year.
+Source: IHS Markit, "Smart Cards Semiconductors",
+July 2016
+10.4%
+15.1%
+16.2%
+24.8%
+30.5%
+CEC Huada
+electronics
+STMicro-
+Samsung
+Infineon
+NXP
+chip card ICs market share 2015
+Market position
+Ticketing, access control
+Trusted Computing
+service function
+- RF ICS
+sales
+Ditzingen
+- Software for chip card applications
+Augsburg
+Germany
+sales
+Saint-Denis
+Réparade
+- Power ICs
+Le Puy-Sainte-
+France
+sales
+Espoo
+Linz
+Finland
+-
+FE - Power semiconductors
+- HiRel products
+- Power semiconductors, analog and
+mixed-signal ICs and sensors
+Competence center for thin-wafer and
+compound semiconductor technologies
+Skovlunde
+Denmark
+BE = Backend
+Frontend
+Manufacturing
+sales
+Villach
+sales
+Vienna
+- SiC and GaN technology
+Padova
+As in previous years, the business with wireless communications infrastructure, in particular
+for fourth generation (LTE) networks, was dominated by activities in China. Network expansion
+did not accelerate any further. As a result, revenues in this area remained slightly below the
+previous year's level.
+> Multicopters
+Kokomo
+distribution center
+Hayward
+- Package platforms
+- Components for space and aviation
+sales
+sales
+El Segundo
+Durham
+- Power semiconductors
+BE
+Manufacturing
+FE = Frontend
+BE Backend
+of GaN components
+Development and characterization
+Chandler
+USA
+Tijuana
+Mexico
+sales
+São Paulo
+Research and Development
+Function
+Brasil
+Americas
+Combined Management Report | Our Group
+Locations
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+GRI G4-17
+sales
+Lebanon
+sales
+Leominster
+- Power semiconductors
+FE
+- Digital power management solutions
+for DC-DC power stages
+Tewksbury
+Torrance
+Warwick
+Temecula
+- HiRel hybrid modules
+BE
+- Power semiconductors for space,
+aerospace, defense, and high-temperature
+applications
+sales
+San Jose
+Raleigh
+- RF power transistors
+BE
+sales
+- RF power transistors
+quarters, sales
+regional head-
+- Epitaxy
+FE
+- Epitaxy
+Mesa
+Milpitas
+sales
+Livonia
+- HiRel power modules
+BE - HiRel power components
+- HiRel power modules
+- HiRel power components
+sales
+Morgan Hill
+Taiwan
+Taipei
+- Test concepts
+center, sales
+Nagoya
+Japan
+- Power ICs
+BE
+Batam
+Indonesia
+- Design flow and library development
+- Software and system development
+sales
+Bangalore
+India
+sales
+Xi'an
+sales
+- Power semiconductors
+BE -Chip card modules
+Wuxi
+sales
+Shenzhen
+sales
+- Application development
+distribution center,
+Shanghai
+sales
+Hong Kong
+- IGBT stack assembly
+BE
+- Application development
+- Discrete semiconductors
+- DC-DC converter, driver ICs and power ICS
+Osaka
+Tokyo
+- Package technology
+ters, distribution
+Competence center for final test
+BE
+- IC, software and system development
+regional headquar-
+- ICS
+- Interface to subcontractors
+Philippines
+Muntinlupa
+Singapore
+- Discrete semiconductors
+- Sensors
+- Power semiconductors
+BE
+- Package technology
+sales
+- Power semiconductors
+Kulim
+Malacca
+- Package derivatives
+Ipoh
+Malaysia
+semiconductors
+- System solutions for automotive electronics
+- System integration for power
+sales
+Seoul
+- IGBT modules
+BE
+Cheonan
+Korea
+sales
+FE
+> Pedelecs
+- Control ICs for digital power management
+52
+Madrid
+sales
+Sweden
+Kista
+sales
+Switzerland
+Zurich
+sales
+The Netherlands
+Rotterdam
+sales
+Turkey
+Istanbul
+sales
+GRI G4-17
+- Power ICs
+- Mixed-signal and RF ICS
+- Chip card ICs
+Manufacturing
+FE = Frontend
+Backend
+BE
+FE
+- Power semiconductors
+BE - IGBT modules
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Locations
+sales
+Barcelona
+Spain
+sales
+(cordless screwdrivers etc.)
+> DIY tools
+> eBikes
+DC motors
+for electric vehicles
+Charging stations
+46
+46
+Power Management & Multimarket
+The segments
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+In general, the launch of new smartphone models did not trigger end customer demand as
+expected. Therefore, global sales of smartphones hardly increased year over year Therefore,
+in the 2016 fiscal year the business with components for smartphones remained below our
+original expectations. However, our diversification strategy was successful in the second half
+of the 2016 fiscal year: For the first time we achieved significant revenue with local Chinese
+smartphone manufacturers.
+51
+Electro-mobility is not only a driver for our Automotive segment, but also for our Power
+Management & Multimarket segment. When it comes to the charging infrastructure either IGBT
+or MOSFET power transistors are used, depending on topology. In China's charging infrastruc-
+ture rollout, MOSFET power transistors are the technology of choice. In this application the
+technological edge of our CoolMOSTM high-voltage power transistors became evident once more.
+Their benchmark energy efficiency reduces cooling requirements. This allows building more
+compact charging stations. Thanks to this leading technology we were chosen as the preferred
+supplier in China.
+This growth in revenue was primarily driven by increased demand for MOSFET power transistors
+in all voltage classes. Furthermore, for the first time International Rectifier made a contribution
+to revenues over the entire 2016 fiscal year, as opposed to only approximately eight and a half
+months in the previous year.
+The Power Management & Multimarket segment generated revenues totaling €2,050 million
+in the 2016 fiscal year, an increase of 14 percent compared to the previous year's figure of
+€1,796 million. The segment contributed 32 percent of Group revenue.
+Revenue development
+The planned acquisition of Wolfspeed will also strengthen our position in radio-frequency
+power components for next-generation cellular infrastructures (5G). This lays the foundation
+for us taking over the leading position in the future.
+- Driver ICs for motion control
+The trend towards more and more sensors in mobile devices is unbroken. We profit from this
+development with our leading MEMS (Micro-Electromechanical Systems) technology: As an
+example, our barometric pressure sensors are particularly small and efficient. They operate
+in a broad temperature range and can detect altitudes with an accuracy down to only a few
+centimeters. This makes them ideally suited for applications in areas such as navigation, local-
+ization, health and weather monitoring in smartphones, wearables and devices of the Internet
+of Things. Furthermore, we continuously expand our portfolio of radar-based sensors. These
+sensors are used in mobile devices as well as in industrial applications, for example for precise
+tank level metering.
+Portugal
+Porto
+service function
+Romania
+Bucharest
+Russian Federation
+Moscow
+On the one hand, our low- and mid-voltage OptiMOST power semiconductors benefited greatly
+from the increasing number of applications with direct current motors, in particular with
+brushless direct current motors. Examples are battery-powered do-it-yourself tools as well as
+multicopters for transport, agriculture and leisure. In these areas in particular the acquisition
+of International Rectifier made an essential contribution to the expansion of our product and
+application portfolios and thus to diversification. On the other hand, the demand for OptiMOSTM
+power transistors remained high also in applications without motors: for example in power
+supplies for servers as well as in photovoltaic inverters. In servers, demand grew in particular
+for DC-DC power supplies with digital control. Besides our OptiMOSTM power transistors for
+low-voltage applications, also our control ICs and driver ICs were sought after.
+Asia-Pacific
+Function
+Research and Development
+Combined Management Report | Our Group
+Research and Development
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+One focus point of our research is in the area of sensor systems. Sensors capture the real, analog
+world. The signals measured are first digitized and then processed, transmitted and stored
+as digital values in accordance with the requirements of the intended application. Infineon has
+almost 40 years of experience in sensor design and sensor manufacturing and offers the most
+comprehensive portfolio of pressure and magnetic field sensors for automotive applications.
+While in the past both research and development were primarily focused on technologies or
+components, today the systems in which the components are used are playing a decisive role.
+Innovative system solutions start with the optimization of system functionality. When savings
+and improvements - for example for passive components, cooling systems, packages, weight,
+reliability - create value for the customer, the customer will be prepared to pay a higher price
+for the enabling semiconductor component. Here digital microelectronics are often combined
+with components from the areas of radio-frequency, control of power components, sensor
+systems and actuators, resulting in a significant increase in performance.
+R&D expenses are not only incurred for product development, but also increasingly for
+platform developments, for new product families and for new manufacturing technologies.
+This includes for example digital power management, technology platforms for low- and high-
+voltage power switches, power semiconductors based on the new materials silicon carbide
+and gallium nitride, and finally new sensor types, in particular those based on our magnetic
+field, radar, infrared and MEMS (micro-electromechanical systems) technologies.
+Principal research and development activities
+The capitalized development costs in the 2016 fiscal year amounted to €98 million (previous
+year: €100 million). Amortization of capitalized development costs totaled €31 million
+(previous year: €29 million) in the 2016 fiscal year. Subsidies and grants for R&D increased
+from €59 million in the 2015 fiscal year to €75 million in the 2016 fiscal year.
+At the end of the 2016 fiscal year we employed 6,057 employees (17 percent of Infineon's total
+workforce) at our research and development sites worldwide; at the end of the 2015 fiscal year
+this figure stood at 5,778 employees (16 percent of the total workforce). Infineon maintains
+R&D departments at 34 sites in 14 countries (see the chapter "Locations", P page 49 ff.).
+Research and development expenses (R&D expenses) amounted to €770 million in the 2016
+fiscal
+year, ‚ after €717 million in the previous year, representing an increase of €53 million or
+7 percent. The year-over-year increase was slower in percentage terms than the increase in
+revenue which grew by 12 percent. In the 2016 fiscal year we spent 11.9 percent on R&D relative
+to revenue compared to 12.4 percent in the previous year. With this rate we are well within our
+target range, i.e. a percentage of revenue in the low- to mid-teens.
+53
+Percentage of revenue
+R&D expenses
+2016
+54
+2015
+11.9%
+12.4%
+717
+770
+550
+12.7%
+€ in millions
+R&D expenses
+Research and Development
+Combined Management Report | Our Group
+Research and Development
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+52
+2014
+GRI G4-17
+P see page 23
+Together with the Belgian nano- and microelectronics research center Imec, Infineon has started
+development of a highly-integrated 79 gigahertz CMOS radar sensor chip. CMOS technology
+enables a higher degree of integration and allows a reduction in manufacturing costs. The
+objective is a cost-effective one-chip solution, although signal quality and transmission power
+are lower compared to the silicon-germanium-based radar sensor chips. We will therefore
+continue to build our 77 gigahertz radar sensor chip for long-range applications based on silicon
+germanium. The 79 gigahertz band has particular advantages over the established 24 gigahertz
+band. In the short-range it allows higher angle and distance resolution. Automated parking
+and blind spot detection are the target applications here. Infineon's portfolio of radar sensor
+chips, the most comprehensive in the industry, makes it possible to realize the radar-based
+safety cocoon for semi and fully automated driving.
+Manufacturing
+FE = Frontend
+BE Backend
+Australia
+Blackburn
+sales
+China
+Beijing
+sales
+Segment Result
+2016
+2015
+328
+323
+Furthermore, Infineon researches and develops a highly diverse range of sensor types. We
+have already received the first customer orders for the digital barometric pressure sensor
+we introduced last year, which will in turn generate revenue in the 2017 fiscal year. In addition
+to automotive applications, our 3D image sensor REAL3TM will now also be used in consumer
+electronics. The technology for 3D capture of the environment will be put to use in the smart-
+phone PHAB2 Pro from Lenovo.
+1,796
+Revenue
+€ in millions
+of the Power Management &
+Multimarket segment
+Revenue and Segment Result
+45
+45
+Power Management & Multimarket
+The segments
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Infineon makes systematic use of its technical core competencies in close collaboration among
+the Segments (see the table in the chapter "Group Strategy/Strategic Fundamentals"). This lets
+us make efficient use of our economies of scale for power semiconductors, radio-frequency
+and security.
+In addition to sensors, manufacturing technologies and transistor architectures for power
+semiconductor components based on new materials are another important focus area of our
+R&D activities. In the 2016 fiscal year we announced a new MOSFET power transistor based
+on silicon carbide (SiC). The strengths of SiC are found in applications of 600 volts and higher.
+This material enables power switches with significantly lower switching and conduction
+losses. However, because of the expensive substrate material involved, SiC also has a cost
+disadvantage. Therefore, SiC will become the material of choice wherever compactness and
+efficiency are key requirements, for example in on-board chargers and powertrains for electric
+and hybrid vehicles, as well as in photovoltaic inverters. Modification of the system design
+and topology will make it possible for other applications to make use of these advantages as
+well. This is due to the fact that disproportionally high savings with other components make
+it possible to reduce system costs in spite of the higher expenses associated with SiC MOSFET.
+The same is true for power transistors based on gallium nitride. Here we are currently develop-
+ing the next generation of transistors, which will be used in highly-compact power supplies.
+Another focus point of our R&D activities is in digital control of power semiconductors. We
+currently witness the transition from analog control to digital control of power switches. Digital
+control systems enable much easier adoption to various operating conditions (for example
+stand-by, partial load, full load) and also enable better use of the ever more complex power
+components. Programmability of the control ICs enables customers to adapt the function of
+the control unit to meet their requirements with shorter learning cycles. This transition already
+began several years ago for MOSFET-based control loops; the trend is now also starting for
+IGBT-based control loops. Infineon provides components for all stages of the digital control
+loop, namely control ICs, driver ICs and power switches.
+2,050
+- Power ICs
+We give high priority to staff training. We continously keep an eye on our employees with all
+their skills and aptitudes to ensure their personal and professional development.
+Our focus in this area is on professional training aimed at developing the technical know-how
+and innovation skills of our workforce; programs concentrating on improving the leadership
+and feedback culture within the organization; training courses on the development of social
+skills and aptitudes; project management training. In addition, in-house training opportunities,
+such as mentoring programs and on-the-job training, are also of importance to us.
+At Infineon, depending on their individual knowledge and talent, development opportunities
+are available to employees in a variety of careers, based on Infineon's needs. Four career
+paths are already established:
+Talent marketing and management
+Promoting talent
+63
+Our employees
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+In addition to our core “Infineon Leadership Excellence Programs", we also offer training
+on a range of topics required in specific situations. One example of this is the "New Leader
+Orientation" program – an in-house workshop for new managers focusing on leadership
+culture and management tools at Infineon. In another training program offered in Asia -
+"Leadership in Healthy Lifestyle" - our top managers learn how to make the most of their
+resources and increase health competence. The e-learning-based “Health & Care" program
+focuses on the issue of health as a managerial task.
+We provide support to our managers in the form of numerous learning and development
+opportunities at the various leadership levels. Our approach to learning involves a variety
+of methods based on both theory and practice. We work on concrete practical examples at
+face-to-face training events and through computer-based trainings.
+Good leadership is essential for Infineon's success, as it enables each individual to perform
+his or her tasks effectively and therefore contribute to the success of the company. At the
+same time, our employees expect to be able to develop their skills and competences within
+a suitable environment. With this in mind, creating an attractive working environment and
+long-term employee retention at Infineon are key tasks for our managers.
+Management development
+Regular participation in the Great Place to Work® survey enables us to measure the progress
+we are making in terms of leadership and feedback culture. Our objective is to provide our
+employees with a working environment in which they can give their very best. Results from
+the spring 2016 survey show that we have made improvements in all categories compared
+to 2013. Particularly gratifying for us is that 78 percent of all employees participating in the
+survey responded with "All in all, this is a very good place to work".
+Open feedback is always important to us in constructive dialog with our employees' represen-
+tatives at the various sites. Co-determination is a key factor in our human resources work.
+Together, and in a spirit of trust, we are building the basis for successfully implementing our key
+topics in the respective bodies, particularly in the Central Works Council and the Management
+Staff Representation Committee.
+> the professional career as an “Individual Contributor”, in which individual expertise in a
+traditional business field, such as finance, purchasing or sales, is promoted;
+These behavioral descriptions play a significant role, for example, in the annual dialogs with
+employees under the global STEPS process (abbreviation for Steps To Employees' Personal
+Success). However, our fundamental culture of openness does not stop there. Feedback from
+teams to their managers is just as important as feedback from managers to staff. We have,
+therefore, established the format of the "leadership dialog", which is carried out every two
+years, and acts as a supplement to the STEPS dialogs. Managers receive structured feedback
+from their staff as part of the leadership dialog process, thus enabling them to reflect on their
+individual leadership conduct, identify strengths and potential areas for improvement and
+hence promote cooperation, both with and within the team.
+62
+Our employees
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+61
+12
+Be ambitious
+and manage
+risks
+Strive for
+excellence
+Drive value
+through
+innovation
+Focus on the
+customer
+We commit.
+We innovate.
+We partner.
+We perform.
+Team up
+for best
+results
+talents
+Foster your
+62
+Be passionate
+about profit
+> the "Technical Ladder", which enables our technical experts to develop;
+> the Management career path for (junior) managers.
+Women in management positions (Infineon worldwide)
+Our employees
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+1 Figures expressed in percentages based on the workforce at September 30, 2016.
+2 At Infineon, the management function includes not only the leadership of employees but also leadership through specialist
+expertise as defined in the internal job evaluation system.
+62.5
+37.5
+36,299
+Total
+53.1
+46.9
+23,762
+74.3
+25.7
+> the Project Management career, which offers our project managers clear prospects for their
+personal development and careers - and emphasizes the importance of implementing
+development projects for Infineon's success; and
+6,538
+Entry level management²
+86.6
+13.4
+5,999
+Middle and senior level management²
+Total
+Male'
+Female¹
+Employees
+The promotion of women to management positions is one of the key focus areas of our diversity
+management policy. We had set ourselves the ambitious target of increasing the percentage
+of female executives to 15.0 percent by the end of the 2015. Despite a steady upward trend
+in recent years to 13.4 percent, we did not quite achieve this target. We intend to reinforce our
+efforts and now plan to achieve the target by 2020. Individual measures and performance
+indicators are being put in place across the business with a view to achieving the target. We
+remain committed to our long-term target of 20 percent of women in management positions.
+As an international company, the diversity of our staff is particularly important to us. Our
+global diversity management provides the framework for a corporate culture which values
+the individuality of each staff member and promotes equal opportunities - irrespective
+of age, disability, ethnic-cultural origin, gender, religion, belief, or sexual identity. The focal
+points of our commitment to diversity may vary from one location to another and are tailored
+to suit local needs. For example, the diversity team in the Asia-Pacific region concentrates in
+particular on ethnic-cultural diversity and the demographic trend.
+Encouraging diversity
+In the Asia-Pacific region (including Japan), due to the expectations of employees and the
+specific local context, in addition to the Infineon career paths, we offer specially designed talent
+management programs: "ENGINE" for management careers and "TechStar" for technical
+careers. Both programs focus on the key areas of training, interaction with management and
+the practical application of what has been learnt in specific projects.
+As an international company, we wish to offer our staff development prospects beyond
+organizational and national boundaries. The worldwide Development Conferences, during
+which managers discuss the specific development of our talents with the Human Resources
+team, are an important instrument in this endeavor.
+Non-management staff
+Trust and
+respect others
+High Performance Behavior Model
+An organization cannot progress without open and honest feedback. This basic premise is
+reflected in our values, which are collectively defined in our "High Performance Behavior
+Model" (see graph). These values are not purely theoretical: The High Performance Behavior
+Model shows how we aim to achieve Infineon's targets and set priorities.
+This key performance indicator describes how efficiently a company manages its resources.
+ROCE is also analyzed by Infineon at Group level only and not at segment level. A comparison
+of a company's ROCE and its weighted cost of capital provides information on the extent to
+which returns have been generated in excess of shareholders' and debt holders' expectations.
+Thus RoCE serves as a tool for value-based management.
+Apart from profitability, ROCE is also influenced by asset intensity, of both non-current assets
+and net working capital. Asset intensity describes the amount of assets necessary to generate
+a certain level of revenue (for an analysis of the derivation of and change in ROCE in the 2016
+fiscal year, see the chapter "Review of financial condition").
+Other performance indicators
+The principal performance indicators described above are supplemented by others that provide
+information about growth potential, cost efficiency by functional area and liquidity.
+Growth and profitability performance indicators
+Revenue growth is compared continuously with the rate of growth of relevant target markets.
+This ties in directly with our strategic target of profiting continuously from the growth of our
+target markets. A further indicator for future revenue growth is the number of design wins,
+whereby we regularly measure actual outcomes against targets.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Internal management system
+60
+60
+P see page 68 ff.
+P see page 75 ff.
+P see page 75
+P see page 70
+As part of the process of analyzing operating profitability in detail, Infineon considers earnings
+and costs above the Segment Result line. This involves a review of gross profit, research and
+development expenses, selling, general administrative expenses and the ratio of these items
+to revenue. These performance indicators are used to manage the business at both Group and
+segment levels (for an analysis of changes in the fiscal year under report, see the chapter
+"Review of results of operations").
+Liquidity performance indicators
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity at its
+disposal and an optimal capital structure. Liquidity is managed at Group level, not at segment
+level, and uses the following key performance indicators:
+> Gross cash position: Cash and cash equivalents plus financial investments
+> Net cash position: Gross cash position less short-term and long-term debt
+> Net working capital: Current assets less cash and cash equivalents, less financial investments,
+less assets classified as held for sale, less current liabilities excluding short-term debt, and
+current maturities of long-term debt, excluding liabilities classified as held for sale
+> Investments: The total amount invested in property, plant and equipment and intangible
+assets, including capitalized development costs
+For an analysis of changes in these key performance indicators during the previous fiscal year,
+see the chapter "Review of liquidity".
+Moreover, in order to avoid costs resulting from overcapacity and/or capacity bottlenecks, the
+key operational figures for capacity utilization and forecast capacity requirements are analyzed.
+The results of this analysis are used in determining investment requirements.
+Operational early indicators
+The analysis of current and future performance is rounded off by using the following opera-
+tional early indicators:
+› Orders received: The aggregate of all orders received by the Group from customers during
+the relevant reporting period
+› Orders received as a percentage of revenue: The ratio of orders received and revenue
+recognized during the same accounting period (book-to-bill ratio)
+The book-to-bill ratio gives a good indication of future trends in demand. If orders received
+are greater than revenue recognized within a given period, it is seen as an indication of future
+revenue growth.
+P see page 79
+Operating result after tax from continuing operations
+Capital employed
+ROCE =
+The performance indicator RoCE measures the ability of capital to provide a return and is
+defined as the operating result after tax from continuing operations divided by capital
+employed. Capital employed consists of non-current assets and net working capital. ROCE
+shows the correlation between profitability and the capital resources required to run the
+business.
+Open and honest feedback
+Leadership excellence
+Our human resources work focuses on developing our existing workforce and recruiting new
+staff as required. We firmly believe that effective human resources management is the key to
+commercial success, as only fulfilled, successful employees are able to deliver long-term peak
+performance and support us in meeting the growth and profitability targets set out at the
+beginning of this report. We continually endeavor to promote the performance and potential
+of our employees in the best possible way. The three pillars of "Leadership excellence",
+"Promoting talent" and "Our workforce" provide a framework to the activities we deploy to
+achieve this objective.
+Our employees
+Sustainability activities are described in the report "Sustainability at Infineon", which is
+available on our website.
+Sustainability at
+Infineon
+@www.infineon.com/sustainability_reporting
+Combined Management Report | Our Group
+Sustainability at Infineon | Our employees
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+The chapter "Outlook” contains a table showing the actual values achieved in the 2016 fiscal
+year for the key performance indicators, along with expectations for the 2016 fiscal year and
+the 2017 fiscal year.
+> Free cash flow from continuing operations to measure the amount of cash generated or
+used excluding financing activities
+> Return on Capital Employed (ROCE) to measure capital efficiency
+Segment Result is the key figure for measuring operating performance. Expressed as a percent-
+age of revenue (Segment Result Margin), it measures profitability of revenue and shows how
+well operations are being managed. The activities of Infineon's segments are managed on the
+basis of Segment Result. Responsibility for optimizing Segment Result within the framework
+of Group strategy (as approved by the Management Board) rests with the management teams
+of the relevant segments, acting, however, in coordination with the Management Board.
+Free cash flow from continuing operations enables us to measure how well operating profit-
+ability is being converted into cash inflows. This key figure also provides information on the
+efficient use of working capital and property, plant and equipment.
+Infineon also compares the actual as well as the planned Return on Capital Employed (ROCE)
+against the cost of capital, in order to ensure value creation.
+The three performance indicators described above are also the cornerstones of the system for
+variable compensation within Infineon. Most variable salary components for employees and
+management are directly linked to these performance indicators.
+Since revenue growth correlates with all three performance indicators and especially with
+Segment Result, it is not used as a key performance indicator in its own right.
+Return on Capital Employed (ROCE)
+Effective investment management plays a key role with regard to managing free cash flow.
+Our stated strategy of managing investments systematically and limiting them to 13 percent
+of revenue should be seen in this context. Free cash flow is considered by Infineon only at
+Group level and not at segment level.
+Infineon manages net working capital levels by focusing relentlessly on optimizing levels of
+inventories, trade receivables and trade payables.
+The main levers for generating free cash flow are profitability, the ability to manage working
+capital efficiently and the levels of investments.
+An important key performance indicator for Infineon is the free cash flow figure, defined as net
+cash provided by or used in operating activities and net cash provided by or used in investing
+activities, both from continuing operations, after adjusting for cash flows related to the
+purchase and sale of financial investments. Free cash flow measures the ability to generate
+sufficient cash flows to finance day-to-day operations and fund required investments out
+of the ongoing business. It is Infineon's stated target to sustainably generate positive free cash
+flow (see the chapter "Review of financial condition" for an analysis of free cash flow in the
+2016 fiscal year).
+Free cash flow
+25
+Psee page 77
+Internal management system
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Segment Result is defined as operating income (loss) excluding the following: the net amount
+of asset impairments and reversals thereof; the impact on earnings of restructuring and
+closures; share-based compensation expense; acquisition-related depreciation/amortization
+and other expenses; gains (losses) on sales of assets, businesses, or interests in subsidiaries as
+well as other income (expense), including litigation costs (see note 23 to the Consolidated
+Financial Statements for a computation of the relevant figures). Court and legal fees arising in
+conjunction with licensing Infineon's patents are included in Segment Result, as is any related
+income. Segment Result is the indicator that Infineon uses to evaluate the operating perfor-
+mance of its segments (for an analysis of Group and individual segment performance in the
+2016 fiscal year, see the chapter "The segments" and the section "2016 fiscal year").
+Segment Result
+59
+20
+15
+15.0%
+> Increased level of automation at our frontend and backend sites, for example improvement
+of the wafer transport system and mathematically optimized manufacturing planning.
+> Expansion of backend manufacturing capacities, in particular in Malacca, and also in Wuxi
+with the construction of a second manufacturing facility.
+› Adaptation and retooling of manufacturing lines to accommodate the modified product
+portfolio, in particular due to the beginning of volume production for new technologies
+and products.
+Ramp-up of 300-millimeter thin wafer manufacturing takes place as planned
+The continuous expansion of manufacturing capacities for our 300-millimeter frontend
+manufacturing network, consisting of the sites in Dresden and Villach, progressed as planned.
+The next milestones are set for the end of calendar year 2017. By then we want to have equipped
+20 to 30 percent of the available cleanroom space with 300-millimeter thin wafer manufacturing
+equipment. We then expect 300-millimeter manufacturing costs per chip to reach the level of
+our 200-millimeter manufacturing.
+The utilization level of the 300-millimeter manufacturing capacities is increasing for several
+reasons. First of all, it is no longer possible to meet demands for our power semiconductor
+components with the 200-millimeter fabs alone. Secondly, we are shifting part of the manu-
+facturing activities from Newport to Dresden. And finally, in the future certain new products
+will be manufactured on 300-millimeter manufacturing lines only, for example the 800 volt
+power transistor CoolMOSTM P7, introduced in the 2016 fiscal year.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Internal management system
+Internal
+management system
+57
+P see page 22 ff.
+@www.infineon.com/sustainability_reporting
+P see page 61 ff.
+> Expansion of 300-millimeter frontend manufacturing capacities (see following paragraph).
+P see page 102 ff.
+> achieving a compound annual revenue growth rate of 8 percent
+> thereby achieving a 17 percent (previously 15 percent) Segment Result Margin over the
+economic cycle, and
+> limiting investments to 13 percent of revenue over the economic cycle
+Overall, reaching these financial targets yields in a sustainable increase in the value of the
+business, brought about by achieving a premium on the cost of capital in the long term.
+In this context, growth, profitability and investments are all interdependent. Profitability is
+the prerequisite for being able to finance operations internally, which, put another way, means
+opening up potential opportunities for growth. Growth, in turn, requires continual investment
+in research and development as well as in manufacturing capacities. Growing at a commen-
+surate rate allows Infineon to achieve leading market positions and to generate economies
+of scope that contribute to greater profitability. Employing financial resources efficiently is a
+critical factor in achieving these goals.
+Infineon deploys a comprehensive controlling system to manage its business with respect
+to the strategic targets it has set itself. The system involves the use of financial and operating
+key performance indicators. Information for controlling purposes is derived from annual
+long-term planning, quarterly outlooks, orders received per week and actual monthly financial
+results. This knowledge enables management to base its decisions on sound information
+with respect to the current situation and future expected financial and operational develop-
+ments. Sustainable business practices and the consideration of forward-thinking qualitative
+factors are important for Infineon's long-term success. As an enterprise very much aware
+of its responsibilities towards society, Infineon also takes account of non-financial factors,
+mainly in the fields of sustainability (see "Sustainability at Infineon" on our website) and
+human resources (see the chapter "Our employees"). Although these factors are not used to
+manage business performance, they nevertheless help Infineon achieve its financial targets.
+As part of the process of managing business performance, management also attaches
+great importance to ensuring that Infineon acts in strict compliance with all relevant legal
+requirements and, of equal importance, that its internal Corporate Governance Standards
+are complied with (see the chapter "Corporate Governance").
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Internal management system
+P see page 169 ff.
+P see page 40 ff. and page 18 ff.
+58
+Performance indicators
+The internal management system at Infineon is designed to assist in implementing the Group
+strategy described in "Group strategy" in the chapter "Finances and strategy". Accordingly,
+performance indicators are used which enable profitable growth and efficient employment of
+capital to be measured. Infineon has set itself the targets of:
+> Expansion of 200-millimeter frontend manufacturing capacities for differentiating manufac-
+turing technologies such as MEMS-based sensors, radio-frequency components, as well as
+power semiconductors and magnetic field sensors for automotive applications.
+Furthermore, the concluded fiscal year saw investments at the frontend and backend sites
+primarily in the following areas:
+Milestones and essential investment focuses in manufacturing in the 2016 fiscal year
+Continued high demand for automotive power semiconductors resulted in further expansion
+of the second manufacturing building at the frontend site at Kulim, known as "Kulim 2". The
+"Ready for Equipment” milestone, i.e. the beginning of equipping the cleanroom, was reached
+on January 15, 2016. The official opening of the manufacturing building took place on schedule
+on May 13, 2016. This date also marked the beginning of volume production.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our Group
+Operations
+Operations
+55
+55
+P see page 49 ff.
+Investments
+€ in millions
+15.5%
+668
+826
+785
+13.5%
+卅
+2014
+2015
+56
+Combined Management Report | Our Group
+Operations
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Of the amount invested in property, plant and equipment, the largest share is accounted for by
+investments in manufacturing facilities. Here in turn approximately two thirds went on frontend
+manufacturing facilities, with the rest essentially going on backend manufacturing facilities.
+In the 2016 fiscal year our investments amounted to €826 million, representing an increase
+of €41 million or 5 percent compared to the €785 million invested in the previous year. Relative
+to revenues, the investments in the complete fiscal year stood at 12.8 percent, slightly lower
+compared to the previous year's 13.5 percent. €716 million of the overall investment volume
+went on property, plant and equipment (previous year: €646 million) and €110 million went on
+intangible assets including capitalized R&D costs (previous year: €139 million).
+Principal performance indicators
+Another successful step in the area of manufacturing technology is the introduction of a
+larger wafer diameter for manufacturing of power semiconductors. The use of 300-millimeter
+thin wafers creates significant advantages in terms of productivity and reduces the amount
+of capital required. However, the technical challenges involved are substantial. Infineon is
+as of yet the only company to successfully complete this step. Further information on the
+ramp-up of 300-millimeter thin wafer technology can be found at the end of this chapter.
+Infineon maintains a total of 19 manufacturing sites in eleven countries: Dresden, Regensburg
+and Warstein (all Germany); Villach (Austria); Newport (Wales, UK); Cegléd (Hungary); Beijing
+and Wuxi (both China); Malacca and Kulim (both Malaysia); Cheonan (Korea); Batam (Indonesia);
+Singapore; Tijuana (Mexico) as well as Leominster, Mesa, Morgan Hill, San Jose and Temecula
+(all USA) (see the chapter "Locations"). As of September 30, 2016, 26,383 employees were
+employed in Operations at these manufacturing sites (previous year: 25,909 employees).
+Our manufacturing strategy follows the basic principle that in-house manufacturing has to
+result in a differentiation potential in terms of costs and/or performance. If this is not the case
+we outsource manufacturing. This applies both to frontend manufacturing and backend
+manufacturing. This is the most efficient way to use our capital employed and to optimize
+our investments.
+1 Property, plant and equipment and intangible assets
+Percentage of revenue
+12.8%
+2016
+Investments
+For frontend manufacturing this principle means that power semiconductors, sensors and
+radio-frequency components are preferably manufactured at our own manufacturing sites.
+Here we gain a strategic advantage from our manufacturing technologies and our process
+expertise because we can offer components which can only be manufactured with leading-
+edge manufacturing techniques. In the case of CMOS-based process technologies on the
+other hand we work together with manufacturing partners. This applies to the majority of our
+products manufactured in 90 nanometer manufacturing technologies as well as all products
+manufactured in 65 nanometer and 40 nanometer manufacturing technologies. These are
+primarily highly-integrated products such as microcontrollers and security ICs. In backend
+manufacturing for certain package types we work with subcontractors in order to ensure
+adequate capacity growth and to be able to better manage phases of high fluctuation in
+demand. Standard power semiconductor packages are an example here.
+For an analysis of orders received and the book-to-bill ratio in the previous fiscal year, see
+the chapter "Review of results of operations".
+In order to measure its success in implementing its strategies, Infineon uses the following
+three overarching performance indicators:
+Actual and target values for performance indicators
+Qualifications and training
+At selected top universities in China, Infineon organizes "Student Dialogs” and “Infineon
+Days" and sponsors "Joint Labs", "Training Labs” and an endowment chair for the long-term
+promotion of application-based research and teaching.
+Infineon keenly promotes close contact with both students and academics with the aim of
+recruiting young professionals – for instance through special “High Potential" programs:
+Infineon has been a member of the UNITECH network for promoting talented engineers since
+2002. In the meantime, UNITECH has developed into a sustainable recruiting ground for inter-
+national, high-caliber staff for Infineon. Our cooperation with the Collège des Ingénieurs (CDI)
+has proven highly successful over the years. Infineon has established itself as an attractive
+and reliable partner for this international MBA program.
+Cooperation with universities
+In conjunction with the "Law on Equal Participation of Women and Men in Leadership Positions
+in the Private and Public Sector", Infineon Technologies AG and Infineon Technologies Dresden
+GmbH have set targets for the percentage of women in the two leadership levels below the
+Management Board. We will report on the extent of target attainment for the Supervisory
+Board, Management Board/Board of Directors as well as for the two leadership levels below
+board level (see the chapter "Corporate Governance") as of June 30, 2017.
+P see page 106
+1 International Rectifier not included
+Target
+2020
+2016
+2015'
+64
+20131
+2014¹
+12.5%
+13.0%
+13.4%
+10
+12.1%
+5
+0
+2010'
+10.2%
+› Segment Result to measure the operating profitability of its various businesses and of
+the portfolio as a whole
+4,076
+5%
+5%
+8%
+4,665
+5,023
+Total equity
+7%
+7%
+0%
+9%
+18%
+13%
+13%
+24%
+23%
+Septem-
+€ in millions, except percentages
+ber 30, 2016
+Septem-
+ber 30, 2015
+Change
+year-on-year
+Current assets
+Non-current assets
+4,492
+4,115
+9%
+Total liabilities
+4,595
+(1%)
+Total assets
+9,087
+8,741
+4%
+Current liabilities
+1,530
+1,585
+(3%)
+Non-current liabilities
+2,534
+2,491
+2%
+20%
+4,626
+4,064
+7.3%
+2016
+Current liabilities marginally lower; non-current liabilities almost unchanged
+Current liabilities stood at €1,530 million at the end of the reporting period, €55 million
+(3 percent) lower than at September 30, 2015 (€1,585 million). Non-current liabilities remained
+almost unchanged at €2,534 million (September 30, 2015: €2,491 million).
+Current provisions and liabilities for obligations to employees decreased by €58 million,
+largely reflecting the fact that payments made for prior-year performance-related remune-
+ration exceeded the amount accrued for the 2016 fiscal year. By contrast, trade payables
+were €55 million higher than one year earlier, mainly as a corollary to the organic revenue
+growth recorded by the segments and the resulting increase in inventories.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Group performance
+Non-current assets decreased slightly from €4,626 million as of September 30, 2015 to
+€4,595 million as of September 30, 2016. Investments in property, plant and equipment
+totaling €716 million were higher than the depreciation expense of €665 million during
+the same period. Investments related mainly to the manufacturing sites in Regensburg
+(Germany), Kulim (Malaysia), Villach (Austria) and Malacca (Malaysia). By contrast, invest-
+ments in intangible assets amounting to €110 million were lower than the amortization
+expense for the period totaling €168 million.
+Review of financial condition
+Debt by currencies
+1,793
+1,769
+53%
+53%
+46%
+74
+Slight decrease in non-current assets
+Current assets were up by 9 percent to €4,492 million at the end of the reporting period,
+compared to €4,115 million as of September 30, 2015. Infineon's gross cash position (sum
+total of cash and cash equivalents and financial investments) improved by €227 million
+(see "Gross cash position and net cash position" in the chapter "Review of liquidity" P page 77).
+In addition, trade receivables and inventories increased by €94 million in total as a result of
+organic revenue growth across the segments.
+Increase in current assets due to higher gross cash position
+1,793
+857
+1,769
+Pension plans and
+similar commitments
+426
+604
+Provisions
+474
+403
+Other liabilities
+581
+431
+Equity
+4,665 5,023
+8,741 9,087
+47%
+1%
+0%
+2015
+12.8%
+2015
+2016
+0
+1,769
+Non-current liabilities increased slightly from €2,491 million as of September 30, 2015 to
+€2,534 million as of September 30, 2016. Liabilities for pension plans and similar commitments
+went up by €178 million, primarily due to actuarial losses. By contrast, deferred tax liabilities
+decreased by €137 million, mainly reflecting the reduction of deferred tax liabilities relating to
+the acquisition of International Rectifier and the reversal of allowances on deferred tax assets
+relating to German and foreign entities.
+Percentage share of debt denominated in euro unchanged
+The percentage share of total debt (short- and long-term) denominated in euros remained
+unchanged at 53 percent compared to the end of the previous fiscal year. The percentage
+share of debt denominated in US dollars increased marginally to 47 percent (2015: 46 percent).
+The US$934 million loan, which Infineon had raised with various international banks in
+conjunction with the acquisition of International Rectifier, was fully repaid out of proceeds
+from the issue of USPP notes (US Private Placement).
+Information on debt maturities is provided in note 14 to the Consolidated Financial Statements
+P page 152.
+Equity up due to net income for the year
+Equity increased by €358 million (8 percent) to €5,023 million at the end of the reporting
+period (September 30, 2015: €4,665 million), mainly due to the net income generated in the
+2016 fiscal year amounting to €743 million. Working in the opposite direction, equity was
+reduced during the reporting period by the dividend of €225 million paid for the 2015 fiscal
+year and by actuarial losses amounting to €159 million (net of tax) - recognized in other
+comprehensive income - arising in conjunction with pension plans and similar commitments
+(see notes 15 and 20 to the Consolidated Financial Statements P page 153 and 157 ff.).
+The equity ratio improved to 55.3 percent as of the end of the reporting period (September 30,
+2015: 53.4 percent).
+Increase in earnings gives rise to higher ROCE
+The operating income from continuing operations after tax rose year-on-year from €664 million
+to €799 million, as a result of which the return on capital employed (ROCE) also increased from
+12.8 percent to 15.0 percent, despite the fact that capital employed went up from €5,176 million
+as of September 30, 2015 to €5,334 million as of September 30, 2016. The performance again
+enabled Infineon to more than cover its cost of capital in the 2016 fiscal year.
+Capital employed - ROCE
+H
+Debt
+15.0%
+5,176
+2016
+€ in millions
+2015
+2016
+Euro
+947
+939
+US dollar
+828
+830
+Other
+18
+1,793
+ROCE
+€ in millions
+5,334
+2015
+802
+Trade and
+38.4%
+other receivables
+742
+774
+Inventories
+1,129
+35.2%
+1,191
+Inventory intensity 5
+ROCE6
+12.9%
+15.0%
+12.8%
+and equipment
+2,093
+Property, plant
+Debt-to-equity ratio 4
+Trade and
+13.6%
+Statement of Financial Position Ratios:
+Return on assets 1
+8.2%
+8%
+€ in millions
+2015
+2016
+Equity ratio 2
+55.3%
+53.4%
+Gross cash position
+2,013
+2,240
+Return on equity 3
+14.8%
+2,119
+Intangible assets
+1,738
+1,656
+21%
+20%
+5%
+7%
+5%
+4%
+7%
+5%
+53%
+55%
+2015
+2016
+€ in millions
+2015
+2016
+9%
+other payables
+9%
+8,741
+1 Return on assets = Net income/Total assets
+Deferred tax assets
+2 Equity ratio = Total equity/Total assets
+604
+623
+3 Return on equity = Net income/Total equity
+Other assets
+422
+484
+8,741
+9,087
+5 Inventory intensity = Inventories (net)/Total assets
+4 Debt-to-equity ratio = (Long-term and short-term debt)/Total equity
+6 Calculation see following section about ROCE in this chapter
+Liabilities and equity
+9,087
+25%
+13.1%
+With this aim in mind, our human resources work focuses on the three pillars "Leadership
+excellence", "Promoting talent" and "Our workforce”. Furthermore, the "HR Operational
+Excellence" initiative continues to improve our key processes in human resources. With
+a combination of stable processes and efficient instruments, the HR team – in its role as
+strategic partner and adviser for management and staff - accompanies Infineon on its
+high-performance path.
+Percentage of revenue
+Change year-on-year
+Cost of goods sold
+Percentage of revenue (gross margin)
+Gross profit
+2016
+2015
+35.9%
+艹
+2,080
+€ in millions, except percentages
+36.0%
+A part of the cost of goods sold is incurred in currencies other than the euro. To some extent,
+the effects of exchange rates on the cost of goods sold offset a similar impact on revenue,
+with the result that the positive currency effect on the gross margin was lower in the fiscal year
+under report.
+The gross margin improved slightly from 35.9 percent to 36.0 percent year-on-year. Lower
+expenses in conjunction with the purchase price allocation and other acquisition-related
+expenses for International Rectifier were largely offset by higher costs of goods sold, attribu-
+table to a change in the product mix and to start-up expenses for Kulim 2 and 300-millimeter
+manufacturing. Moreover, further investments were made in manufacturing facilities, with
+a view to creating a broader base for sustainable growth. Expenses in conjunction with the
+purchase price allocation and other acquisition-related expenses for International Rectifier
+reduced earnings by €96 million in the 2016 fiscal year, compared with €143 million in the
+previous fiscal year and relate in particular to amortization and depreciation on intangible
+assets and property, plant and equipment. In the previous fiscal year, additional expenses
+arose from consuming inventories revalued to their fair value in conjunction with the
+purchase price allocation.
+Gross margin slightly improved
+The book-to-bill ratio was virtually unchanged at 1.09 (2015: 1.11) and therefore remained
+at a high level. The value of orders received increased by 10 percent to €7,050 million in the
+2016 fiscal year (2015: €6,421 million).
+Book-to-bill ratio still at high level
+2,330
+€ in millions
+Gross profit and gross margin
+Orders received ― Book-to-bill ratio
+Revenue
+1.09
+2016
+2015
+开
+5,795
+6,473
+Gross profit
+6,421
+Percentage of revenue (gross margin)
+2016
+Therein included grants received
+12.4%
+11.9%
+30%
+7%
+717
+770
+2015
+2016
+Percentage of revenue
+Change year-on-year
+Research and development expenses
+€ in millions, except percentages
+Grants received in conjunction with R&D projects and capitalized development costs reduce
+the amount of R&D expenses recognized.
+Research and development expenses (R&D expenses)
+Operating expenses (research and development expenses and selling, general and
+administrative expenses) increased year-on-year by €66 million to €1,561 million (2015:
+€1,495 million), corresponding to 24.1 percent of revenue (2015: 25.8 percent).
+35.9%
+36.0%
+2,080
+2,330
+64.1%
+64.0%
+39%
+12%
+3,715
+4,143
+2015
+Slight decrease in ratio of operating expenses to revenue
+Percentage of revenue
+7,050
+except book-to-bill ratio
+6%
+424
+Japan
+23%
+1,337
+24%
+1,574
+Therein: China
+46%
+2,666
+48%
+3,083
+Asia-Pacific (excluding Japan)
+16%
+942
+15%
+1,000
+Therein: Germany
+35%
+2,020
+33%
+2,147
+Europe, Middle East, Africa
+2015
+2016
+€ in millions, except percentages
+Significance of Asia-Pacific continues to grow; China ahead of Germany
+as most important sales market
+399
+1.11
+Americas
+13%
+€ in millions,
+Orders received and revenue
+10
+70
+Review of results of operations
+Group performance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+69
+69
+China accounted for €1,574 million or 24 percent of Infineon's worldwide revenue and therefore
+for the largest share at individual country level, followed by Germany at €1,000 million or
+15 percent.
+The Asia-Pacific region (excluding Japan) had already become the largest region in the previous
+fiscal year, when it accounted for 46 percent of revenue, ahead of the Europe, Middle East
+and Africa region with 35 percent. The importance of the Asia-Pacific region (excluding Japan)
+continued to grow in the year under report, accounting for 48 percent of revenue, compared
+to the 33 percent generated in the Europe, Middle East and Africa region.
+With an increase of €417 million, more than one half (62 percent) of revenue growth related
+to the Asia-Pacific region (excluding Japan), followed by the Europe, Middle East and Africa
+region, which recorded a €127 million or 19 percent increase in revenue, and the Americas
+region, where revenue rose by €109 million (16 percent of total revenue growth).
+The acquisition of International Rectifier resulted in better access to the Chinese and
+US markets, a fact reflected in above-average revenue growth in these regions. Infineon also
+grew in all other regions.
+100%
+5,795
+100%
+6,473
+Total
+10%
+568
+10%
+661
+Therein: USA
+12%
+710
+819
+75
+1.2%
+59
+1.0%
+16
+6
+2
+4
+274
+191
+6
+9
+13
+(7)
+31
+16
+620
+742
+2015
+2016
+Other income and expense, net
+or interests in subsidiaries, net
+Losses (gains) on sales of assets, businesses,
+Acquisition-related depreciation/amortization and other expenses
+Share-based compensation expense
+Impact on earnings of restructuring and closures, net
+Impairments on assets including assets classified
+as held for sale, net of reversals
+Earnings from continuing operations attributable to
+shareholders of Infineon Technologies AG - diluted
+Plus/minus:
+€ in millions (unless otherwise stated)
+Earnings per share in accordance with IFRS are influenced by amounts relating to purchase
+price allocations for acquisitions (in particular International Rectifier) as well as by other
+exceptional items. To enable better comparability of operating performance over time, Infineon
+computes adjusted earnings per share (diluted) as follows:
+Tax effects on adjustments
+Sharp improvement in adjusted earnings per share
+(49)
+Revaluation of deferred tax assets resulting from
+23%
+9,087
+8,741
+73
+Review of financial condition
+Review of financial condition
+Group performance
+Combined Management Report | Our 2016 fiscal year
+Assets
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Adjusted net income and adjusted earnings per share (diluted) should not be seen as a
+replacement or superior performance indicator, but rather as additional information to
+the net income and earnings per share (diluted) determined in accordance with IFRS.
+The calculation of earnings per share in accordance with IFRS is presented in detail in note 8
+to the Consolidated Financial Statements.
+P see page 146
+1 The calculation of the adjusted earnings per share is based on unrounded figures.
+0.60
+0.76
+Adjusted earnings per share (in euro) - diluted¹
+1,125
+1,129
+Weighted-average number of shares outstanding - diluted
+680
+853
+shareholders of Infineon Technologies AG - diluted
+Adjusted earnings from continuing operations attributable to
+(209)
+(59)
+the annually updated earnings forecast
+(73)
+The improvement in net income resulted in a corresponding increase in earnings per share.
+Compared to earnings per share of €0.56 (basic and diluted) in the previous fiscal year, the
+corresponding figures for the 2016 fiscal year both amounted to €0.66.
+Earnings per share improved
+72
+Selling, general and administrative expenses
+€ in millions, except percentages
+Selling, general and administrative expenses
+The main R&D activities undertaken during the 2016 fiscal year are described in more detail
+in the chapter "Research and Development" P page 53 f.
+R&D expenses amounted to €770 million in the 2016 fiscal year, an increase of €53 million
+or 7 percent compared to the previous year's figure of €717 million. At 11.9 percent (2015:
+12.4 percent) of revenue, R&D expenses therefore remained within the target range of a low-
+to mid-teen percentage of revenue. The principal reasons for the increase were the inclusion
+of International Rectifier for the full twelve-month period compared to the previous year and
+the fact that research and development activities were intensified. Among other measures
+taken, additional staff was recruited with the aim of broadening the basis for further growth.
+A total of 6,057 employees worked in research and development functions at the end of the
+reporting period (September 30, 2015: 5,778 employees).
+11.9%
+2016
+Percentage of revenue
+R&D expenses
+2015
+12.4%
+H
+770
+717
+€ in millions
+R&D expenses
+71
+Review of results of operations
+Group performance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+100
+13.9%
+12.7%
+Percentage of research and development expenses
+98
+For information: capitalized development costs
+Change year-on-year
+Percentage of revenue
+2016
+2015
+Review of results of operations
+Group performance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Further details regarding income tax are provided in note 7 to the Consolidated Financial
+Statements.
+In the previous fiscal year, the reassessment and reversal of valuation allowances on deferred
+tax assets amounting to €209 million resulted in an income tax benefit of €102 million, based
+on income from continuing operations before income tax of €520 million.
+As in the previous fiscal year, tax expense for the 2016 fiscal year was affected by foreign tax
+rates, non-deductible expenses, tax credits and changes in valuation allowances on deferred
+tax assets. Overall, an income tax benefit of €36 million arose on income from continuing
+operations before income tax of €705 million. The deferred income tax benefit arose primarily
+in conjunction with the acquisition and integration of International Rectifier. In addition to the
+reversal of deferred tax liabilities relating to the purchase price allocation, income of €43 million
+was recognized as a result of changes in valuation allowances on tax credits, which became
+utilizable as a result of the integration of International Rectifier.
+Reduction of deferred tax liabilities and changes in valuation allowances on
+deferred tax assets give rise to deferred tax benefit
+At 12.2 percent of revenue selling, general and administrative expenses were lower in
+percentage terms than in the previous fiscal year (13.4 percent). In absolute terms, however,
+they edged up by €13 million to €791 million, mainly due to the inclusion of International
+Rectifier for the full twelve-month period. Unlike in the current fiscal year, the previous year's
+figures also included transaction-related costs (legal services and bank fees) relating to the
+acquisition of International Rectifier.
+12.2%
+Psee page 144 f.
+Selling, general and
+administrative expenses
+Percentage of revenue
+A significant share of revenue was generated in foreign currencies in the 2016 fiscal year,
+with revenue denominated in US dollars accounting for the largest share. The average euro/
+US dollar exchange rate changed from 1.14 in the previous fiscal year to 1.11 in the 2016 fiscal
+year. Across all currencies and over the fiscal year as a whole, currency factors contributed
+approximately 2 percent to the revenue increase. The currency impact is measured by applying
+the previous fiscal year's relevant average exchange rates to the 2016 fiscal year revenue.
+2016
+H
+791
+778
+13.4%
+€ in millions
+administrative expenses
+Selling, general and
+13.4%
+12.2%
+57%
+2%
+778
+791
+2015
+Positive currency impact on revenue from US dollar
+7%
+Industrial Power Control
+120
+130
+140
+150
+160
+10.06
+11.06
+12.07
+13.07
+14.08
+15.08
+16.09
+September 30, 2015 = 100
+Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia Semiconductor Index (SOX)
+and the Dow Jones US Semiconductor Index for the 2016 fiscal year (daily closing prices)
+Infineon share price in €
+67
+Combined Management Report | Our Group
+The Infineon share
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+99
+66
+During the 2016 fiscal year the Infineon share continued the upward trend seen in previous
+years, finishing the fiscal year at a closing price of €15.88, 58 percent higher than its closing
+price of €10.06 at the end of fiscal 2015. The price of the Infineon share reached its low for the
+year, €9.75, at the beginning of the fiscal year. After that, the price rose continuously, with at
+times volatile price fluctuations. The Infineon share reached its high for the year of €15.88 on
+the last day of trading in the fiscal year, September 30, 2016. During the 2016 fiscal year the
+value of the Infineon share significantly outperformed comparable benchmark indices. In this
+period the Philadelphia Semiconductor Index (SOX) rose by 39 percent and the Dow Jones US
+Semiconductor Index rose by 35 percent. The 9 percent increase in value of the DAX was
+significantly lower in the fiscal year just completed.
+Further share price increase in 2016 fiscal year
+2 Own shares were not taken into consideration for calculation of market capitalization.
+due on September 10, 2018, ISIN: XS1191115366
+due on March 10, 2022, ISIN: XS1191116174
+since February 2016: "BBB" (outlook "stable")
+Dow Jones Sustainability Europe Index
+Dow Jones Sustainability World Index
+S&P-Europe-350
+MSCI Germany
+Dow Jones Germany Titans 30
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+110
+Dow Jones STOXX Europe 600
+100
+90
+2012
+0.12
+2011
+0.10
+2010
+in €
+Dividend per share
+Dividend for
+fiscal year
+Kuwait Investment Authority
+Retail investors
+Other
+State of Kuwait/
+Allianz Global Investors GmbH
+The Capital Group Companies
+BlackRock Inc.
+O
+5.08%
+4.28%
+3.25%
+9.53%
+5.74%
+72.12%
+Shareholder structure
+Dow Jones US Semiconductor Index
+■SOX
+DAX
+Infineon
+Power Management & Multimarket
+Chip Card & Security
+Other Operating Segments
+06|2016 07|2016 08|2016
+04|2016 05|2016
+03|2016
+02|2016
+01|2016
+12|2015
+11|2015
+10|2015
+9.05
+0.12
+DAX 30
+US$20,032 million (as of September 30, 2016)
+@Interested parties are able to participate
+E-mail: investor.relations@infineon.com
+Fax: +49 89 234-955 2987
+Phone: +49 89 234-26655
+e-mail or telephone hotline:
+☐ Questions may be directed to us via
+The Infineon share
+The Infineon share
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+99
+65
+Subsequent to completing the integration of International Rectifier during the 2016 fiscal
+year, one of the areas to which the HR department will turn its attention during the 2017
+fiscal year will be the scheduled acquisition of Wolfspeed.
+Our human resources work focuses on continuing successful initiatives and programs and
+developing new measures in response to current requirements. Infineon's long-term human
+resources strategy continually contributes to meeting our high-performance aspirations.
+Our aim is to deploy our workforce both competently and correctly - and to be motivated
+through personal success to contribute to Infineon's overall success.
+Outlook
+The worldwide personnel cost for current internal Infineon employees in the 2016 fiscal year
+totaled €2,047 million (2015 fiscal year: €1,939 million). This amount includes wages and
+salaries, including overtime and allowances, as well as social costs (pension expenses and
+social contributions).
+As of September 30, 2016 Infineon had a worldwide workforce of 36,299 employees,
+compared to 35,424 employees one year earlier.
+Employees and personnel expense
+Our offering of functional training is made available primarily via the "Academy Connect"
+platform. Cooperation has been established among a total of 11 global "functional academies"
+operating in specific segments and fields, with a view to providing coordinated learning to
+build up professional expertise. Academies exist, for example, in the fields of purchasing,
+finance, manufacturing, quality management and supply chain. The learning content on offer
+is expanded on an ongoing basis, as through the professional and targeted development
+of our staff we aim to reinforce our corporate strategy and increase productivity.
+How do we equip ourselves optimally for the working world of the future? We endeavor
+answer to this question by our strategic competence management program, which identifies
+the skill sets necessary for the future and suggests relevant development paths.
+Competence development
+The health of our staff is imperative. We therefore protect and promote it through our
+occupational health management program. Preventive programs, such as "Fit4Health"
+in Germany and Austria or H.A.P.P.Y. (Healthy Active People Program for You) in Singapore
+boost health competence in our staff. Additional demand-oriented local health initiatives
+supplement the range of measures on offer.
+Health management
+Our workforce
+Our employees
+Combined Management Report | Our Group
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+in telephone conferences via a webcast in
+the Investor Relations section of the
+Infineon website:
+216,173 (in the 2016 fiscal year)
+www.infineon.com/investor
+index-membership/
+ADS, over-the-counter trading on the OTC market (OTCQX)
+5,469,535 (in the 2016 fiscal year)
+€17,892 million (as of September 30, 2016)
+Shares: Frankfurt Stock Exchange (FSE)
+IFX GY (Xetra trading system), IFNNY US
+IFX-XE, IFNNY-XE
+IFX (share), IFNNY (ADS)
+623100
+6 million shares (as of September 30, 2016)
+DE0006231004
+1,132,673,109 (as of September 30, 2016),
+1,129,271,481 (as of September 30, 2015)
+€2,265,346,218 (as of September 30, 2016),
+€2,258,542,962 (as of September 30, 2015)
+Ordinary registered shares in the form of shares or
+American Depositary Shares (ADS) with a notional value
+of €2 each (ADS: shares = 1:1)
+1 The number of shares issued includes own shares.
+1.0% Infineon Bond from March 10, 2015
+1.5% Infineon Bond from March 10, 2015
+Rating of S&P Global Ratings
+Index membership (selected)
+Daily average ADS traded
+Market capitalization²
+Trading in the USA
+Daily average shares traded on Xetra
+Market capitalization²
+Listings
+Reuters
+Bloomberg
+Ticker symbol
+ISIN
+WKN
+Own shares
+Shares issued¹
+Share capital
+Share types
+Basic information on shares and bonds
+@A full overview of other major indices,
+in which the Infineon share is repre-
+sented, can be found on Infineon's
+website at www.infineon.com/cms/en/
+about-infineon/investor/infineon-share/
+2013
+09|2016
+2014
+INFINEON TECHNOLOGIES
+Revenue grew by €678 million to €6,473 million in the year under report (2015: €5,795 million).
+The increase primarily reflects strong business performances across all segments (see the
+chapter “The segments") and the first-time inclusion of International Rectifier for a full twelve-
+month period, contrasting with the previous fiscal year when revenue was included only for
+the period after closing of the acquisition on January 13, 2015.
+Good sales performance and the full-year inclusion of International Rectifier
+drive revenue growth
+Adjusted earnings per share (diluted) improved sharply from €0.60 to €0.76 per share (see "Sharp
+improvement in adjusted earnings per share" in this chapter for details of the calculation).
+Earnings per share (basic and diluted) amounted to €0.66 per share and were therefore higher
+than one year earlier (2015: €0.56).
+Net income improved year-on-year by €109 million to €743 million for the 2016 fiscal year
+on the back of revenue growth. The €83 million decrease in acquisition-related depreciation,
+amortization and other expenses (2016: €191 million; 2015: €274 million) for International
+Rectifier (primarily expenses recognized in conjunction with the purchase price allocation)
+was largely offset by a €66 million reduction in income tax benefits.
+P see page 40 ff.
+0.12
+Net income improved
+0.60
+0.76
+Adjusted earnings per share (in euro) - diluted
+0.56
+0.66
+Diluted earnings per share (in euro)
+0.56
+0.66
+Basic earnings per share (in euro)
+634
+743
+Net income
+12
+2
+Income from discontinued operations, net of income taxes
+622
+741
+Income from continuing operations
+102
+36
+ANNUAL REPORT 2016
+Income tax
+Revenue by segment
+Combined Management Report | Our 2016 fiscal year
+Group performance
+Share of Group Revenue 2016
+Automotive
+41%
+16%
+11% 0%
+32%
+2015
+2016
+Corporate and
+Elimininations
+Other Operating
+Segments
+Chip Card &
+Security
+Power
+Management &
+Multimarket
+Industrial
+Power Control
+Automotive
+0
+(7) (1)
+8 14
+500
+698 665
+1,073 971
+1,000
+1,500
+1,796
+2,050
+2,000
+2,350
+2,500
+2,651
+3,000
+Review of results of operations
+€ in millions
+4
+Psee page 72
+(39)
+5,795
+6,473
+2015
+2016
+Revenue
+€ in millions, except earnings per share
+68
+The consolidated statement of operations
+Review of results of operations
+Group performance
+Review of results of operations
+Group performance
+Combined Management Report | Our 2016 fiscal year
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+After the dividend for the 2014 fiscal year had already been increased from €0.12 to €0.18,
+the Management Board and Supervisory Board decided to propose a further increase of
+the dividend to €0.20 per share for the 2015 fiscal year to the Annual General Meeting on
+February 18, 2016. The shareholders approved the proposal and thus on February 19, 2016
+the amount of €225 million was paid out to shareholders. At that point in time the number
+of shares entitled to a dividend was 1,123,271,481 units. At September 30, 2016 the number
+of shares issued was 1,132,673,109. This figure includes the unchanged amount of 6 million
+shares owned by the company, which are not entitled to a dividend. Based on positive
+business developments and Infineon's positive business outlook, a proposal will be made
+to shareholders at the 2017 Annual General Meeting to increase the dividend for the 2016
+fiscal year by 2 cents or 10 percent from €0.20 to €0.22. For more information on Infineon's
+dividend policy, see "Sustainable value creation for our shareholders" in the chapter
+"Group strategy".
+Dividend
+As of September 30, 2016, four shareholders each held more than 3 percent of the Infineon
+shares issued; two of the four shareholders held more than 5 percent. At the end of the 2015
+fiscal year, six shareholders held more than 3 percent of shares each. The share capital held
+by retail investors dropped from 11.79 percent at the end of the 2015 fiscal year to 9.53 percent
+at September 30, 2016.
+Shareholder structure
+3
+The Infineon share is traded in the USA in the form of American Depositary Shares ("ADS”) on
+the OTCQX International over-the-counter market under the ticker symbol "IFNNY". The average
+trading volume rose from 147 thousand ADS per day in the previous fiscal year to 216 thousand
+ADS per day in the 2016 fiscal year. The number of ADS outstanding also dropped to 16.7 million
+units at September 30, 2016, from 23.2 million ADS at the end of the 2015 fiscal year.
+The average volume of Infineon shares traded, measured in units, in the Xetra system,
+dropped by 28 percent in the 2016 fiscal year compared to the previous year. 5.5 million shares
+were traded daily in the 2016 fiscal year, compared to 7.6 million shares in the previous year.
+The average daily trading volume of Infineon shares in euros fell slightly by 7 percent from
+€73.7 million in fiscal 2015 to €68.5 million in the 2016 fiscal year.
+Trading volumes and DAX ranking
+P see page 30
+0.22
+Proposal 2016
+0.20
+2015
+0.18
+Gross profit
+Research and development expenses
+Infineon improved by 5 places in the DAX ranking in terms of market capitalization, moving
+from 22nd place at the end of the 2015 fiscal year to 17th place at the end of the 2016 fiscal
+year. In terms of the volume traded in euros in Xetra and on the Frankfurt trading floor during
+the last twelve months, Infineon ranked 19th in the 2016 fiscal year, up from 21st place in
+the previous year.
+2,330
+Selling, general and administrative expenses
+(61)
+Net financial result (financial income and expenses, net)
+Income from investments accounted for using the equity method
+555
+763
+Operating income
+(30)
+(6)
+Other operating income and expenses, net
+(778)
+(717)
+(770)
+2,080
+(791)
+Assets
+Gain from investments accounted for using the equity method
+3
+4
+Less:
+Plus:
+Income tax
+36
+102
+Financial expense excluding interest expense²
+(3)
+(1)
+(1,585)
+(1,530)
+Total current liabilities
+Assets classified as held for sale
+(1,340)
+(1,615)
+Financial investments
+(673)
+(625)
+4
+Cash and cash equivalents
+Less:
+8,741
+Operating income from continuing operations after tax ⑫①ID:
+799
+664
+9,087
+Financial income excluding interest income¹
+75
+555
+5 >€250 million Major
+Short-term debt and current maturities of long-term debt
+1 <10% Unlikely
+2 <40% Possible
+3 <60% Likely
+4 <90% Probable
+5 >90% Certain
+1
+1
+2
+3
+4
+5
+Likelihood of Occurrence
+Low Risk
+33
+Medium Risk
+High Risk
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Group performance
+Review of financial condition | Review of liquidity
+ROCE for the 2016 and 2015 fiscal years is calculated as follows:
+€ in millions
+Operating income
+2016
+2015
+763
+Plus:
+17
+Liabilities classified as held for sale
+12%
+220
+471
+(gross cash position higher than debt)
+Net cash position
+(gross cash position higher than debt)
+Working capital
+550
+Investments
+785
+Between €700 and €850 million
+About €850 million
+739
+826
+Between €750 and €900 million
+About €950 million
+INFINEON TECHNOLOGIES
+Net cash position
+ANNUAL REPORT 2016
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+80
+60
+Comparison of original outlook and actual figures for the 2016 fiscal year
+A Segment Result Margin of 16 percent was forecast at the mid-point of the planned range for
+revenue growth. Actual revenue growth in the 2016 fiscal year was 12 percent, 1 percentage
+point lower than the mid-point. The Segment Result Margin of 15.2 percent was therefore in
+line with expectations. Free cash flow totaled €490 million in the 2016 fiscal year, slightly below
+the expected range of between €500 million and €600 million. The Return of Capital employed
+(ROCE) improved year-on-year from 12.8 percent to 15.0 percent and therefore in line with
+expectations.
+Revenue grew by 12 percent in the 2016 fiscal year and therefore within the forecast range
+of 13 percent plus/minus 2 percentage points. The gross margin increased as forecast slightly
+from 35.9 percent to 36.0 percent year-on-year. Operating expenses developed better than
+expected. Growth in line with or slightly below revenue growth had been forecast for research
+and development expenses as well as for selling, general and administrative expenses.
+Research and development expenses increased by 7 percent, 5 percentage points below the
+rate of revenue growth and therefore in line with expectations. By contrast, selling, general
+and administrative expenses increased by only 2 percent, compared with revenue growth of
+12 percent, and therefore at a substantially less pronounced rate than revenue.
+Explanatory comments to the outlook for the 2017 fiscal year
+Assumed euro/US dollar exchange rate
+As a globally operating organization, Infineon generates revenue not only in euros, but also in
+foreign currencies, predominantly in US dollars. It also incurs expenses both in US dollars and in
+currencies closely correlated to the US dollar, such as the Singapore dollar, the Malaysian ringgit
+and the Chinese renminbi. The impact of non-euro denominated revenue and expenses does
+not always balance out. For this reason, fluctuations in exchange rates, particularly between
+the euro and the US dollar, influence the amounts reported for revenue and earnings. Excluding
+the effect of currency hedging instruments, the impact of a deviation of 1 cent in the actual
+exchange rate of the US dollar against the euro compared to the forecast rate would amount
+to a change in Segment Result of approximately €2 to €3 million per quarter, or approximately
+€8 to €12 million per fiscal year compared to the forecast value. These figures assume, however,
+that the exchange rates of currencies correlated with the US dollar - in which expenses arise
+for Infineon - change in parallel to the euro/US dollar exchange rate. In terms of revenue, the
+impact of exchange rates is limited almost entirely to the euro/US dollar rate, where a deviation
+of 1 cent in the actual exchange rate compared to the forecast rate would have an impact on
+revenue of approximately €8 million per quarter, or approximately €32 million per fiscal year.
+Planning for the 2017 fiscal year is based on an assumed average exchange rate for the US dollar
+against the euro of US$1.10.
+Growth prospects for the global economy and the semiconductor market
+The world economy grew by 2.6 percent in the 2015 calendar year. Global gross domestic product
+(GDP) is expected to grow by around 2.4 percent in the 2016 calendar year. The world economy
+has therefore continued to move sideways and without the increase in momentum which had
+still been predicted by economists at the International Monetary Fund (IMF) in the fall of 2015.
+At that stage, the forecast growth rate for the 2016 calendar year stood at 3.0 percent, which
+was subsequently adjusted downwards as the year progressed in the face of deteriorating eco-
+nomic conditions. Like previous years, the 2016 calendar year was dominated by geopolitical
+crises and fears of terrorism. On top of this came the surprising vote of the British electorate
+to leave the European Union. This decision, which is likely to have negative repercussions for
+economic growth, will also raise levels of uncertainty over the coming years. Outside Europe
+the US economy progressed rather weakly compared to the previous growth. China labored
+on with the process of economic transformation and Japan, too, showed no signs of economic
+recovery. Countries such as Brazil and Russia, where state revenues are closely tied to oil and
+commodity prices, continued to suffer from low, albeit slowly recovering prices.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+Combined Management Report | Our 2016 fiscal year
+In the range of €1.7-€2.4 billion and
+therefore within the target range of €1 billion
++10% to 20% of revenue
+2,240
+34.6%
+In the range of 30%-40% relative to revenue,
+therefore within the target of 30%-40%
+Slight decrease compared to FY 2016
+Supplementary
+performance indicators
+Growth and profitability
+performance indicators
+Change in revenue
+34%
+Increase by 13%
+compared to previous year
+Gross margin
+35.9%
+plus/minus 2 percentage points
+Slight increase compared to FY 2015
+36.0%
+Research and
+717
+Development expenses
+30%
+2,013
+34.7%
+Gross cash position
+Liquidity performance indicators
+2%
+57%
+administrative expenses
+81
+Increase below revenue growth
+791
+7%
+770
+Increase in line with or
+slightly below revenue growth
+Increase slightly below revenue growth
+778
+Selling, general and
+Increase by 6%
+plus/minus 2 percentage points
+Slight increase compared to FY 2016
+Increase below revenue growth
+IMF economists forecast a growth rate of 2.8 percent for the 2017 calendar year. Economic
+stimulus measures in China, Japan and other countries, as well as low interest rates, should
+have a positive impact on demand in the fields of consumer spending and investments. The
+expected continued recovery in oil and commodity prices would also provide some welcome
+financial headroom for raw material-exporting countries. Brazil and Russia could therefore exit
+their two-year-long recession at some stage during the 2017 calendar year. Nevertheless, the
+level of risks and challenges to which the world - and hence the world economy - is exposed
+remains high. Protectionist tendencies, the threat of terrorism and unresolved conflicts in
+various countries and regions are just some of the factors that could have a negative impact.
+The global semiconductor market has mirrored the world economy's performance over the
+past two years. After slipping by 2.0 percent in the 2015 calendar year, the semiconductor
+market is expected to register another slight contraction in the 2016 calendar year.
+At an expected growth rate of 4.8 percent, the outlook for the global semiconductor market
+is considerably more optimistic for the 2017 calendar year.
+The gross cash position is expected to finish the 2017 fiscal year at a level of between €1.7 billion
+and €2.4 billion. Hence, Infineon expects to meet its capital structure targets again in the 2017
+fiscal year. See "Capital structure targets demonstrate our reliability” in the chapter “Group
+strategy" for information on capital structure targets.
+ROCE
+Capital employed is forecast to rise in the 2017 fiscal year, with net income remaining more or
+less stable. The Return on Capital Employed (ROCE) is therefore expected to decrease slightly
+compared to its previous year's level of 15.0 percent. This decrease is due to the fact that
+the expected improvement in Segment Result is offset by higher tax expenses, as well as an
+increase in capital employed that is the result of the consolidation of MoTo (see the chapter
+"Significant events after the end of the reporting period").
+Overall statement on the expected development of the Infineon Group
+Based on forecasts for the global economy and the semiconductor market in the 2017 calendar
+year, Infineon predicts year-on-year revenue growth of 6 percent, plus or minus 2 percentage
+points. The gross margin is expected to improve slightly. At the mid-point of the planned range
+for revenue growth, the Segment Result Margin is expected to come in at about 16 percent.
+Investments will be about €950 million. Depreciation and amortization are expected to be about
+€830 million. Free cash flow from continuing operations is expected to reach an amount of
+between €400 million and €500 million. The Return on Capital Employed (ROCE) is expected
+to decrease slightly compared to its previous year's level of 15.0 percent.
+Psee page 22 ff.
+Risk and opportunity report
+Risk policy: Underlying principles of our risk and opportunity management
+Effective risk and opportunity management is central to all of our business activities and
+plays an important role in implementing the strategic targets described in the chapter "Group
+strategy" - namely achieving sustainable, profitable growth and preserving our financial
+resources through efficient employment of capital. Infineon's risk and opportunity profile is
+characterized by periods of rapid growth, followed by periods of significant market decline,
+a substantial need for capital investment in order to achieve and sustain our market position
+and an extraordinarily rapid pace of technological change. Gaining a leading edge through
+technological innovation also has a legal dimension. Against this background, Infineon's risk
+policy is aimed firstly at taking advantage of identified opportunities as quickly as possible in
+a way most appropriate to increasing the value of the business, and secondly at proactively
+mitigating risks - particularly those capable of posing a threat to Infineon's going-concern
+status - by adopting appropriate countermeasures. Risk management at Infineon is therefore
+closely linked to forecasting and the implementation of our business strategies. Ultimate
+responsibility for risk management lies with the Infineon Management Board.
+Coordinated risk management and control system elements are in place that enable us to
+pursue our stated risk policy in practice. Alongside the "Risk and Opportunity Management
+System" and the "Internal Control System with respect to Financial Reporting Processes"
+described below, it also includes the related forecasting, management and internal reporting
+processes as well as the Compliance Management System.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+84
+Risk and Opportunity Management System
+Infineon's centralized risk management system is based on a Group-wide, management-
+oriented Enterprise Risk Management (ERM) approach, which aims to cover all relevant risks
+and opportunities. The approach is based on the "Enterprise Risk Management - Integrated
+Framework" developed by the Committee of Sponsoring Organizations of the Treadway
+Commission (COSO). The objective of the system is the early identification, assessment and
+management of risks that could have a significant influence on Infineon's ability to achieve its
+strategic, operational, financial and compliance-related targets. We therefore define risk/
+opportunity as the occurrence of future uncertainties that could result in a negative or positive
+variance from forecast. We incorporate all relevant organizational units within the Group in
+this analysis, thus covering all segments, significant centralized functions and regions.
+Responsibility for processes and systems relating to Risk and Opportunity Management
+rests with the Risk Management and Internal Control System (ICS) function within the corpo-
+rate finance department and with designated Risk Officers working at segment, corporate
+function and regional levels. Responsibility for the identification, measurement, management
+and reporting of risks and opportunities lies with the management of the organizational
+unit concerned.
+In organizational terms, the Risk and Opportunity Management System is structured in a
+closed-loop, multiple-stage process, which stipulates the manner and criteria to be applied to
+identify, measure, manage and report on risks and opportunities and defines how the system
+is to be monitored as a whole. Major components of the system are a quarterly analysis of risks
+and opportunities, reporting by all consolidated entities, an analysis of the overall situation
+at segment, regional and Group level, reporting to the Management Board on the risks and
+opportunities situation as well as major management measures undertaken. The Management
+Board, in turn, reports regularly to the Supervisory Board's Investment, Finance and Audit
+Committee. Where necessary, standard processes are supplemented by the ad-hoc reporting
+of any major risks identified between regular reporting dates.
+Risks and opportunities are measured on a net basis, i.e. after factoring in any risk mitigation
+or hedging measures, but without offsetting any provisions recognized. The time periods and
+the measurement categories used are closely linked to our short- and medium-term business
+planning and Group targets.
+All relevant risks and opportunities are assessed uniformly across the Group in quantitative
+and/or qualitative terms, based on the dimensions degree of impact on operations, liquidity,
+earnings, cash flows and reputation on the one hand and likelihood of occurrence on the other.
+The scales used to measure these two factors (degree of impact and likelihood of occurrence)
+and the resulting risk assessment matrix are depicted in the following table.
+4 > €100 million Significant
+3 >€60 million Moderate
+2 >€20 million Minor
+2
+3
+Likelihood of Occurrence
+Gross cash position and net cash position
+<€20 million Marginal
+on Segment Result
+Degree of Impact
+4
+5
+Degree of Impact
+Risk assessment matrix
+1
+15.0%
+83
+Combined Management Report | Our 2016 fiscal year
+Revenue increase of 6 percent expected, plus or minus 2 percentage points,
+compared to the previous fiscal year
+Based on our expectations for the global economy and for the semiconductor market
+segments relevant for Infineon as described above, Infineon forecasts revenue growth of
+6 percent, plus/minus 2 percentage points, for the 2017 fiscal year. The Automotive segment
+is expected to grow at a substantially faster rate than the Group average. Growth in the
+Industrial Power Control segment is forecast to be roughly in line with or slightly higher than
+the Group average. The Power Management & Multimarket and Chip Card & Security segments
+are both expected to report growth rates below the Group average.
+Slight upward trend in gross margin expected
+At the mid-point of the planned range for revenue growth, the gross margin for the 2017
+fiscal year is expected to rise slightly. The gross margin will still be negatively influenced by
+acquisition-related expenses.
+Operating expenses expected to increase
+Infineon expects operating expenses to increase in absolute terms as a result of revenue growth.
+As a percentage of revenue, however, the increase should be lower than revenue growth.
+Research and development expenses and selling, general and administrative expenses are
+both forecast to increase below revenue growth. Acquisition-related expenses included in
+operating expenses are expected to be slightly below the previous fiscal year's level.
+Segment Result Margin of approximately 16 percent expected
+Based on the forecast changes in revenue and expenses described above, the Segment Result
+Margin in the 2017 fiscal year is expected to increase to approximately 16 percent, at the
+mid-point of the planned range for revenue growth.
+Non-segment result
+Infineon expects the non-segment result for the 2017 fiscal year to be a negative amount of
+between €200 million and €250 million, mainly attributable to acquisition-related expenses
+(2016 fiscal year: minus €219 million). Approximately €130 million of the forecasted amount
+relates to non-cash-relevant depreciation and amortization arising in conjunction with the
+International Rectifier acquisition.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+82
+Financial result
+At September 30, 2016, debt amounted to €1,769 million, compared with cash and cash
+equivalents and financial investments totaling €2,240 million. The financial result (financial
+income less financial expense) for the 2016 fiscal year was a net expense of €61 million. After
+the planned acquisition of Wolfspeed takes legal effect, Infineon will raise additional debt of
+approximately US$720 million and use some of its gross cash position to finance the purchase
+price. The resulting higher level of debt, combined with the lower amount of interest income
+that will be earned on reduced volumes of cash and cash equivalents, means that the financial
+result for the 2017 fiscal year will decline year-on-year.
+P see page 78
+Psee page 29 f.
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+Free cash flow in the 2017 fiscal year is forecast to reach an amount of between €400 million
+and €500 million.
+Free cash flow from continuing operations
+Report on expected developments, together with associated material risks and opportunities
+Outlook | Risk and opportunity report
+The investments in operations relate in roughly equal portions to frontend-related capacity
+expansion measures, improvements to existing frontend manufacturing facilities and backend-
+related investments, and will contribute to the expansion of Infineon's 200-millimeter as well
+as its 300-millimeter manufacturing capacities. Continuous investments in automation, quality,
+innovation and infrastructure will also ensure that frontend manufacturing facilities keep
+pace with changing technological requirements. Around one third of capital expenditure in
+the 2017 fiscal year will be used to improve and expand backend manufacturing facilities.
+Depreciation and amortization are expected to be in the region of €830 million.
+Investments and depreciation/amortization
+Working capital is forecast to finish the 2017 fiscal year at between €750 million and €900 million.
+Working capital
+In Germany, Infineon's current tax expense is based on the applicable "minimum taxation"
+rules, under which only 40 percent of taxable profits arising in Germany are subject to current
+tax as a result of the utilization of tax loss carry-forwards. This results in a cash-effective tax
+rate of approximately 12 percent in Germany. At September 30, 2016, tax loss carry-forwards
+for German corporation tax and municipal trade tax purposes amounted to €2.0 billion and
+€3.1 billion respectively.
+The effective current tax rate (cash tax) for the Infineon Group in the 2017 fiscal year is fore-
+cast at approximately 15 percent. This tax rate is based on income, excluding the impact of
+the purchase price allocation in connection with the International Rectifier acquisition, and
+comprises the cash-effective German and foreign income taxes of Infineon Group entities.
+Income taxes
+Investments (defined by Infineon as the sum of purchases of property, plant and equipment,
+purchases of intangible assets and capitalized development assets) are planned to rise in the
+2017 fiscal year to approximately €950 million. This figure compares with €826 million in the
+2016 fiscal year, comprising investments in property, plant and equipment (€716 million) and
+capitalized development assets and other intangible assets (€110 million). Investments in
+capitalized development assets and other intangible assets in the 2017 fiscal year are planned
+at a similar level to one year earlier. The total figure for planned investments in the region of
+€950 million includes approximately €35 million for a new office building at Infineon's head-
+quarters in Neubiberg near Munich. The ratio for investments as a percentage of revenue (at the
+mid-point of the planned range for the 2017 fiscal year) is forecast at 13.8 percent. Excluding
+expenditure on the new office building, the percentage rate is about 13 percent.
+Slight increase compared to FY 2015
+Net cash position
+ROCE
+Group performance
+Review of liquidity
+76
+Net cash provided by operating activities from continuing operations
+significantly up on previous year
+Net cash provided by operating activities from continuing operations in the 2016 fiscal
+year amounted to €1,313 million, an improvement of €356 million on the €957 million reported
+for the previous fiscal year. The main reason for the improvement was the €259 million
+increase in income from continuing operations before scheduled depreciation, amortization,
+impairment charges, interest and taxes totaling €1,612 million (2015: €1,353 million). In addi-
+tion, the figure reported for the previous fiscal year includes a payment of €104 million to settle
+disputes relating to the continuation of the right to use Qimonda patents as well as a payment
+of €83 million to the EU Commission relating to a fine imposed in conjunction with chip card
+antitrust proceedings.
+Net cash used in investing activities from continuing operations mainly reflects
+investments in property, plant and equipment
+Net cash used in investing activities from continuing operations totaled €1,098 million
+in the 2016 fiscal year, resulting primarily from investments in property, plant and equipment
+(€716 million) and in intangible and other assets (€110 million). Net purchases of financial
+investments resulted in a cash outflow of €275 million.
+Net cash used in investing activities from continuing operations in the previous fiscal year
+amounted to €2,593 million, including €1,869 million (after deduction of cash acquired) for
+the acquisition of International Rectifier. Investments in property, plant and equipment and in
+intangible and other assets totaled €785 million.
+Dividend payment results in net cash used in financing activities from
+continuing operations
+Net cash used in financing activities from continuing operations totaled €229 million in
+the 2016 fiscal year. This figure includes primarily the cash outflow for the dividend payment
+for the 2015 fiscal year amounting to €225 million. In April 2016, Infineon also successfully
+completed a US Private Placement (USPP) of notes with a volume of US$935 million, which
+provided net proceeds amounting to €819 million. The US dollar loan of US$934 million raised
+in conjunction with the acquisition of International Rectifier was subsequently repaid, resulting
+in a cash outflow of €820 million.
+Net cash provided by financing activities from continuing operations in the 2015 fiscal year
+amounted to €1,363 million, comprising mainly a net cash inflow of €1,584 million in con-
+junction with the financing of the acquisition of International Rectifier and a cash outflow for
+the dividend paid for the 2014 fiscal year amounting to €202 million.
+Net cash used for discontinued operations
+Net cash used for discontinued operations in the 2016 fiscal year totaled €22 million, mainly
+due to payments to the Qimonda insolvency administrator (€14 million) relating to settlement
+agreements reached for residual liability claims pertaining to Qimonda Dresden employees
+and legal defense costs.
+In the previous fiscal year, net cash used for discontinued operations amounted to €140 million,
+of which €125 million (net of value added tax reimbursed) related to payments in conjunction
+with the partial settlement reached with the Qimonda insolvency administrator.
+Combined Management Report | Our 2016 fiscal year
+INFINEON TECHNOLOGIES
+Combined Management Report | Our 2016 fiscal year
+Group performance
+Review of liquidity
+77
+Free cash flow
+Infineon reports the free cash flow figure, defined as net cash provided by and/or used in
+operating activities and net cash provided by and/or used in investing activities, both from
+continuing operations, after adjusting for cash flows related to the purchase and sale of
+financial investments. Free cash flow serves as an additional performance indicator, since
+Infineon holds part of its liquidity in the form of financial investments. This does not mean
+that the free cash flow calculated in this way is available to cover other disbursements, since
+dividend, debt-servicing obligations and other fixed disbursements are not deducted. Free
+cash flow should not be seen as a replacement or superior performance indicator, but rather
+as an additional useful item of information over and above the disclosure of the cash flow
+reported in the Consolidated Statement of Cash Flows, and as a supplementary disclosure to
+other liquidity performance indicators and other performance indicators derived from the
+IFRS figures. Free cash flow includes only amounts from continuing operations, and is derived
+as follows from the Consolidated Statement of Cash Flows:
+€ in millions
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Purchases of (proceeds from sales of) financial investments, net
+Free cash flow
+2016
+2015
+1,313
+957
+(1,098)
+275
+(2,593)
+ANNUAL REPORT 2016
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+(385)
+(48)
+ROCE 1/②
+Capital employed ②
+5,334
+5,176
+15.0%
+12.8%
+1 Financial income in the 2016 and 2015 fiscal year amounted to €6 million and €10 million, respectively, and consisted of
+€6 million, respectively, of interest income.
+2 Financial expense in the 2016 and 2015 fiscal year amounted to €67 million and €49 million, respectively, and consisted of
+€64 million and €48 million, respectively, of interest expense.
+The reported ROCE was calculated using actual capital employed, without adjustment for
+exceptional factors such as provisions recorded in connection with the Qimonda insolvency,
+amounts relating to purchase price allocations for acquisitions and changes in deferred tax
+assets and liabilities, all of which influencing the level of capital employed.
+Review of liquidity
+Cash flow
+€ in millions
+2016
+2015
+Net cash provided by operating activities from continuing operations
+1,313
+957
+28
+12.8%
+Effect of foreign exchange rate changes on cash and cash equivalents
+Change in cash and cash equivalents
+(413)
+(36)
+Net change in cash and cash equivalents
+(18)
+(140)
+1,363
+(229)
+Net cash provided by (used in) financing activities from continuing operations
+Net change in cash and cash equivalents from discontinued operations
+(2,593)
+(1,098)
+Net cash used in investing activities from continuing operations
+(22)
+490
+(12)
+Net cash provided by operating activities exceeds investments
+Free cash flow in the 2016 fiscal year was a positive amount of €490 million. Net cash provided
+by operating activities from continuing operations amounting to €1,313 million exceeded
+investments in property, plant and equipment and intangible assets totaling €826 million.
+By contrast, free cash flow in the previous fiscal year was a negative amount of €1,654 million,
+which included €1,869 million (after deduction of cash acquired) relating to the acquisition
+of International Rectifier. In addition, payments to the Qimonda insolvency administrator, net
+of proceeds from the sale of the Qimonda patents, and to the EU Commission reduced free
+cash flow from continuing operations by €178 million.
+On November 17, 2016, Infineon signed a purchase agreement to acquire 93 percent of the shares
+of MoTo Objekt Campeon GmbH & Co. KG ("MoTo"). The purchase requires the approval of
+the responsible regulatory authorities. The transaction is expected to be completed towards
+the end of the 2016 calendar year and will result in the subsequent full consolidation of MoTo.
+Moto is the owner and lessor of the existing Campeon office complex in Neubiberg, near Munich,
+the location of Infineon's headquarters. A lease agreement relating to the office complex,
+with a lease term of 20 years, has been in place with MoTo since October 2005. After a period
+of 15 years, Infineon has the right to acquire the property or lease it for an additional five-year
+period (see note 24 to the Consolidated Financial Statements).
+The shares are being sold by Geneba RE 3 B.V. The purchase consideration amounts to
+€113 million and will be financed by Infineon out of cash on hand. The acquisition will earn
+a rate of return well above Infineon's borrowing cost and, as from the beginning of the 2017
+fiscal year, is accretive to the Segment Result by a low double-digit million euro amount. Free
+cash flow for the 2017 fiscal year will decrease as a result of the payment of the €113 million
+purchase consideration. In subsequent years, the transaction will result in an increase in free
+cash flow of between €20 million and €30 million per year. MoTo's existing financial liabilities
+amounting to approximately €220 million will increase Infineon's debt accordingly.
+Report on expected developments,
+together with associated
+material risks and opportunities
+P see page 78
+On July 14, 2016, Infineon and Cree signed a contract relating to the purchase of Cree's
+Wolfspeed business. Infineon intends to acquire Wolfspeed, including the related wafer
+substrate business, for a purchase price of US$850 million. Closing, which is expected to take
+place at the beginning of the 2017 calendar year, requires approval from the responsible
+regulatory authorities. For this reason, the forecasts made in this chapter only relate to the
+Infineon Group's operations. Once the acquisition has been successfully completed, the
+outlook will be adjusted to take account of the new corporate structure.
+On November 17, 2016, Infineon signed a purchase agreement to acquire 93 percent of the
+shares of MoTo Objekt Campeon GmbH & Co. KG (MOTO) (see the chapter "Significant events
+after the end of the reporting period”). The impact of this transaction on Infineon's key
+performance indicators is included in the outlook provided below.
+INFINEON TECHNOLOGIES
+ANNUAL REPORT 2016
+€ in millions, except percentages
+Principal performance indicators
+Combined Management Report | Our 2016 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+79
+Outlook
+Actual and target values for performance indicators
+The following table and subsequent comments compare the actual values of Infineon's key
+performance indicators with the original forecasts for the 2016 fiscal year and show the outlook
+for the 2017 fiscal year. The performance figures for the 2016 fiscal year include the financial
+figures of International Rectifier for a full fiscal year. Actuals shown for the 2015 fiscal year
+include figures for International Rectifier from January 13, 2015 onwards, in other words with
+effect from the acquisition closure date.
+FY 2015
+(1,654)
+continuing operations
+About 16% (at the mid-point of the
+planned range for revenue growth)
+Between €400 and €500 million
+490
+Between €500 and €600 million
+(1,654)
+P see page 174
+Free cash flow from
+About 16% (at the mid-point of the
+planned range for revenue growth)
+15.5%
+Segment Result Margin
+Outlook
+FY 2017
+Actuals
+FY 2016
+Original Outlook
+FY 2016
+15.2%
+Significant events after the end
+of the reporting period
+Actuals
+78
+Gross cash position and net cash position
+Significant events after the end of the reporting period | Report on expected developments, together with associated material risks and opportunities
+The following table reconciles the gross cash position and the net cash position (i.e. after
+deduction of debt). Since some liquid funds are held in the form of financial investments,
+which, for IFRS purposes, are not considered to be "cash and cash equivalents", Infineon
+reports on its gross and net cash positions in order to provide investors with a better under-
+standing of its overall liquidity. The gross and net cash positions are determined as follows
+from the Consolidated Statement of Financial Position:
+€ in millions
+Cash and cash equivalents
+Septem-
+ber 30, 2016
+Septem-
+ber 30, 2015
+625
+673
+1,615
+1,340
+Gross cash position
+2,240
+2,013
+Less:
+Financial investments
+220
+INFINEON TECHNOLOGIES
+Free cash flow totaling €490 million easily exceeded the dividend payment of €225 million.
+The gross cash position as of September 30, 2016 increased accordingly by €227 million.
+471
+Net cash position
+ANNUAL REPORT 2016
+Combined Management Report | Our 2016 fiscal year
+1,793
+Total debt
+1,760
+1,752
+33
+17
+1,769
+Short-term debt and current maturities of long-term debt
+Long-term debt
+109 Consolidated Statement of Comprehensive Income
+110 Consolidated Statement of Financial Position
+108 Consolidated Statement of Operations
+Management Board and Supervisory Board
+88 Infineon Technologies AG
+91 Corporate Governance
+111 Consolidated Statement of Cash Flows
+87 Overall statement of the Management Board
+with respect to Infineon's financial condition
+as of the date of this report
+Consolidated Financial Statements
+112 Consolidated Statement of Changes in Equity
+114 Notes to the Consolidated Financial Statements
+Financial calendar
+171 Responsibility Statement by the Management Board
+172 Independent Auditor's Report
+178 List of Abbreviations
+179
+Letter to shareholders
+179 Imprint
+73 Report on expected developments, together with
+associated material risks and opportunities
+Further Information
+62 Group performance
+Content
+60 The Infineon share
+(outlook "stable")
+Letter to shareholders
+Listing in the
+Dow Jones
+Sustainability™
+Index
+Management Board and Supervisory Board
+2 Letter to shareholders
+6 The Management Board
+Our 2018 fiscal year
+8 Report of the Supervisory Board
+to the Annual General Meeting
+Our Group
+16 Finances and strategy
+40 The segments
+50 Research and development
+54 Operations
+56 Internal management system
+59 Sustainability at Infineon
+Combined Management Report
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Infineon Technologies AG is a world leader in semiconductor solutions that make life easier, safer and greener.
+Microelectronics from Infineon is the key to a better future. In the 2018 fiscal year (ending 30 September), the
+Company reported sales of approximately €7,6 billion with some 40,100 employees worldwide. Infineon is listed
+on the Frankfurt Stock Exchange (ticker symbol: IFX) and in the USA on the over-the-counter market OTCQX
+International Premier (ticker symbol: IFNNY).
+Chief Executive Officer
+In all of our business areas we want to take on a leading position or be able to do so within the foreseeable future,
+which means growing faster than the market. In this way we can see evidence that we are on the right path and can
+be the preferred partner for our customers. Our increased business targets show that we took the right decisions
+in the past. In the 2018 fiscal year we took additional steps to make sure we can continue our growth trajectory in
+the years to come as well. I would like to point out some of them.
+Technology leadership and a broad technology portfolio are important factors for our success. We have developed
+new technologies based on silicon carbide (SiC) and gallium nitride (GaN) in our core power semiconductor business.
+These materials have properties superior to those of silicon; however, technical hurdles remain before we can
+manufacture them in high volumes and at a reasonable cost. In the still nascent SiC market we have in the meantime
+established ourselves with our CoolSiCTM MOSFET and our module manufacturing competence. We have secured
+our supply of SiC wafers under a long-term supply agreement with Cree, Inc. (USA). This means we are excellently
+positioned to drive the market penetration of silicon carbide forward: Infineon is the company that can offer the
+right power semiconductor solution for every application.
+Furthermore, we have taken a variety of steps to strengthen our position through portfolio expansion. For example,
+with the acquisition of the Danish startup company Merus Audio we complemented our portfolio of integrated
+Class D audio amplifiers. Moreover, we signed Memoranda of Understanding with the Chinese internet conglomer-
+ates Alibaba Cloud and JD providing for collaboration on Internet of Things (IoT) applications. Here, expertise from
+Dresden (Germany) will also come into play: We have built a new development center at our Dresden site that
+concentrates on solutions for automotive and power electronics as well as for Artificial Intelligence (AI). Algorithms,
+Al and the lot today already play a central role in the context of the constantly increasing interconnection of traffic
+systems. We will use this know-how to provide Al solutions for other target markets as well on a long-term basis
+under the excellent conditions offered by the eco-system in Dresden.
+Another milestone is the joint venture established in February with SAIC Motor Corporation Ltd., China's largest
+automobile manufacturer. This joint venture gives us even better access to the world's largest and fastest-growing
+market for electro-mobility. Volume manufacturing of the power semiconductor modules began in August at the
+Infineon Wuxi (China) site. The objective is to supply customers who produce in China. Customers outside of China
+will still be supplied directly by Infineon.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+0=0C
+Lo-i
+In the short term we are even expecting an elevated growth-level. Due to the well-filled order books, we expect
+revenue growth for the Group of 11 percent plus or minus 2 percentage points for the 2019 fiscal year. At the mid-point
+of the forecast revenue range, we expect a Segment Result Margin of around 18 percent and investments of €1.6 billion
+to €1.7 billion.
+Power Control
+Automotive
+Infineon at a glance
+Infineon
+Infineon Technologies AG
+Annual Report 2018
+Page 40
+Rated credit-worthiness
+"S&P Global Ratings"
+"BBB"
+Industrial
+Dr. Reinhard Ploss
+› Segment Result margin of at least 17 percent: In the 2018 fiscal year, in spite of the effects of the weak US dollar
+mentioned above, we achieved a Segment Result margin of 17.8 percent. In doing so we were able to compensate
+for the continued sharp increase in prices for raw wafers and for other materials such as copper. This result is
+thus proof of our high performance capabilities - and we continue on this path. Currently we are not expecting a
+reversal of the trend in material costs. Furthermore, increased investments will result in higher depreciation and
+amortization. These two factors thus represent additional burdens for now, but we are working on compensating
+them by progress in productivity and higher-quality product and system solutions, and will therefore be able to
+keep our gross margin stable. We see opportunities to increase the Segment Result margin through the scaling of
+certain operating expenses more slowly than revenues: Infineon's lifeblood is technological innovation. Research
+and development activities thus ensure the future viability of the company. Expenses are therefore expected to
+develop in in line with revenue growth. On the other hand, for selling, general and administrative expenses we
+leverage economies of scale and plan efficiency improvements. This allows us to gradually increase our Segment
+Result margin in spite of increased burdens in terms of cost of goods sold.
+Letter to shareholders
+Neubiberg, November 2018
+2
+Dear shareholders
+and business partners,
+dear Infineon colleagues,
+Infineon has added a new chapter to its success story:
+The 2018 fiscal year was very strong in economic terms and
+has given us a glimpse of the future. We have set the course
+for long-term, profitable growth of Infineon.
+First, to the figures for the fiscal year under report. Compared
+to the previous year, revenue increased by 8 percent to
+€7,599 million. The unfavorable development of the US dollar
+exchange rate partly masked the underlying dynamic of our
+business. The annual average exchange rate was 1.19. If it
+had remained at the previous year's level of 1.11, our revenue
+growth in the previous fiscal year would have been 12 percent
+and as such clearly above the original forecast of 9 percent.
+Not only did we grow strongly, we also became more profitable.
+Management Board and Supervisory Board
+Letter to shareholders
+4
+3
+The Segment Result increased to €1,353 million, the Segment Result margin was 17.8 percent. This makes 2018
+another one in a long series of successful fiscal years: For the fifth time in a row we were able to significantly
+increase revenue and Segment Result. Our strategy is paying off, the orientation of the company promises long-term
+success. We want our shareholders to adequately participate in this success. Therefore, for the fifth consecutive
+year, the Management Board and Supervisory Board will propose an increase in the dividend to the Annual General
+Meeting on 21 February 2019, this time to 27 cents per share.
+Our world is facing serious challenges: demographic and social change, climate change and scarcity of resources,
+urbanization and the digital transformation. Our solutions are the key to a better future because they make it
+possible to achieve more while using less resources. Infineon's current business has organically grown at an average
+rate of approximately 9 percent per year since the Company was established as an independent corporation in the
+1999 fiscal year, faster than the semiconductor market as a whole. This success is due both to the fact that we have
+grown in scale by gaining market shares in our core business, as well as the fact that we have grown in scope, i.e. we
+have continuously expanded our range of activities into adjacent markets with new products and solutions. Our
+strategic approach "Product to System" helps us continue to rigorously develop our core business. Starting with
+a comprehensive understanding of customer requirements, we develop solutions that take the overall system
+into consideration, thus providing the customer with important competitive advantages. Software is playing an
+increasingly important role here. You can read more on this topic in the chapter "Group Strategy".
+Our strategic orientation towards topics with a high relevance for society and our technological strength both point
+to a future with outstanding growth opportunities. For this reason we updated our target operating model and
+presented it to investors and analysts at our Capital Markets Day in London on 12 June 2018. For the most part, the
+structural growth drivers have horizons of several years, in some cases even of a decade or more. The same applies
+to the lifecycles of many platforms in which our products are used. This allows us to define robust, long-term targets.
+We are committed to the following targets:
+› Revenue growth of 9 percent: In the automotive sector, the increasing trend towards electro-mobility and the
+development towards the automation of more and more driving functions are the primary drivers of our growth.
+We thus expect the highest growth rate for the segment Automotive at 10 percent annually. The segments
+Industrial Power Control (8 percent expected average growth rate) and Power Management & Multimarket
+(9 percent expected average growth rate) also benefit from a large number of structural growth drivers such as
+energy storage for renewable energies, dynamically controlled electric motors in large and small devices and
+battery-powered applications. Information security is an essential success factor in many solutions. Under the
+leadership of our division Digital Security Solutions (previously Chip Card & Security) we will play a central role
+in driving market development for hardware-based security solutions. Because of the ongoing transition from
+card-based to embedded products, we expect a growth rate in the mid single-digit percent range.
+› Investment-to-sales ratio of 15 percent: During the previous fiscal year and also currently, our ability to ship is
+limited in several areas by the amount of available manufacturing capacities. This limits our customers' and our
+potential. We are therefore investing in order to take advantage of the current market opportunities. Accelerated
+revenue growth and ambitious investments go hand in hand. In the future, our investment-to-sales ratio will be
+15 percent of revenue at the target growth rate of 9 percent. The ratio of 15 percent does not include investments
+in cleanrooms and large office buildings as well as in measures to increase manufacturing flexibility, which we
+will use in the coming years to lay the foundation for participating in a possibly even larger demand dynamic
+in our target markets. By making significant investments in the expansion of our manufacturing capacities, we
+fulfill the prerequisite for working together with our customers to supply growing demands in existing and new
+markets. We continue to rely on in-house manufacturing, especially in the area of power semiconductors, since
+our know-how of the manufacturing processes represents an important competitive advantage. With the
+300-millimeter thin-wafer technology, we can manufacture cost-effectively at the highest quality levels and can
+take advantage of the lower capital intensity. In approximately three years we expect to reach the capacity limit
+of our 300-millimeter fab in Dresden (Germany), which is why we have begun construction of a similar second
+factory in Villach (Austria), paving the way for long-term growth. The highly visible investment of about €1.6 billion
+will create around 400 highly qualified jobs and will allow for an annual revenue volume of approximately
+€1.8 billion when operating at full capacity.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Management Board and Supervisory Board
+P see page 20 ff.
+± 17.8 percent
+Applications
+€7.599 billion
++8 percent
+7,063
+8
+Automotive
+3,284
+43
+2,989
+42
+10
+Industrial Power Control
+1,323
+17
+1,206
+17
+10
+7,599
+Power Management & Multimarket
+31
+2,148
+31
+8
+Digital Security Solutions
+664
+Other Operating Segments
+10
+10
+900
+708
+10
+(6)
+9
+2,318
+Revenue by segment
+1
+10
+1,071
+15
+5
+Greater China
+34
+2,376
+34
+9
+Therein: China
+1,921
+25
+1,735
+25
+11
+Japan
+534
+7
+714
+60
+9
+719
+Therein: USA
+1
+0
+12
+12
+894
+Americas
+15
+7
+463
+881
+15
+11
+0
+17.8
+1,208
+17.1
+12
+Property, plant and equipment
+3,038
+2,659
+14
+Total assets
+10,879
+9,945
+9
+Total equity
+6,446
+1,353
+5,636
+Net cash provided by operating activities from continuing operations
+1,571
+1,728
+(9)
+Net cash used in investing activities from continuing operations
+(1,163)
+(1,131)
+(3)
+Net cash used in financing activities from continuing operations
+Free cash flow²
+(542)
+(340)
+(59)
+618
+594
+14
+Segment Result/Segment Result Margin
+36
+790
+Corporate and Eliminations
+Gross profit/Gross margin
+2,885
+38.0
+2,621
+37.1
+10
+Research and development expenses
+(836)
+11.0
+(776)
+11.0
+8
+Selling, general and administrative expenses
+(850)
+11.2
+(819)
+1,075
+(1)
+(143)
+Gain (loss) from discontinued operations, net of income taxes
+Net income
+54
+791
+3
+1,218
+49
+983
+1,469
+Operating income
+4
+11.6
+Income from continuing operations
+1,129
+Asia-Pacific (excluding Japan, Greater China)
+7
+› Bare die business
+> Discrete IGBTs
+> Driver ICs
+> IGBT modules (low-power, medium-power,
+high-power)
+> IGBT module solutions including IGBT stacks
+> Intelligent power modules with integrated
+control unit, driver and switch
+> Silicon carbide MOSFETs and modules
+Key customers'
+ABB / Alstom / Bombardier / CRRC / Danfoss /
+Eaton/Emerson / Goldwind / Inovance / Midea /
+Nidec / Rockwell / Schneider Electric / Siemens/
+Sungrow/Toshiba / Vestas / Yaskawa
+Market position²
+#1 with a market share of 27.1%
+for IGBT-based power semiconductors
+Source: IHS Markit, Technology Group, September 2018
+1 In alphabetical order. Infineon's major distributions customers are Arrow, Avnet, Intron, Jingchuan, Macnica, Weikeng and WPG Holding (SAC).
+Product range
+Power
+& Multimarket
+Page 45
+Applications
+> Cellular infrastructure
+> Charging stations for electric vehicles
+> DC motors
+> HiRel (high-reliability components)
+> Internet of Things
+> LED and conventional lighting systems
+> Mobile devices
+> Power management (adapters, chargers,
+power supplies)
+Product range
+> Control ICs
+Management
+› Traction
+> Renewable energy generation
+> Industrial vehicles
+> Powertrain
+> Comfort electronics
+> Assistance systems and safety systems
+Segment Result and Margin
+€1.353 billion
+> Security
+Product range
+> 32-bit automotive microcontrollers for powertrain,
+safety and driver assistance systems
+> 3D ToF sensors
+> Discrete power semiconductors
+> IGBT modules
+> Industrial microcontrollers
+> Magnetic and pressure sensors
+> Power ICs
+> Radar sensor ICs (77 GHz)
+> Transceivers (CAN, LIN, Ethernet, FlexRay)
+> Voltage regulators
+> Industrial robots
+> Industrial power supplies
+> Industrial drives
+> Home appliances
+> Energy distribution
+> Charging stations for electric vehicles
+> Customized chips (ASICS)
+Applications
+Source: Strategy Analytics, April 2018
+#2 with a market share of 10.8%
+Market position²
+Denso / Hella / Hitachi / Hyundai / Keihin / Lear/
+Mando/Mitsubishi Electric / Omron / Preh /
+Valeo/Veoneer / ZF
+Aptiv / Bosch / BYD / Continental / Delphi /
+Key customers¹
+Page 42
+> Discrete low-voltage and high-voltage
+power MOSFETS
+> GPS low-noise amplifier
+> Low-voltage and high-voltage driver ICs
+Market position²
+#1 with a market share of 24.2%
+for smart card and secure ICs
+Source: ABI Research, October 2018
+2 All figures for 2017 calendar year. The market share of the five largest competitors is shown in the "Market position" section of the relevant segment.
+The figures provided in those sections with respect to changes in market share relate to the 2017 and 2016 market share figures as calculated in 2018.
+Due to changes in the way the market is analyzed, these figures may differ from the 2016 market share figures reported in 2017.
+Infineon at a glance
+Infineon key data
+As of and for the fiscal years ended 30 September (under IFRS)'
+Fiscal year from 1 October to 30 September
+2018
+2017
+€ in
+millions
+in % of
+revenue
+€ in
+millions
+in % of
+revenue
+2018/2017
+Change
+in %
+Revenue by region
+15
+1,094
+15
+1,171
+Therein: Germany
+8
+US Government Publishing Office / Watchdata
+32
+32
+2,443
+Europe, Middle East, Africa
+8
+7,063
+7,599
+2,272
+4
+Gemalto / Giesecke & Devrient / Google / HP/
+Idemia/Lenovo/ Microsoft / Samsung/
+> Embedded security controllers
+> MEMS and ASICs for pressure sensors
+> MEMS and ASICs for silicon microphones
+> Radar sensor ICs (24 GHz, 60 GHz)
+> RF antenna switches
+> RF power transistors
+> Silicon carbide diodes
+> TVS (transient voltage suppressor) diode
+Key customers'
+☐
+Airbus / Alibaba / Artesyn / Baidu / Boeing / Cisco/
+Dell/Delta / Ericsson / Google / Hewlett Packard
+Enterprise/HP/Huawei / Lenovo / LG Electronics/
+Lite-On / Makita / Nokia / Osram / Panasonic /
+Quanta / Samsung/ZTE
+Market position²
+#1 with a market share of 26.3%
+for standard power MOSFETs
+Source: IHS Markit, Technology Group, September 2018
+Digital Security
+Solutions
+(previously Chip Card & Security)
+Page 47
+> Dual-interface security controllers
+(contact-based and contactless)
+> Contactless security controllers
+> Contact-based security controllers
+Product range
+> Trusted computing
+> Ticketing, access control
+Key customers'
+> Payment system, mobile payment
+> Internet of Things
+> Healthcare cards
+> Governmental identification documents
+> Automotive
+> Authentication
+Applications
+> Mobile communications
+Depreciation and amortization
+2,599
+at a glance
+0.70
+36
+Adjusted earnings per share in € - diluted
+0.98
+0.85
+15
+Dividend per share in €³
+0.27
+0.25
+8
+Equity ratio
+59.3%
+56.7%
+Return on equity4
+16.7%
+0.95
+Diluted earnings per share in €
+36
+0.70
+Capital expenditure
+Gross cash position²
+Net cash position²
+861
+812
+6
+1,254
+14.0%
+1,022
+2,543
+2,452
+4
+1,011
+618
+Basic earnings per share in €
+0.95
+23
+Return on assets4
+64
+7.9%
+4 See the chapter "Review of financial condition" for definition, P page 67.
+5 Debt-to-total-capital ratio = long-term and short-term debt divided by total assets.
+Infineon at a glance
+Our year
+2018
+Infineon continued to grow during the 2018
+fiscal year. Revenue increased by 8 percent
+to €7.599 billion. Segment Result increased
+to €1.353 billion, corresponding to a margin
+of 17.8 percent. The revenue and profitability
+target, which we defined at the beginning
+of the fiscal year, has been adjusted due to
+currency effects and achieved in the course
+of the 2018 fiscal year.
+We make our customers more successful
+with leading technology and system under-
+standing. Here we benefit from long-term,
+global megatrends and develop solutions
+that make life easier, safer and greener.
+Today, our traditional core competencies
+are in greater demand than ever. At the
+same time, we continue to refine our growth
+strategy to prepare for the success of
+tomorrow. During the past fiscal year we
+have once again made strong progress
+in strategic projects.
+Our year
+Infineon continued to grow during the 2018
+fiscal year. Revenue increased by 8 percent
+to €7.599 billion. Segment Result increased
+to €1.353 billion, corresponding to a margin
+of 17.8 percent. The revenue and profitability
+target, which we defined at the beginning
+of the fiscal year, has been adjusted due to
+currency effects and achieved in the course
+of the 2018 fiscal year.
+We make our customers more successful
+with leading technology and system under-
+standing. Here we benefit from long-term,
+global megatrends and develop solutions
+that make life easier, safer and greener.
+Today, our traditional core competencies
+are in greater demand than ever. At the
+same time, we continue to refine our growth
+strategy to prepare for the success of
+tomorrow. During the past fiscal year we
+have once again made strong progress
+in strategic projects.
+At Infineon, success is not only defined by
+the targets that we achieve but also by the
+way that brought us there: Sustainability
+is at the core of our thinking. Listings in the
+Dow Jones Sustainability™ Europe Index
+and in the Dow Jones Sustainability™ World
+Index are both our reward and motivation.
+Revenue
+9.9%
+3 A dividend per share of €0.27 for the 2018 fiscal year will be proposed to the Annual General Meeting on 21 February 2019.
+7
+At Infineon, success is not only defined by
+the targets that we achieve but also by the
+way that brought us there: Sustainability
+is at the core of our thinking. Listings in the
+Dow Jones Sustainability™ Europe Index
+and in the Dow Jones Sustainability™ World
+Index are both our reward and motivation.
+40,098
+Inventory intensity 4
+37,479
+Debt-to-equity ratio4
+Debt-to-total-capital ratio5
+13.6%
+12.5%
+32.5%
+14.1%
+23.8%
+20.5%
+14.9%
+Return on Capital Employed (ROCE) 2
+Infineon employees as of 30 September
+2 See the chapter "Internal management system" for definition, P page 58 f.
+18.4%
+1 Columns may not add due to rounding.
+P see page 72
+Corporate Governance
+91
+Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB)
+Combined Management Report | Our 2018 fiscal year
+P see page 76 ff.
+Information pursuant to section 289a,
+paragraph 1, and section 315a, paragraph 1,
+of the German Commercial Code (HGB)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Corporate Governance
+Structure of the subscribed capital
+Shares with special control rights
+The Company held 6 million of the above-mentioned issued shares as own shares at the end of the reporting period
+(30 September 2017: 6 million). Own shares held by the Company on the date of the Annual General Meeting do not
+carry a vote and are not entitled to participate in profit.
+Restrictions on voting rights or the transfer of shares
+Restrictions on the voting rights of shares may, in particular, arise as the result of the regulations of the German Stock
+Corporation Act (Aktiengesetz – “AktG"). For example, pursuant to section 136 AktG shareholders are prohibited
+from voting under certain circumstances and, according to section 71b AktG, Infineon Technologies AG has no voting
+rights from its own shares. Furthermore, non-compliance with the notification requirements pursuant to section 33,
+paragraphs 1 or 2 of the German Securities Trading Act (Wertpapierhandelsgesetz - "WPHG") and to section 38,
+paragraph 1 or section 39, paragraph 1, WpHG can, pursuant to section 44 WPHG, have the effect that certain rights
+(including the right to vote) may, temporarily at least, not exist. We are not aware of any contractual restrictions on
+voting rights or the transfer of shares.
+Pursuant to section 67, paragraph 2, AktG, only those persons recorded in the share register of Infineon Technologies AG
+are recognized as shareholders of the Company. In order to be recorded in the share register of Infineon Technologies AG,
+shareholders are required to submit to the Company the number of shares held by them and their name or company
+name, their address and, where applicable, their registered office and their date of birth. Pursuant to section 67,
+paragraph 4, AktG, Infineon Technologies AG is entitled to request information from any party listed in the share
+register regarding the extent to which shares, to which the entry in the share register relates, are actually owned by
+the registered party and, if it does not own the shares, to receive the information necessary for the maintenance of
+the share register in relation to the party for whom the party concerned holds the shares. Section 67, paragraph 2,
+AktG stipulates that the shares concerned do not confer voting rights until such time as the information requested
+has been supplied in the appropriate manner.
+Direct or indirect shareholdings exceeding 10 percent of the voting rights
+Section 33, paragraph 1, WpHG requires each shareholder whose voting rights reach, exceed or, after exceeding, fall
+below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the voting rights of a listed corporation to notify such corporation
+and the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - "BaFin")
+immediately. As of 30 September 2018, we have not been notified of any direct or indirect shareholdings reaching or
+exceeding 10 percent of the voting rights. The shareholdings notified to us as of 30 September 2018 are presented
+in the Notes to the Separate Financial Statements of Infineon Technologies AG under the information pursuant to
+section 160, paragraph 1, No. 8 AktG.
+No shares conferring special control rights have been issued.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+P see page 30
+Combined Management Report | Our 2018 fiscal year
+The share capital of Infineon Technologies AG stood at €2,273,991,668 as of 30 September 2018. This sum is divided
+into 1,136,995,834 non-par registered shares, each of which represents a notional portion of the share capital of €2.
+Each share carries one vote and gives an equal right to the profit of the Company based on the profit appropriation
+resolved by shareholders at the Annual General Meeting.
+@www.infineon.com/investor
+Total assets increased by 9 percent from €10,792 million as of 30 September 2017 to €11,789 million as of 30 Sep-
+tember 2018. Current assets went up by €926 million. Cash and cash equivalents and marketable securities totaled
+€2,318 million at the end of the reporting period (30 September 2017: €2,216 million) and accounted for 50 percent
+of current assets.
+The expected developments, together with associated material risks and opportunities of Infineon Technologies AG
+are very similar to those of Infineon. Moreover, it is assumed that the result from investments will play a major role
+in Infineon Technologies AG's earnings performance. As a general rule, Infineon Technologies AG participates in the
+risks of its subsidiaries and equity investments on the basis of the relevant shareholding. As the parent company,
+Infineon Technologies AG is integrated in Infineon's overall risk management system and internal control system. For
+more information on this topic, together with associated material risks and opportunities of Infineon Technologies AG,
+see the chapter "Risk and opportunity report".
+Corporate Governance
+10
+11,789
+10,792
+1 The increases in inventories and liabilities to affiliated companies were mainly attributable to a change in the accounting treatment of intragroup
+transactions in the 2018 fiscal year. Further information is provided in the Separate Financial Statements of Infineon Technologies AG.
+P see page 148 ff.
+The increase in equity (€705 million) was mainly attributable to net income of €982 million for the 2018 fiscal year.
+Payment of the dividend for the 2017 fiscal year (€283 million) reduced equity accordingly.
+Provisions for pensions and similar commitments increased by €76 million as a result of the reduction in the average
+market interest rate for the past ten years used to measure obligations. Other provisions increased by a total of
+€174 million, mainly due to higher provisions for Qimonda in connection with pending legal proceedings (see note 19
+to the Consolidated Financial Statements). Liabilities increased by 1 percent from €3,296 million at the end of the
+previous fiscal year to €3,329 million as of 30 September 2018.
+The equity ratio at the end of the reporting period was 65.3 percent, compared to 64.8 percent one year earlier.
+For information on own shares, please refer to the disclosures relating to section 160, paragraph 1, no. 2, German
+Stock Corporation Act (AktG) provided in the Separate Financial Statements of Infineon Technologies AG.
+@www.infineon.com/investor
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Infineon Technologies AG
+90
+90
+Dividend
+Under the German Stock Corporation Act the amount of dividends available for distribution to shareholders is
+based on the level of unappropriated profit (Bilanzgewinn) recorded by the ultimate parent, as determined in
+accordance with the German Commercial Code (HGB).
+Infineon Technologies AG reports unappropriated profit of €491 million in its financial statements for the fiscal year
+ended 30 September 2018. Due to the strong business performance, a proposal will be made to shareholders at
+the Annual General Meeting 2019 to increase the dividend for the 2018 fiscal year by 2 cents from €0.25 to €0.27 per
+share. The disbursement of the proposed dividend is subject to approval by shareholders.
+The Company paid a dividend of €0.25 per share (€283 million in total) for the 2017 fiscal year.
+For information regarding Infineon's long-term dividend policy, see "Sustainable value creation for our shareholders"
+in the chapter "Group Strategy".
+Expected developments, together with associated material risks and opportunities
+Most transactions within Infineon involving derivative financial instruments are handled by Infineon Technologies AG.
+The comments provided in "Principles and structure of Infineon's treasury" within the chapter "Review of liquidity"
+regarding the nature and scope of transactions with derivative financial instruments and hedged risks apply to
+Infineon Technologies AG as well. Reference is also made to the Notes to the Separate Financial Statements of
+Infineon Technologies AG.
+Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB)
+Various financing agreements with lending banks and capital market creditors (see note 12 to the Consolidated
+Financial Statements) contain defined change-of-control clauses which give creditors the right to call for early
+repayment. These clauses reflect standard market practice. In addition, one financing agreement stipulates that
+in the event of a change of control, Infineon Technologies AG may be required to provide collateral in the form of
+cash rather than a guarantee.
+2
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB) | Corporate Governance Report |
+Declaration concerning the management of the Company
+94
+==
+P see page 136 f.
+P see page 95 ff.
+The use of own shares, acquired through derivatives, is governed by the same rules as applicable for the direct
+acquisition of own shares.
+Significant agreements that are subject to the condition of a change of control as a result of a takeover
+bid and compensation agreements with members of the Management Board or with employees in the
+event of a takeover bid
+3,296
+Furthermore, certain patent cross-licensing agreements, development agreements, subsidy agreements and
+approvals, supply contracts, joint venture agreements and license agreements contain customary change-of-control
+clauses, according to which a change in control of Infineon Technologies AG triggers the right of the other party at
+its sole discretion to terminate the agreement or to continue the agreement as well as other rights which may,
+under certain circumstances, be unfavorable for Infineon.
+If a member of the Management Board leaves his or her position in connection with a defined change of control
+(namely, where a party holds at least 50 percent of the voting rights in Infineon Technologies AG), that member is
+currently entitled to continued payment of the relevant annual remuneration for the entire remaining contract
+term. In accordance with a special contract termination right granted to members of the Management Board, the
+period of continued payment is capped at a maximum of 36 months in the event that the member resigns, or at
+a minimum of 24 months and a maximum of 36 months in the event that the member is removed from office or
+removed from office by Infineon Technologies AG. Further details are contained in the Compensation Report.
+The change-of-control clauses agreed with the members of the Management Board correspond to the recommen-
+dation made in section 4.2.3, paragraph 5, of the German Corporate Governance Code. Such clauses are intended
+to give members of the Management Board financial security in the event of a change of control, with a view to
+preserving their independence in this situation.
+The conditions of both the Performance Share Plan (open to participation by members of the Management Board,
+managers and other selected employees of the worldwide company) and the Restricted Stock Unit Plan (additionally
+applicable to specified employees of Infineon in the USA) contain rules that are triggered in the event of a defined
+change of control (namely holding at least 30 percent of the voting rights of Infineon Technologies AG). For the most
+part, these rules specify that the vesting periods that are envisaged by the relevant plans are aborted in the event
+of a change of control. The corresponding rule in the Performance Share Plan does not, however, apply to members
+of the Management Board, given that the service contracts take precedence.
+Corporate Governance Report
+The Corporate Governance Report is publicly available.
+@www.infineon.com/corporate-governance-report
+Declaration concerning the management
+of the Company
+The Declaration on Corporate Governance in accordance with section 289f and section 315d, of the German
+Commercial Code (HGB) 1 has been made publicly accessible.
+@www.infineon.com/declaration-on-corporate-governance
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+(282)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+92
+Shareholders have a right to sell their Infineon shares in this connection only insofar as the Company is required to
+accept the shares under the derivative transactions. No other right to sell shares will apply in this connection.
+According to a resolution passed by the Annual General Meeting on 22 February 2018, the acquisition of Infineon
+Technologies AG shares may also be effected using equity derivatives. The total number of shares that can be
+acquired using derivatives may not exceed 5 percent of the Company's share capital, determined both at the time of
+this authorization becoming effective and at the time of its exercise through the use of the derivatives. The shares
+acquired through the exercise of this authorization are to be counted toward the acquisition threshold for the
+shares acquired in accordance with the authorization to acquire own shares as described above. The authorization
+stipulates other restrictions when derivatives are deployed, including their execution, term, servicing and
+acquisition price.
+Psee page 143 f.
+Nature of control over voting rights when employees participate in the Company's capital
+and do not exercise their control rights directly
+Employees who participate in the capital of Infineon Technologies AG exercise their control rights directly in
+accordance with the applicable laws and the Articles of Association, just like other shareholders.
+Statutory regulations and Articles of Association provisions governing the appointment and dismissal
+of members of the Board of Management and amendments to the Articles of Association
+Section 5, paragraph 1, of the Articles of Association stipulates that the Management Board of Infineon
+Technologies AG shall consist of at least two members. The Management Board currently comprises four members.
+Members of the Management Board are appointed and dismissed by the Supervisory Board in accordance with
+section 84, paragraph 1, AktG. As Infineon Technologies AG falls within the scope of the German Co-Determination
+Act (Mitbestimmungsgesetz - "MitbestG"), the appointment or dismissal of members of the Management Board
+requires a two-thirds majority of the votes of the members of the Supervisory Board (section 31, paragraph 2,
+MitbestG). If such majority is not achieved at the first ballot, the appointment may be approved on a recommendation
+of the Mediation Committee at a second ballot by a simple majority of the votes of the members of the Supervisory
+Board (section 31, paragraph 3, MitbestG). If the required majority is still not achieved, a third ballot is held in which
+the Chairman of the Supervisory Board has two votes (section 31, paragraph 4, MitbestG). If the Management Board
+does not have the required number of members, in urgent cases, the local court (Amtsgericht of Munich) makes the
+necessary appointment upon petition of a party concerned pursuant to section 85, paragraph 1, AktG.
+Pursuant to section 84, paragraph 1, sentence 1, AktG, the maximum term of appointment for members of the
+Management Board is five years. Re-appointment or extension of the term of office, in each case for a maximum of
+five years, is permitted (section 84, paragraph 1, sentence 2, AktG). Section 5, paragraph 1, of the Articles of Association
+and section 84, paragraph 2, AktG stipulate that the Supervisory Board may appoint a chairman and a deputy
+chairman to the Management Board. The Supervisory Board may revoke the appointment of a member of the
+Management Board and the Chairman of the Management Board for good cause (section 84, paragraph 3, AktG).
+Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of Association rests with the
+Annual General Meeting. However, section 10, paragraph 4, of the Articles of Association gives the Supervisory
+Board the authority to amend the Articles of Association insofar as such amendments relate merely to the wording,
+such as changes in the share capital amount resulting from a capital increase out of conditional or authorized
+capital or a capital decrease by means of cancellation of own shares. Unless the Articles of Association provide for
+another majority, section 179, paragraph 2, AktG stipulates that resolutions of the Annual General Meeting regarding
+the amendment of the Articles of Association require a majority of at least three quarters of the share capital
+represented. Section 17, paragraph 1, of the Articles of Association of Infineon Technologies AG provides in principle
+for resolutions to be passed with a simple majority of the votes cast and, when a capital majority is required, with
+a simple majority of the capital unless a higher majority is required by law or in accordance with other stipulations
+contained in the Articles of Association.
+Powers of the Management Board, in particular with respect to the issuing or buying back of shares
+The powers of the Management Board to issue shares derive from section 4 of the Articles of Association, in
+conjunction with applicable legal provisions. Further information relating to the Company's existing Authorized
+and Conditional Capital can be found in note 15 to the Consolidated Financial Statements.
+Authorization to issue convertible bonds and/or bonds with warrants
+The Annual General Meeting on 22 February 2018 authorized the Management Board, in the period through
+21 February 2023, either once or in partial amounts, to issue convertible bonds and/or bonds with warrants (referred
+to collectively as "bonds") in an aggregate nominal amount of up to €4,000,000,000, to guarantee such bonds
+issued by subordinated Group companies of the Company and to grant bondholders conversion or option rights
+to up to 130,000,000 no-par-value registered Company shares, representing a notional portion of the share capital
+of up to €260,000,000, in accordance with the relevant terms of the bonds. The Management Board is authorized,
+with the approval of the Supervisory Board, to exclude the right of shareholders to subscribe to the bonds,
+> if the issue price is not substantially lower than the bonds' theoretical market value as determined in accordance
+with accepted valuation methods, in particular those based on financial mathematics; however, this right of
+exclusion only applies insofar as the shares to be issued to service the conversion or option rights established on
+this basis in aggregate do not exceed 10 percent of the share capital either at the time of this authorization
+becoming effective or at the time of its exercise;
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+Information pursuant to section 289a, paragraph 1, and section 315a, paragraph 1, of the German Commercial Code (HGB)
+93
+> in order to exclude fractional amounts resulting from a given subscription ratio from the subscription rights of the
+shareholders to the bonds or insofar as such action is necessary in order to grant holders of conversion or option
+rights arising from bonds that have already been or will in future be issued by the Company or its subordinated
+Group companies subscription rights to that extent to which they would be entitled after exercise of their rights
+or after fulfillment of any conversion or option obligations;
+> insofar as bonds are issued in return for a capital contribution in kind, provided that the value of such capital
+contribution in kind is appropriate in relation to the market value of the bonds.
+Even if the dilution protection regulations are applied, the conversion or option price must equal at least 80 percent
+of the arithmetic mean of the closing prices of the Company's share in XETRA trading on the Frankfurt Stock
+Exchange (or comparable successor system); further details - including the conditions under which the conversion
+or option price may be reduced - are set out in the authorization.
+The Management Board is authorized, subject to the requirements resolved by the shareholders at the Annual
+General Meeting, to determine the further details of the bond issue, including terms and conditions.
+Authorization to acquire own shares
+A resolution passed by the Annual General Meeting on 22 February 2018 authorizes Infineon Technologies AG, in
+the period through 21 February 2023, to acquire its own shares, within the statutory boundaries, in an aggregate
+amount not exceeding 10 percent of the share capital at the time the resolution was passed or - if the latter amount
+is lower- of the share capital in existence at the time the authorization is exercised. The Company may not use the
+authorization for the purposes of trading in its own shares. The Management Board decides whether own shares
+are acquired through the stock exchange, by means of a public offer to purchase addressed to all shareholders or
+a public invitation to submit offers for sale or via a bank or other entity that meets the requirements of section
+186, paragraph 5, sentence 1, AktG. The authorization includes differentiating requirements – in particular with
+regard to the permissible purchase price – for each method of acquisition.
+-
+Infineon shares acquired or being acquired on the basis of this or an earlier authorization may - if not sold either via
+the stock exchange or by means of a public offer to purchase addressed to all shareholders - be used for all legally
+admissible purposes. The shares may also be cancelled or offered to third parties in conjunction with business
+combinations or the acquisition of companies, parts of companies or participations in companies. Under specified
+circumstances subject to the consent of the Supervisory Board, the shares may also be sold to third parties in
+return for cash payment (including by means other than through the stock exchange or through an offer to all
+shareholders), used to meet the Company's obligations under convertible bonds and bonds with warrants and
+stock option plans, offered for sale or granted as a remuneration component to members of representative bodies
+and employees within the Group, and/or used to repay securities-backed loans. The subscription right of share-
+holders is excluded in all of the above cases (except when the shares are cancelled). In addition, the subscription
+rights of shareholders are excluded in respect of fractional amounts in instances in which the shares are sold through
+a public offer addressed to all shareholders.
+If own shares are acquired using derivatives in accordance with the requirements stipulated in the authorization, any
+right of the shareholders to conclude such derivative transactions with the Company will be excluded in analogous
+application of section 186, paragraph 3, sentence 4, AktG. The shareholders have no right to conclude derivative
+transactions with the Company.
+3,329
+19
+(907)
+Deferred income
+Market access and activities in China (OC: medium)
+Infineon generates more revenue in China than in any other country. Accordingly, developments and growth oppor-
+tunities in China are of the utmost importance to the Group and relate to the following markets that we serve:
+Vehicle production in China is still expanding, albeit at a slower pace. At the same time, rapid growth in the production
+of plug-in hybrid and all-electric vehicles has turned China into the world's largest market for electro-mobility.
+For this reason, during the 2018 fiscal year Infineon and SAIC Motor (China's largest car manufacturer) established
+SIAPM, a joint venture that offers power semiconductor solutions for electric vehicles. Volume production has
+already commenced. The joint venture strengthens our position in China, whilst also offering additional potential
+for Infineon's future global business.
+China is the world's largest market for trains and, with CRRC (an Infineon customer) home to the world's largest train
+manufacturer by far. The continued expansion of the domestic rail network and a growing volume of international
+infrastructure projects both represent growing business opportunities for Infineon.
+At the G20 summit held in Hangzhou (China) in September 2016, China ratified the Paris climate agreement, thereby
+giving its formal commitment to reducing carbon emissions. As a consequence, the importance of expanding
+renewable energy sources in China has increased enormously. Our presence in this market, alongside our collaboration
+with leading companies in the wind and solar power sectors, will create further opportunities for long-term growth.
+Our success in positioning Infineon in China as an integral part of Chinese industry (and hence Chinese society)
+could well open up a multitude of new opportunities and is highly likely to have a positive impact on the growth
+and profitability of our business.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+85
+85
+Combined Management Report | Our 2018 fiscal year
+The availability of additional capacities, combined with the pro-active strategic and operational planning of internal
+and external resources, enable us to meet rising demand from both existing and new customers in the event of a
+market upturn. We benefited from this trend again during the previous fiscal year.
+Report on expected developments, together with associated material risks and opportunities
+86
+P see page 70 ff.
+Further growth in semiconductor content in vehicles (OC: medium)
+We expect semiconductor content per vehicle to continue growing. The primary driving force behind this trend is
+the rising demand for electro-mobility, active safety features and driver assistance systems.
+We are also convinced that current global carbon emissions targets cannot be achieved without further electrification.
+The need for increased efforts in this field is relevant not only for electro-mobility (i.e. hybrid, plug-in hybrid and
+all-electric vehicles), but also for power units in vehicles with combustion engines. IT security within the vehicle is
+also further gaining in importance. Thanks to our expertise in the field of security controllers, we are extremely well
+positioned to exploit opportunities in this area.
+Growth from mobile applications (OC: medium)
+The continued trend towards mobility is also reflected in the unbroken high demand for smartphones and tablets.
+We benefit from this development in two ways. Firstly, through the components we supply for mobile devices (sili-
+con-MEMS microphones, TVS diodes, GPS signal amplifiers, CMOS-RF switches), and secondly, through power semi-
+conductors, which form the key components for energy-efficient chargers (high-voltage and low-voltage power
+transistors, driver ICs and control ICs).
+Security applications (OC: medium)
+Risk and opportunity report
+The trend towards electronic identity documents is having a positive impact on Digital Security Solutions segment
+revenue. Paper-based documents are increasingly being replaced by chip-based versions, due to the higher level
+of security they offer. New markets are also emerging in conjunction with the Internet of Things and the Industrial
+Internet ("Industry 4.0"). The authentication of devices is playing an increasingly important role in both of these
+fields, for which Infineon offers the corresponding security chips.
+Our in-house manufacturing capacities, together with those of our external partners, provide us with sufficient
+flexibility to meet demand requirements. In particular, further expansion of 300-millimeter manufacturing in
+Dresden (Germany), of the second manufacturing module in Kulim (Malaysia) and the planned construction of
+a second, fully automated 300-millimeter factory at the Villach site (Austria) will help meet growing demand for
+power semiconductors.
+The trend towards digitalization represents a significant business opportunity for Infineon. This is reflected on one
+hand in the optimization of internal processes, for example for our interconnected manufacturing capabilities on a
+global scale. At the same time, our portfolio of sensors, microcontrollers, power semiconductors, security controllers
+and specific software puts us in an excellent position to exploit growing market potential. Thanks to our "Product
+to system" strategic approach, we are ideally placed to penetrate and develop the markets involved. Good examples
+already visible today include automated driving, voice and gesture control of devices and machines, and the
+advancing development of the Internet of Things and Big Data.
+612
+982
+(46)
+(43)
+24
+(74)
+(81)
+478
+Ability to supply due to available capacities (OC: medium)
+980
+150
+(172)
+(200)
+(259)
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Support for change in energy policies and consideration of climate change issues (OC: medium)
+Population growth and increasing industrialization in all parts of the world are resulting in ever-greater global
+demand for energy. Electric power is becoming the most important energy carrier of the 21st century and renewables
+are playing a key role in reducing carbon emissions. The long-term objective is to achieve global decarbonization
+by the end of the century, as resolved at the Climate Change Conference held in Paris (France) in December 2015.
+Infineon's semiconductors enable electric power to be generated from renewable energy sources. They offer efficiency
+gains at all stages of the energy industry's value-added chain, whether in generation, transmission, or above all in
+the use of electrical power. They form the basis for the intelligent and efficient use of electrical power, for instance
+in industrial applications, power supplies for computers, consumer electronics and vehicles.
+Digitalization (OC: medium)
+7
+Liquidity position (OC: medium)
+Our current liquidity position, which we describe in the chapter "Review of liquidity", enables us to obtain and, if
+necessary make use of favorable refinancing conditions. This fact gives Infineon both the financial headroom and
+the entrepreneurial flexibility it needs to implement its business strategies and initiatives.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Selling expenses
+General and administrative expenses
+Other income (expense), net
+Result from investments, net
+Interest result
+Other financial result
+Income tax
+Income after taxes/net income
+Research and development expenses
+Transfers to retained earnings according to section 58, paragraph 2, AktG
+Unappropriated profit at the end of year
+2017
+5,357
+5,789
+(4,228)
+(1,003)
+Total liabilities and shareholders' equity
+1,461
+1,561
+2018
+Gross profit
+Cost of goods sold¹
+Revenue¹
+Combined Management Report | Our 2018 fiscal year
+Overall statement of the Management Board with respect to Infineon's financial condition as of the date of this report
+Overall statement of
+the Management Board
+with respect to Infineon's
+financial condition as of
+the date of this report
+87
+We have now been able to report significant revenue growth and improved earnings for five years in a row. Revenue
+increased by 8 percent to €7,599 million compared to €7,063 million in the previous year, despite the unfavorable
+development of the US dollar exchange rate. Segment Result increased by 12 percent from €1,208 million to
+€1,353 million, giving a margin of 17.8 percent. We therefore achieved our margin target of "at least 17 percent over
+the cycle" (as raised during the 2018 fiscal year) despite the above-mentioned weakness of the US dollar and the
+continued sharp increase in prices for wafer substrates and other materials such as copper. Adjusted earnings per
+share (diluted) increased to €0.98 cents. Despite higher investments, free cash flow from continuing operations
+improved from €594 million to €618 million year-on-year. The international rating agency S&P Global Ratings (S&P)
+continues to rate Infineon's creditworthiness with an investment grade rating of "BBB" (outlook “stable”). Infineon
+therefore currently holds the highest S&P rating of any European semiconductor manufacturer. We want our
+shareholders to participate appropriately in the excellent progress that Infineon is making. Therefore, at the Annual
+General Meeting to be held on 21 February 2019, it will be proposed to raise the dividend by 2 cents to €0.27 per share.
+The 2018 fiscal year was not only extremely successful in terms of reported figures, it was also a defining year
+for Infineon's future. Our focus on topics of high relevance for society as well as our technological strength are
+expected to provide us with excellent growth opportunities in the coming years. For this reason, we have adjusted
+our long-term financial targets over the cycle and are aiming for an average revenue growth rate of 9 percent per
+year, a Segment Result Margin prospectively in excess of 17 percent and an investment-to-sales ratio of 15 percent.
+In order to enable the aforementioned growth, a number of key strategic decisions were made during the 2018 fiscal
+year. Highlighting just two of them, we announced the construction of a second 300-millimeter factory in Villach
+(Austria) and set up a manufacturing joint venture with China's largest automotive manufacturer, SAIC Motor, which
+will give us even better access to the largest and fastest growing market for electric vehicles.
+Our growth strategy is based on three pillars: achieving economies of scale in our core business, broadening our
+scope to adjacent markets and engaging in new, long-term growth areas. Our strategic approach "product to system"
+provides an excellent basis for developing our core business. By gaining an extensive understanding of our customers'
+requirements, we are able to develop solutions that take account of all system aspects and therefore offer a com-
+petitive advantage to the customer.
+After being restrained to 8 percent in the 2018 fiscal year by adverse currency developments, we expect revenue
+growth of 11 percent, plus or minus 2 percentage points, on the back of high customer demand and assuming a
+euro/US dollar exchange rate of 1.15. For the fiscal years thereafter, Infineon assumes that revenue will grow at an
+average rate of 9 percent per year. At the mid-point of the forecast revenue range, we expect to achieve a Segment
+Result Margin of approximately 18 percent for the 2019 fiscal year. Investments in a range between €1.6 billion and
+€1.7 billion have been planned for the 2019 fiscal year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Infineon Technologies AG
+Infineon Technologies AG
+88
+In addition to reporting on Infineon, in the following section we also provide information on the performance of
+Infineon Technologies AG.
+Infineon Technologies AG is the parent company of Infineon and performs the Group's management and corporate
+functions. It takes on major Group-wide responsibilities such as Finance and Accounting, Corporate Compliance,
+Human Resources, strategic and product-oriented R&D activities, and also Corporate and Marketing Communication
+worldwide. Furthermore, it manages supply chain processes throughout the Group. Infineon Technologies AG has
+its own manufacturing facilities, located in Regensburg and Warstein (both in Germany).
+Unlike the Consolidated Financial Statements, which are prepared in accordance with International Financial
+Reporting Standards ("IFRS"), Infineon Technologies AG's Separate Financial Statements are prepared in accordance
+with the provisions of the German Commercial Code ("HGB"). The complete Separate Financial Statements are
+published separately.
+Earnings position
+Statement of income of Infineon Technologies AG in accordance with the
+German Commercial Code (condensed)
+€ in millions
+(491)
+(306)
+(3,896)
+306
+216
+Provisions for pensions and similar commitments
+1
+1
+Special reserve with an equity portion
+6,995
+7,700
+491
+Shareholders' equity
+306
+491
+Unappropriated profit
+3,717
+1,226
+1,230
+2,260
+2,262
+140
+Other provisions
+524
+350
+885
+1,567
+316
+1,291
+881
+376
+1
+804
+Retained earnings
+504
+740
+Liabilities
+Other liabilities
+Liabilities to affiliated companies¹
+Trade payables
+Loans payable to banks
+Bonds
+Provisions
+490
+Capital reserves
+3,203
+10,792
+7,084
+6,300
+6,331
+708
+Share capital
+Inventories¹
+Non-current assets
+Financial assets
+Intangible assets, property, plant and equipment
+30 Septem-
+ber 2017
+30 Septem-
+ber 2018
+89
+€ in millions
+Statement of financial position of Infineon Technologies AG in accordance with the
+German Commercial Code (condensed)
+Net assets and financial position
+Combined Management Report | Our 2018 fiscal year
+Infineon Technologies AG
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The gross profit margin for the 2018 fiscal year decreased by 6 percent to 27 percent year-on-year. Infineon
+Technologies AG reports net income of €982 million for the 2018 fiscal year. This includes a profit distribution
+of €744 million (2017: €337 million) from Infineon Technologies Holding B.V., Rotterdam (The Netherlands).
+After transferring a total of €491 million to retained earnings, unappropriated profit amounted to €491 million.
+1 The decreases in revenue and cost of goods sold compared to the previous fiscal year were mainly attributable to a change in the accounting treatment
+of intragroup transactions. The change in accounting treatment had no impact on earnings due to the fact that the cost of goods sold was reduced by the
+same amount. Further information is provided in the Separate Financial Statements of Infineon Technologies AG.
+7,008
+966
+753
+Receivables and other assets
+11,789
+Total assets
+4
+617
+Active difference resulting from offsetting
+44
+40
+Prepaid expenses
+3
+903
+4,662
+Current assets
+2,216
+2,318
+Cash and cash equivalents, marketable securities
+1,378
+3,736
+Jochen Hanebeck
+Member of the Management Board
+2017
+2018 (min.)
+2018 (max.)
+750,000
+65,596
+750,000
+685,000
+47,728
+732,728
+750,000
+65,596
+815,596
+750,000
+65,596
+815,596
+750,000
+33,500
+783,500
+750,000
+33,500
+783,500
+685,000
+32,016
+717,016
+2018
+815,596
+2017 2018 (min.) 2018 (max.)
+941,662
+Dr. Helmut Gassel
+149,084
+3,525,000
+33,500
+891,838
+318,442
+1,743,987
+318,442
+279,374
+5,119,903
+Member of the Management Board
+2,090,976
+95,831
+95,831
+279,374
+in €
+Fixed compensation
+Basic annual salary
+Fringe benefits
+2018
+675,000
+2,362,500
+297,220
+279,374
+1,982,261 1,245,145 3,511,814
+783,500
+850,373
+Variable compensation
+600,000
+170,373
+190,238
+Total variable compensation
+850,373
+806,238
+Pension expense
+Total compensation (DCGK)
+124,723
+1,790,692
+132,853
+1,671,819
+85,186
+124,723
+1,025,505 3,070,319
+2,130,000
+124,723
+806,238
+148,449
+162,385
+85,186 600,000
+85,186 2,130,000
+148,449
+85,186
+190,238
+170,373
+Performance Share Plan¹
+Single-year variable compensation (STI)
+340,000
+308,000
+Multi-year variable compensation
+Mid Term Incentive (MTI)
+850,000
+340,000
+308,000
+Total fixed compensation
+850,000
+2018-2020 tranche
+308,000
+340,000
+308,000
+680,000
+340,000
+680,000
+Long Term Incentive (LTI)
+2017-2019 tranche
+1,275,608
+321,123
+2,707,885
+825,000
+44,940
+869,940
+Total compensation (DCGK)
+Fixed compensation
+Basic annual salary
+Fringe benefits
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+Compensation report
+101
+Compensation granted to members of the Management Board in accordance with the DCGK (total compensation
+and compensation components) as well as the minimum and maximum values that can be achieved are shown in
+the following table:
+Total fixed compensation
+2018
+Dr. Reinhard Ploss
+Chief Executive Officer
+Dominik Asam
+Chief Financial Officer
+2017 2018 (min.)
+2018 (max.)
+2018
+2017 2018 (min.)
+2018 (max.)
+in €
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Unlike in the disclosures in accordance with DRS 17, the STI is required to be disclosed pursuant to the DCGK at the
+target value (i.e. the value in the event of 100 percent target achievement). The MTI is required to be disclosed - in
+a deviation from DRS 17 - at the target value for an "average probability scenario" at the grant date. For these
+purposes, Infineon assumes 100 percent target achievement on a scale ranging from 0 to 200 percent. In addition,
+the pension expense, i.e. the service cost pursuant to IAS 19 (see "Commitments to members of the Management
+Board upon termination of their Board activities” in this chapter), is also required to be included in the amount of
+total compensation disclosed in accordance with the DCGK.
+The following table shows the value of compensation granted for the 2017 and 2018 fiscal years, including fringe
+benefits, as well as the minimum and maximum values that can be achieved for the 2018 fiscal year.
+94,858
+95,379
+94,858
+148,449
+524,413
+851,350
+1 When exercising stock options members of the Management Board may only make gains up to a pre-determined amount (cap). Where the cap has been
+reached in the previous fiscal year stock options have expired.
+P see page 146
+1,240,000
+P see page 102 ff.
+Special bonuses
+The Supervisory Board did not award any special bonuses to members of the Management Board during the 2018
+fiscal year.
+Other awards and benefits
+In the 2009 fiscal year, the Company entered into a restitution agreement with each of the active members of the
+Management Board at that time. Dr. Ploss is the only current member of the Management Board affected by the
+agreement. These agreements stipulate that the Company covers all costs and expenses of any legal, governmental,
+regulatory and/or parliamentary proceedings and investigations as well as arbitration proceedings, in which the
+member of the Management Board is involved in conjunction with his/her activities on behalf of the Company.
+However, the agreements specifically exclude any restitution of costs if the Company initiates proceedings against
+the member of the Management Board for a breach of the duty of care owed in conjunction with section 93,
+paragraph 2, German Stock Corporation Act (Aktiengesetz).
+Management Board compensation in the 2018 fiscal year in accordance with the
+German Corporate Governance Code
+The DCGK recommends that the individual compensation components for each member of the Management Board
+be disclosed in accordance with specified criteria. It also recommends that disclosure is based on the model tables
+- in part diverging from DRS 17 – provided in the appendix to the Code.
+Compensation granted in accordance with DCGK
+Further details regarding the performance shares which vested on 30 September 2017 and to the performance
+shares awarded to the members of the Management Board on 1 March 2018 for the 2018 fiscal year are provided in
+note 17 to the Consolidated Financial Statements.
+36,461
+1,276,461
+1,075,000
+36,154
+1,111,154
+480,000
+550,000
+340,000
+1,100,000
+375,000
+750,000
+Long Term Incentive (LTI)
+Performance Share Plan¹
+2018-2020 tranche
+298,168
+149,084
+1,050,000
+191,662
+211,838
+Total variable compensation
+1,398,168
+Pension expense²
+318,442
+315,608
+2,993,071
+2017-2019 tranche
+340,000
+1,240,000
+36,461
+1,276,461
+1,240,000
+36,461
+1,276,461
+750,000
+43,203
+793,203
+825,000
+825,000
+44,940
+44,940
+937,500
+869,940
+Variable compensation
+Single-year variable compensation (STI)
+550,000
+480,000
+Multi-year variable compensation
+Mid Term Incentive (MTI)
+1,375,000
+375,000
+869,940
+1,782,322
+103
+1,017,135
+4,876,940
+Dominik Asam
+2018
+247,500
+2,787,031
+279,374
+(Chief Financial Officer)
+2017
+225,000
+2,586,986
+297,220
+Dr. Helmut Gassel²
+2018
+225,000
+2,241,660
+124,723
+(Member of the Management Board)
+210,000
+321,123
+629,343
+322,500
+Alongside the annual retirement entitlements and related benefit amounts, the following table shows the present
+values of pension entitlements earned to date and the service cost in accordance with IFRS. The service cost reported
+in the table for Dr. Gassel and Mr. Hanebeck only relates to periods of current Board activities. The present value of
+pension and benefit entitlements is particularly dependent on changes in the discount rate required to be applied
+(30 September 2018: 1.7 percent, 30 September 2017: 1.8 percent).
+Pension entitlements
+in €
+Fiscal year
+Member of the Management Board
+Pension
+entitlements
+(annual) as
+of beginning
+of pension
+period
+Benefit
+amounts
+determined
+for the
+relevant
+fiscal year
+Present value
+2017
+of pension
+and benefit
+entitlement
+Dr. Reinhard Ploss¹
+2018
+372,000
+(Chief Executive Officer)
+210,000
+977,189
+5,046,826
+318,442
+2017
+Original
+service cost
+(earned in the
+current year)
+The amounts credited to the pension entitlement accounts of the members of the Management Board - in line with
+the plan rules applied to Infineon employees - are paid out on or after reaching the age of 67, provided the service
+contract has also ended, or, upon request, at an earlier point in time if the service contract ends on or after reaching
+the e age of 60. If the beneficiaries elect that their pension be paid out in monthly installments, the pension amount
+is adjusted automatically each year in accordance with the Infineon pension plan.
+205,500
+132,853
+Corporate Governance
+Compensation report
+104
+Early termination of service contracts
+The service contracts of members of the Management Board include a change-of-control clause, which stipulates
+the terms that apply when the activities of a member of the Management Board are terminated in the event of a
+significant change in Infineon's ownership structure. A change of control for the purposes of this clause occurs
+when a third party, individually or together with another party, acquires at least 50 percent of the voting rights in
+Infineon Technologies AG as defined in section 30 of the German Securities Acquisition and Takeover Act (Wert-
+papiererwerbs- und Übernahmegesetz - “WpÜG”). Members of the Management Board have the right to resign and
+terminate their service contracts within twelve months of the announcement of such a change of control and any
+who choose to do so are entitled to continued payment of their annual remuneration through to the end of the
+originally agreed duration of their contract, up to a maximum of 36 months. If Infineon Technologies AG removes a
+member of the Management Board or terminates his or her contract within twelve months of the announcement of
+a change of control, the members of the Management Board concerned are entitled to continued payment of their
+annual remuneration through to the end of the originally agreed duration of their contract, subject to a minimum
+period of 24 months and a maximum period of 36 months.
+The Management Board service contracts otherwise contain no promises of severance pay for situations in which
+contracts are terminated early.
+Payments to former members of the Management Board in the 2018 fiscal year
+Total compensation (primarily pension benefits) of €1,527,437.89 (2017: €1,324,427.14) was paid to former members
+of the Management Board in the 2018 fiscal year. As of 30 September 2018, accrued pension liabilities for former
+members of the Management Board amounted to €68,838,837 (30 September 2017: €67,862,601).
+Review of the Management Board compensation system, compensation components and
+individual contracts
+Review of the Management Board compensation system
+In accordance with section 4.2.2 DCGK, the Supervisory Board has engaged an external, independent compensation
+expert to review the Management Board compensation system in place since 1 October 2010 and conclude on its
+compliance with applicable legislation and its overall appropriateness from an objective perspective. In this context,
+the target annual incomes of each individual member of the Management Board were subjected to detailed scrutiny.
+The expert's report concluded that the Company's compensation system complies with legal requirements and
+with the recommendations contained in the German Corporate Governance Code (DCGK). In particular, the expert
+concluded that the compensation of Infineon's Management Board is commensurate with market conditions and
+that the variable compensation component is oriented towards the sustainable growth of the enterprise. The
+individual target annual incomes of the members of the Management Board are appropriate, both horizontally (i.e.
+looking at peer companies) and vertically (i.e. looking at Infineon's various employee groupings). Regardless of this,
+however, there would be scope for the compensation to be increased, especially for the Chief Executive Officer. The
+results of the compensation expert's review were discussed in detail during the Executive Committee meeting held
+on 25 October 2018 and by the full Supervisory Board on 20 November 2018. The Supervisory Board concurred with
+the conclusions reached by the external expert.
+Increase in Management Board compensation
+The increases in the compensation of the members of the Management Board resolved by the Supervisory Board in
+the 2017 fiscal year - in the case of Dr. Ploss by approximately 15 percent and in the case of Mr. Asam, Dr. Gassel and
+Mr. Hanebeck by approximately 10 percent respectively - took effect from the beginning of the 2018 fiscal year. The
+increases did not, however, change the relation of the individual compensation components or the compensation
+structure as a whole.
+Other adjustments
+In addition, following extensive discussions at the Supervisory Board meetings held on 21 November 2017,
+16 May 2018 and 3 August 2018, prepared by the Executive Committee, a new (simplified) set of rules came into
+force on 1 October 2018 for LTI purposes when a member leaves the Management Board:
+167,452
+On 3 August 2017, the Supervisory Board resolved to move the allocation date for granting performance shares to
+members of the Management Board for LTI purposes from 1 October to 1 March of a fiscal year, in line with the rules
+applicable for managers and employees. This amendment was applied for the first time for the LTI allocation in the
+2018 fiscal year.
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+1 The upper line for Dr. Ploss in the 2018 fiscal year respectively 2017 shows the contribution amount, the present value and the service cost relating to the
+defined contribution pension commitment additionally granted to him with effect from 1 January 2016. The second line shows the pension entitlement
+and the present value of his fixed amount pension plan. Income from past service cost amounting to €1,114,773 was recognized in the 2017 fiscal year.
+2 As a result of the separate allocation to pension entitlement accounts and guaranteed interest component - compared to the previous year's flat-rate
+allocation - the present value of the pension provision for Dr. Gassel and Mr. Hanebeck as of 30 September 2018 was reduced by €475,162 and €659,685
+respectively (including the effect of changes in interest rates).
+913,581
+Jochen Hanebeck²
+2018
+225,000
+2,702,051
+148,449
+(Member of the Management Board)
+2017
+205,500
+2,716,822
+3,361,736
+Total
+2018
+210,000
+2017
+210,000
+1,069,500
+958,500
+13,754,757
+14,171,827
+870,988
+162,385
+> The defined contribution pension plan in place for Dr. Ploss is also based on a fixed contribution amount of
+30 percent of the relevant agreed basic annual salary. The pension contribution made by the Company for the
+2018 fiscal year amounted to €372,000.
+> Dr. Gassel and Mr. Hanebeck have statutorily vested pension entitlements as a result of their previous periods
+of employment in senior management positions with Infineon. The contracts appointing them to the Board
+specifically state that the amounts made available to cover their vested pension entitlements represent a
+continuation of those vested entitlements and are, therefore, not subject to any separate vesting arrangements.
+The Company makes a fixed annual pension contribution on behalf of Dr. Gassel and Mr. Hanebeck for each
+full fiscal year of service on the Board, equivalent to 30 percent of the relevant agreed basic annual salary. The
+Supervisory Board is not required to decide each time on the amount to be contributed. The pension contributions
+for the 2018 fiscal year for Dr. Gassel and Mr. Hanebeck amounted in each case to €225,000.
+> On joining the Management Board, the Company made a one-time, contractually vested initial pension contribution
+of €540,000 on behalf of Mr. Asam as compensation for the loss of vested retirement pension entitlements in
+connection with the termination agreement with his previous employer. For each fiscal year of his membership
+on the Management Board, Mr. Asam also receives a pension contribution from the Company amounting to
+between 25 and 40 percent, as determined by the Supervisory Board, of the relevant agreed basic annual salary.
+As in the previous year, the pension contribution for Mr. Asam for the 2018 fiscal year has been set at 30 percent
+of his basic annual salary and therefore amounts to €247,500. The pension entitlements arising from the defined
+contributions made on behalf of Mr. Asam vested with effect from 31 December 2013.
+2018
+2017
+2018
+2017
+2018
+2017
+Fixed compensation
+Basic annual salary
+1,240,000
+Fringe benefits
+36,461
+Total fixed compensation
+1,276,461
+1,075,000
+36,154
+1,111,154
+825,000
+44,940
+869,940
+750,000
+43,203
+793,203
+750,000
+65,596
+815,596
+2017
+2018
+Member of the
+Management Board
+Jochen Hanebeck
+3,061,949
+1 The figures of the active members of the Management Board in the 2018 fiscal year are based on a fair market value per performance share amounting to €15.25 (2017: €11.25),
+which was calculated using a Monte-Carlo simulation.
+2 Income from past service costs for Dr. Ploss amounting to €1,114,773 have been recorded in the 2017 fiscal year.
+Allocation amount in accordance with DCGK
+Since compensation granted to members of the Management Board for the 2018 fiscal year does not coincide fully
+with amounts disbursed in a particular fiscal year, a separate table is presented - in accordance with the relevant
+DCGK recommendation - showing the amounts flowing to members of the Management Board for the 2018 fiscal
+year (the "allocation amount” (“Zufluss")).
+In line with the DCGK recommendations, the fixed compensation and the STI are required to be disclosed as the
+allocation amount for the relevant fiscal year concerned. In the case of the MTI, the DCGK recommends that this is
+disclosed as flowing to members of the Management Board in the fiscal year in which the plan term of the relevant
+MTI tranche ends. In addition to the fixed compensation and the STI granted for the 2018 fiscal year, the allocation
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+685,000
+47,728
+732,728
+Corporate Governance
+102
+P see page 95 ff.
+amount for the 2016-2018 MTI tranche therefore flowed to the members of the Management Board in the 2018 fiscal
+year. In accordance with the DCGK, share-based payments are deemed to be allocated on the basis of the relevant
+time and value for German tax law purposes. The performance shares awarded on 1 October 2014 which were
+settled in cash after the end of the 2018 fiscal year (see "Components of the Management Board compensation
+system" in this chapter) will not be disclosed as having flowed until the 2019 fiscal year. In line with the DCGK
+recommendations, the pension expense (meaning the service cost pursuant to IAS 19) constitutes the allocation
+amount (see previous table), even though it is not - strictly speaking - an allocation.
+The total compensation allocated to the individual members of the Management Board for the 2018 fiscal year in
+accordance with DCGK - analyzed by component - is shown in the following table:
+in €
+Dr. Reinhard Ploss
+Chief Executive Officer
+Dominik Asam
+Chief Financial Officer
+Dr. Helmut Gassel
+Member of the
+Management Board
+Compensation report
+750,000
+33,500
+783,500
+685,000
+32,016
+717,016
+1,525,500
+550,000
+787,500
+550,000
+Total variable compensation
+Pension expense²
+Total compensation (DCGK)
+2,002,990 2,874,300
+318,442 321,123
+3,597,893 4,306,577
+Stock Option Plan 2010
+Performance Share Plan
+due in the financial
+year 2018¹
+1,394,245 1,505,400 671,338 429,968 671,338 429,968
+279,374 297,220 124,723 132,853 148,449 162,385
+2,543,559 2,595,823 1,611,657 1,295,549 1,603,287 1,309,369
+Commitments to members of the Management Board upon termination of their Board activities
+Benefits and pension entitlements in the 2018 fiscal year
+In accordance with the Management Board compensation system in place since 2010, the members of the Management
+Board have, in the meantime, all received a defined contribution pension commitment, which is essentially identical
+to the Infineon pension plan applicable to all employees. The Company has accordingly set up a personal pension
+account (basic account) for each beneficiary and makes annual pension contributions to it. The Company adds
+annual interest to the balance in the basic account using the highest statutory interest rates valid for the insurance
+industry (guaranteed interest rates) until disbursement of the pension begins and may also award surplus credits.
+Ninety-five percent of any income earned over and above the guaranteed interest rate is credited to the pension
+account, either at the date on which disbursement of the pension begins or, at the latest, when the beneficiary reaches
+the age of 60. The balance of the basic account when disbursement of the pension begins (due to age, invalidity or
+death) - increased by an adjusting amount in the event of invalidity or death - constitutes the retirement benefit
+entitlement and is paid out to the member of the Management Board or his or her surviving dependents in twelve
+annual installments, or, if so requested by the member of the Management Board, in eight annual installments, as
+a lump sum or as a life-long pension. In addition to the defined contribution pension plan that has been in place
+for Dr. Ploss since 1 January 2016, a fully vested fixed-amount pension entitlement of €210,000 p.a. also exists for
+his Board activities up to 31 December 2015 which will not increase in future.
+If the entitlements of members of the Management Board (i) have not yet legally vested or (ii) have legally vested
+but are not protected by the state pension insurance scheme (Pensionssicherungsverein), the Company maintains
+pension reinsurance policies in favor of, and pledged to, the members of the Management Board concerned.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+Compensation report
+The plan rules applicable to members of the Management Board differ in terms of the initial defined component,
+the annual transfer to the pension account and the vesting period.
+1 Represents 250 percent of the LTI allocated amount (cap) at the time of granting the virtual performance shares in financial year 2013.
+2 Income from past service costs for Dr. Ploss amounting to €1,114,773 have been recorded in the 2017 fiscal year.
+1,685,639
+Long Term Incentive (LTI)
+281,358
+Variable compensation
+Single-year variable
+compensation (STI)
+630,850
+670,080
+430,125
+474,640 389,980 429,968
+389,980
+281,358
+429,968
+compensation
+Mid Term Incentive (MTI)
+2015-2017 tranche
+678,720
+480,760
+2016-2018 tranche
+584,640
+414,120
+Multi-year variable
+271,000
+153,190
+2017
+1,840,935
+429,968
+389,980
+Single-year variable compensation (STI)
+Variable compensation
+3,195,000
+159,101
+3,354,101
+685,000 3,565,000
+32,016
+180,497
+717,016 3,745,497
+783,500
+750,000
+33,500
+Total fixed compensation
+Fringe benefits
+Basic annual salary
+Fixed compensation
+2017
+2018
+2017
+Total
+Management Board
+2,004,656
+Multi-year variable compensation
+Mid Term Incentive (MTI)1
+2015-2017 tranche
+190,238
+170,373
+Performance Share Plan 2
+Long Term Incentive (LTI)
+613,644
+129,993
+2018-2020 tranche
+727,095
+2018
+549,031
+117,759
+2017-2019 tranche
+727,095
+549,031
+155,951
+117,759
+2016-2018 tranche
+415,193
+155,951
+830,576
+Member of the
+Management Board
+in €
+129,993
+243,040
+183,520
+155,951
+117,759
+172,153
+129,993
+243,040
+183,520
+172,153
+243,040
+2018-2020 tranche
+2017-2019 tranche
+2016-2018 tranche
+2015-2017 tranche
+Mid Term Incentive (MTI)1
+Multi-year variable compensation
+172,153
+117,759
+155,951
+210,283
+1,664,836
+1,741,460
+932,108
+925,864
+190,238
+170,373
+211,838
+191,662
+1,025,148 1,202,937
+1,895,088 1,996,140
+Jochen Hanebeck
+315,608
+1,714,808
+2,825,962
+Total compensation
+1,506,341
+Total variable compensation
+298,168
+Performance Share Plan²
+Long Term Incentive (LTI)
+129,993
+143,375
+2,782,802
+429,968
+907,922
+Total compensation
+Dominik Asam
+153,190
+315,608
+28,054
+125,136
+2017
+(Chief Executive Officer)
+125,160
+11,615
+35,967
+298,168
+19,552
+2018
+Dr. Reinhard Ploss
+year
+Member of the Management Board
+Number
+2018
+104,118
+12,568
+191,662
+Management Board)
+> The previous two-year minimum waiting period rule - which prevented the payment of a current LTI tranche if
+the member of the Board left office during this period - no longer applies.
+(Member of the
+28,082
+170,373
+11,172
+16,910
+2018
+Number
+Dr. Helmut Gassel
+211,838
+18,830
+85,288
+2017
+(Chief Financial Officer)
+83,454
+8,113
+25,119
+104,118
+Total variable compensation
+Number
+Number
+Members of the Management Board did not receive any loans from Infineon, neither in the 2018 nor 2017 fiscal years.
+Similarly, they did not receive any benefits from third parties in the 2018 and 2017 fiscal years, whether promised or
+actually paid, for their board activities at Infineon.
+P see page 95 ff.
+99
+99
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+2 The figures for the active members of the Management Board in the 2018 fiscal year are based on a fair market value
+per performance share amounting to €15.25 (2017: €11.25), which was calculated using a Monte-Carlo simulation model
+taking account of the value-reducing cap.
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfilment of the
+plan requirements.
+8,136,062
+8,128,714
+1,649,124
+4,781,961
+4,383,217
+932,108
+925,864
+1,709,364
+Fringe benefits
+In accordance with their service contracts, members of the Management Board are entitled to a chauffeur-driven
+company car, which may also be used for private purposes. Operating and maintenance costs for the company car
+and chauffeur are borne by the Company. Taxes arising on the fringe benefit related to private usage are borne by
+the members of the Management Board.
+The Company also maintains accident insurance policies for members of the Board in the case of death (€3 million)
+and invalidity (€5 million).
+Other fringe benefits related mainly to statutory obligations such as the payment of inventor's compensation or to
+general benefits/discounts available to all Infineon employees.
+Number
+Fiscal
+Virtual
+performance
+shares
+outstanding
+at the end
+of the
+fiscal year
+fiscal year²
+shares
+expired
+in the
+Virtual
+performance
+Virtual
+performance
+shares
+exercised
+in the
+fiscal year¹
+in €
+of the
+fiscal year
+granted
+at the
+Fair value
+grant date
+Virtual
+performance
+shares newly
+Virtual
+performance
+shares
+outstanding
+at the
+beginning
+of the
+fiscal year
+Performance Share Plan
+A fair market value of €15.25 (2017: €11.25) per performance share granted in the 2018 fiscal year was determined,
+taking account of the cap of 250 percent cap set on the LTI allocation amount as well as the performance hurdle.
+The following table shows the number of performance shares awarded to members of the Management Board in
+the 2018 fiscal year.
+As described in the section "Management Board compensation", the contractually agreed LTI is granted to members
+of the Management Board by the Company in the form of "performance shares". The average price of the Infineon
+share relevant for the number of performance shares granted for the 2018 fiscal year was €21.48 (2017: €13.01).
+Share-based remuneration
+beginning
+389,980
+474,640
+430,125
+19,728
+264,778
+291,128
+1 The share price of the virtual performance shares exercised in the fiscal year 2018 amounts to €21.90.
+2 The expiration of the virtual performance shares results from the cap. The finally allocated performance shares may not exceed 250 percent
+of the respective LTI allocation amount.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Corporate Governance
+Compensation report
+100
+Stock options
+outstanding
+at the
+beginning
+of the
+fiscal year
+Stock Option Plan 2010
+Stock options
+outstanding
+at the
+end of the
+fiscal year
+Stock options
+exercised
+in the
+fiscal year¹
+Stock options
+expired
+in the
+fiscal year
+Exercisable
+stock options
+outstanding
+at the end
+of the
+61,086
+830,576
+907,922
+80,704
+54,464
+190,238
+16,910
+Jochen Hanebeck
+2018
+16,910
+11,172
+170,373
+28,082
+fiscal year
+(Member of the
+2017
+16,910
+190,238
+16,910
+Total
+2018
+2017
+291,128
+210,424
+Management Board)
+Combined Management Report | Our 2018 fiscal year
+Number
+Number
+130,952
+62,800
+68,152
+285,173
+Dr. Helmut Gassel
+2018
+95,379
+(Member of the
+Management Board)
+2017
+Jochen Hanebeck
+2018
+(Member of the
+Management Board)
+2017
+Total
+2018
+2017
+(Chief Financial Officer)
+134,669
+2018
+Number
+Number
+Total
+expense
+for share-
+based com-
+pensation
+Member of the
+Management Board
+Fiscal year
+in €
+Number
+Dr. Reinhard Ploss
+198,986
+(Chief Executive Officer)
+2017
+307,500
+208,200
+99,300
+376,461
+Dominik Asam
+2018
+Corporate Governance
+Compensation report
+Compensation report
+Member of the
+Management Board
+Dr. Helmut Gassel
+Dominik Asam
+Chief Financial Officer
+Dr. Reinhard Ploss
+Chief Executive Officer
+Fringe benefits
+Basic annual salary
+Fixed compensation
+in €
+Total compensation to members of the Management Board pursuant to DRS 17 and benefits to the individual
+members of the Management Board - also presented in accordance with DRS 17 - are shown in the following table:
+Total compensation
+German Accounting Standard 17 (DRS 17)
+Management Board compensation in the 2018 fiscal year in accordance with
+98
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+2018
+2017
+2018
+2017
+670,080
+630,850
+Single-year variable compensation (STI)
+Variable compensation
+Total fixed compensation
+47,728
+732,728
+685,000
+750,000
+65,596
+815,596
+Prior to the introduction of the Performance Share Plan, the Company maintained a stock option plan as an LTI,
+which was resolved at the 2010 Annual General Meeting. The stock options allocated to members of the Manage-
+ment Board on the basis of the "Stock Option Plan 2010" were all exercised during the 2017 fiscal year.
+Additionally, the Supervisory Board has the option - based in all cases on its own best judgment - to grant a special
+bonus, among other things for special achievements of the Management Board or its individual members. In each
+case, however, the bonus is capped at a maximum of 30 percent of the fixed compensation of the member of the
+Management Board concerned.
+793,203
+44,940
+869,940
+36,154
+1,111,154
+36,461
+1,276,461
+825,000
+1,075,000
+1,240,000
+2017
+2018
+750,000
+43,203
+The Supervisory Board is required to define suitable alternative LTI instruments of commensurate value if it is
+impossible or not desired by the Supervisory Board to offer an LTI on the basis of the Performance Share Plan.
+The rules governing situations where a member joins or leaves the Management Board during an on-going LTI
+tranche were revised during the 2018 fiscal year (see “Review of the Management Board compensation system,
+compensation components and individual contracts" in this chapter).
+The Supervisory Board has the right, at the end of the holding period, to make a value-equivalent cash settlement
+to the member of the Management Board rather than actually transfer Infineon shares. As in the previous year,
+the Supervisory Board resolved on 3 August 2018 that the performance shares maturing on expiry of 30 September
+2018 relating to the tranche awarded on 1 October 2014 will not be allocated in the form of Infineon shares, but
+rather - in accordance with the option specified in the Performance Share Plan - will be settled in cash.
+Corporate Governance
+Combined Management Report | Our 2018 fiscal year
+95
+95
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The short-term incentive ("STI”) is intended to reward performance over the preceding fiscal year, reflecting Infineon's
+recent progress. Assuming a 100 percent target achievement of the variable compensation components, the STI
+constitutes approximately 20 percent of target annual income. It is set by the Supervisory Board in a two-phase process:
+(i) At the beginning of each fiscal year, the target functions with respect to the two key performance indicators
+"free cash flow" and "Return on Capital Employed (ROCE)" are defined uniformly for all members of the
+Management Board. Underpinning the consistent approach taken to managing the business, the same
+target indicators - supplemented by the Segment Result - are used as the basis for determining the variable
+compensation components (bonus payments) for Infineon managers and employees. The two key performance
+indicators referred to above, which are described in more detail in the chapter "Internal Management System",
+are equally weighted for the purposes of measuring the STI.
+> Variable (performance-related) compensation: The variable compensation comprises three components - an
+annual bonus (short-term incentive), a multiple-year bonus (mid-term incentive) and a long-term variable com-
+pensation component (long-term incentive).
+> Fixed compensation: The fixed compensation comprises a contractually agreed basic annual salary that is not
+linked to performance and is paid in twelve equal monthly installments.
+Compensation report
+All members of the Management Board receive as compensation for their service an annual income which-based
+on target achievement of 100 percent - comprises approximately 45 percent fixed compensation and approximately
+55 percent variable compensation components:
+Components of the Management Board compensation system
+In the 2018 fiscal year, the Supervisory Board engaged an independent external remuneration expert to perform
+the regular review of the Management Board compensation system. The expert concluded that the Company's
+compensation system complies with the requirements of the German Stock Corporation Act (Aktiengesetz)
+and the DCGK and is in line with current market conditions (for details see "Review of the Management Board
+compensation system, compensation components and individual contracts" in this chapter).
+The Management Board compensation system - similar to the compensation paid to the individual members of
+the Management Board - is defined and regularly reviewed by the full Supervisory Board on the basis of proposals
+made by the Executive Committee. In accordance with applicable legal requirements and the recommendations
+of the DCGK, the compensation paid to members of the Management Board is intended to reflect the typical level
+and structure of management board compensation at peer companies, as well as Infineon's economic position and
+future prospects. The duties, responsibilities and performance of each member of the Management Board are also
+to be considered, as is Infineon's wider pay structure. This includes considering Management Board compensation
+in relation to that of senior management and of the workforce as a whole, including changes in the level of com-
+pensation over time. The stated objective is that the compensation structure should be designed in such a way
+that it promotes sustainable business development, with a cap in place in the event of exceptional developments.
+Infineon aims to set compensation at a level that is competitive both nationally and internationally, so as to inspire
+and reward dedication and success in a dynamic environment.
+Compensation system
+Management Board compensation
+This Compensation Report, which forms part of the Combined Management Report, explains the principles applied
+in determining compensation for the Management Board and Supervisory Board of Infineon Technologies AG
+and the level of remuneration paid to the individual members of the Management Board and Supervisory Board
+in accordance with the applicable legal requirements and the recommendations of the German Corporate Governance
+Code in the version dated 7 February 2017 (Deutscher Corporate Governance Kodex - "DCGK"). Infineon believes
+that transparent and understandable reporting of Management Board and Supervisory Board compensation
+represents a fundamental element of good corporate governance.
+P see page 56 ff.
+Psee page 104 f.
+There have been no changes to the Management Board compensation system in the 2018 fiscal year compared to
+the previous fiscal year.
+438,452
+(ii) At the end of the fiscal year, the actual levels of target achievement and hence, the amount of the STI payouts, are
+determined by the Supervisory Board by reference to the levels of target achievement for free cash flow and ROCE
+as reported in the audited financial statements.
+If the term of office on the Board begins or ends during a fiscal year, the entitlement to STI is reduced on a pro
+rata monthly basis (by one-twelfth for each full month missing from the complete STI tranche). A member of the
+Management Board is not entitled to receive an STI bonus for the fiscal year in which he/she resigns from office
+(unless the resignation is for a reason ("good cause"), for which the member is not responsible) or if the contract
+of the member of the Board is terminated by the Company for good cause.
+The shares are transferred to a securities custodian account attributable to the member of the Management Board;
+thereafter he/she can freely dispose of them. The same also applies to Infineon shares acquired in conjunction with
+the own-investment requirement at the end of the holding period.
+Performance shares are allocated provisionally on the basis of the contractually agreed "LTI allocation amount" in
+euros, agreed upon individually in the contract of each member of the Management Board. This amount is reduced
+accordingly if the member of the Management Board takes up office during a fiscal year (by one twelfth for each
+full month missing for the relevant fiscal year). The number of performance shares is determined by dividing the
+LTI allocation amount by the average price of the Infineon share (Xetra closing price) during the nine months prior
+to the allocation date. The prerequisites for the definitive allocation of the - at that stage still virtual – performance
+shares are (i) that the member of the Management Board invests 25 percent of his/her individual LTI allocation
+amount in Infineon shares and (ii) that the holding period of four years applicable both for the member's own-
+investment and for the performance shares has come to an end. 50 percent of the performance shares are also
+performance-related; they are only allocated definitely if (iii) the Infineon share outperforms the Philadelphia
+Semiconductor Index (SOX) between the date of the performance shares' provisional allocation and the end of the
+holding period. If the conditions for the definitive allocation of performance shares - either of all or of only those
+that are not performance-related - are met at the end of the holding period, the member of the Management
+Board acquires a claim against the Company for the transfer of the corresponding number of (real) Infineon shares.
+Performance shares which do not achieve the target are forfeited. The value of the performance shares definitively
+granted to the member of the Management Board per LTI tranche at the end of the holding period may not exceed
+250 percent of the relevant LTI allocation amount; the performance shares above this amount lapse (cap).
+In the 2018 fiscal year, the allocation of the (virtual) performance shares - initially made on a provisional basis -
+took place for the first time as of 1 March for the fiscal year beginning on the preceding 1 October. Consequently,
+based on the four-year term of the relevant tranche, the definitive allocation of (real) Infineon shares will take place
+at the end of the month of February four years later (see "Review of the Management Board compensation system,
+compensation components and individual contracts" in this chapter).
+With effect from the 2014 fiscal year, the LTI is awarded in the form of a Performance Share Plan. As well as being
+relevant for members of the Management Board, the new LTI also applies to Infineon managers and selected
+Infineon employees worldwide, in their case however unlike for the Management Board on a voluntarily basis and
+with minor differences attributable to specific circumstances.
+The long-term incentive ("LTI") is intended to reward long-term and, similar to the MTI, sustained performance
+on the part of members of the Management Board and, additionally, to ensure that their interests are aligned with
+the interest of the Company's shareholders regarding a positive share price development. Assuming a 100 percent
+target achievement of the variable compensation components, the LTI constitutes approximately 15 percent of
+target annual income.
+P see page 104 f.
+P see page 104 f.
+97
+An STI is paid only if the levels of target achievement reach at least the 50 percent threshold for both performance
+indicators (free cash flow, ROCE). If one of the two target thresholds is not achieved, no annual bonus is paid for the
+relevant fiscal year. If the thresholds are achieved, the arithmetic mean of the two target achievements is calculated
+and used as the percentage rate to determine the actual STI amount. A cap of 250 percent applies, meaning that the
+maximum amount that can be paid is two-and-a-half times the target STI (= 100 percent), regardless of an actual
+higher achievement level. The Supervisory Board may, in addition, increase or reduce the amount to be paid in each
+case by up to 50 percent, as it sees fit, based on the performance of the Management Board as a whole, Infineon's
+position, and any exceptional factors. A lower limit applies in this case such that the amount to be paid cannot be
+less than the amount that would be due given 50 percent target achievement. The upper limit for an upward adjust-
+ment is the cap of 250 percent.
+Compensation report
+Combined Management Report | Our 2018 fiscal year
+96
+96
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+If the term of office commences during a fiscal year, the MTI tranche is reduced on a pro rata monthly basis (by 1/36
+for each full month missing from the complete MTI tranche). Upon leaving Infineon, regulations ensure as a general
+rule that the member of the Management Board can only receive an MTI payment for the number of MTI tranches
+corresponding to his/her term of office, reduced where appropriate on a pro rata basis. MTI tranches already
+started are forfeited if a mandate or service contract of a member of the Management Board comes to an end
+before the due date, for instance if a member resigns from office (unless the resignation is for good cause for which
+the member is not responsible) or if the contract of the member of the Board is terminated by the Company for
+good cause.
+The Supervisory Board may increase or reduce the amount to be paid under the MTI in each case by up to 50 per-
+cent, as it sees fit, based on the performance of the Management Board as a whole, Infineon's situation and any
+exceptional factors. When exercising its judgment in this respect, the Supervisory Board also takes into account the
+extent to which the three-year target for revenue growth and Segment Result (set each year by the Supervisory
+Board exclusively for this purpose) has been achieved and the degree of success achieved complementing organic
+growth through M&A activities. Unlike the STI, there is no lower limit for the amount by which the Supervisory
+Board can adjust the MTI; for the upper limit, however, the cap applies (200 percent).
+A new MTI tranche, each with a term of three years, commences every fiscal year. The incentive is paid in cash at
+the end of the three-year term. The amount of the payment is determined on the basis of actual ROCE and free cash
+flow figures during each three-year period. For these purposes, the target values for ROCE and free cash flow for
+each individual year of an MTI tranche correspond to the STI targets set each year in advance. The level of achieve-
+ment for both the RoCE target and the free cash flow target must reach a threshold of 50 percent in each year of
+the relevant three-year period, otherwise it is deemed - for MTI purposes - to be zero for the year concerned. If the
+thresholds are exceeded, the level of target achievement determined for the STI applies for the relevant annual
+tranche of the MTI. The MTI to be paid at the end of the three-year period is determined by calculating the arithme-
+tic mean of the three annual target achievement levels. Unlike the STI, the MTI is paid as calculated, even if the
+mean level of target achievement for the three-year period is below 50 percent. A cap of 200 percent applies, mean-
+ing that the maximum amount that can be paid is two times the target MTI (= 100 percent), regardless of the actual
+achievement level.
+The mid-term incentive ("MTI") is intended to reward sustained performance by the Management Board reflecting
+Infineon's medium-term progress. In combination with the long-term incentive, the MTI therefore ensures compliance
+with the stock corporation law requirement that the structure of compensation is "oriented toward sustainable
+growth of the enterprise”. Assuming a 100 percent target achievement of the variable components, the MTI
+constitutes approximately 20 percent of target annual income.
+Corporate Governance
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+16,910
+2017
+18,000
+Change in trade payables
+Change in provisions
+Change in other assets and liabilities
+Interest received
+Interest paid
+(270)
+4
+8
+2
+11
+7
+7
+28
+10
+96
+(116)
+(91)
+(251)
+(73)
+158
+177
+Change in inventories
+Change in trade receivables
+Other non-cash result
+Impairment charges
+2017
+21
+1,075
+790
+143
+1
+Plus: loss (income) from discontinued operations, net of income taxes
+Adjustments to reconcile net income to net cash provided by operating activities:
+Depreciation and amortization
+11
+861
+812
+13
+Income tax
+193
+142
+Net interest result
+45
+56
+Losses (gains) on disposals of property, plant and equipment
+(1)
+2
+Gain from sale of RF power business
+Dividends received from joint ventures
+5
+(1)
+91
+(25)
+(1)
+(9)
+Acquisitions of businesses, net of cash acquired
+(16)
+(5)
+Acquisitions of shares in MoTo, net of cash acquired
+(112)
+Proceeds from sales of businesses and interests in subsidiaries, net of cash disbursed
+6
+324
+10
+Investments in related companies
+(17)
+Purchases of intangible assets and other assets
+11
+(164)
+(148)
+Purchases of property, plant and equipment
+11
+(1,090)
+(874)
+Purchases of other equity investments
+3,303
+3,067
+8
+(23)
+14
+9
+(50)
+(58)
+Income tax paid
+5
+(226)
+(142)
+Net cash provided by operating activities from continuing operations
+2018
+1,571
+Net cash provided by (used in) operating activities from discontinued operations
+Net cash provided by operating activities
+4
+(5)
+1,575
+1,723
+Purchases of financial investments
+8
+(3,277)
+(3,300)
+Proceeds from sales of financial investments
+1,728
+Notes
+111
+Net income
+25
+323
+Trade payables
+1,181
+1,020
+Short-term provisions
+Income tax payable
+35
+590
+422
+117
+103
+Other current liabilities
+269
+230
+Total current liabilities
+2,182
+2,098
+Long-term debt
+Pension plans and similar commitments
+Deferred tax liabilities
+12
+Short-term debt and current maturities of long-term debt
+9,945
+10,879
+3,038
+2,659
+Goodwill and other intangible assets
+11
+1,596
+1,586
+Investments accounted for using the equity method
+4
+37
+28
+Long-term provisions
+Deferred tax assets
+648
+612
+Other non-current assets
+137
+189
+Total non-current assets
+5,456
+5,074
+Total assets
+LIABILITIES AND EQUITY
+5
+Proceeds from sales of property, plant and equipment and other assets
+Other non-current liabilities
+12
+2,272
+4,486
+4,774
+(333)
+(1,404)
+56
+31
+(37)
+(37)
+6,446
+5,636
+Total equity
+Total liabilities and equity
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+10,879
+9,945
+Consolidated Financial Statements
+Consolidated Statement of Cash Flows
+Consolidated Statement of Cash Flows
+for the year ended 30 September 2018 and 2017
+€ in millions
+2,274
+15
+4,309
+4,433
+1,507
+1,511
+14
+552
+503
+5
+9
+18
+13
+46
+Total non-current liabilities
+67
+112
+2,251
+2,211
+Total liabilities
+Shareholders' equity:
+Ordinary share capital
+Additional paid-in capital
+Accumulated deficit
+Other reserves
+Own shares at cost
+137
+11
+4
+Net cash used in investing activities from continuing operations
+26
+(13)
+(17)
+(17)
+4,774
+(1,404)
+32
+(1)
+(37)
+5,636
+4,774
+(1,404)
+32
+(1)
+(37)
+5,636
+1,075
+1,075
+(4)
+27
+(2)
+(13)
+19
+(248)
+(248)
+Total equity
+attributable to
+shareholders
+of Infineon
+Technologies AG
+5,016
+(2,312)
+98
+(2)
+(5)
+(37)
+5,023
+21
+790
+118
+(49)
+2
+4
+75
+908
+(49)
+2
+4
+865
+790
+Own shares
+1,071
+(2)
+Financial reporting rules applied for the first time
+The IASB has issued the following Standards or amendments to Standards, which are required to be applied in the
+Consolidated Financial Statements for the year ended 30 September 2018:
+Standard/amendment/interpretation
+Effective date
+Impact on Infineon
+IAS 7
+Cash flow statements
+IAS 12
+(Disclosure initiative - Amendments to IAS 7)
+Recognition of deferred tax assets for unrealized losses
+(Amendments to IAS 12)
+1 January 2017
+immaterial
+1 January 2017
+immaterial
+Annual IFRS improvement cycle
+2014-2016
+Amendments to IFRS 12
+1 January 2017
+none
+Financial reporting rules issued not yet applied
+The following new or amended Standards have been issued by the IASB and will be relevant to Infineon from
+today's perspective. They have not been applied in the Consolidated Financial Statements as of 30 September 2018
+since they are not yet mandatory or, alternatively, have not yet been endorsed by the EU. The new or amended
+Standards are applicable for fiscal years beginning on or after their respective effective date. As a general rule, they
+are not applied before their effective date, even if this is permitted for certain standards.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Deviations between amounts presented are possible due to rounding. Negative amounts are presented in parentheses.
+The Company's Management Board presented the Consolidated Financial Statements on 20 November 2018.
+The Group currency is the euro ("€").
+The fiscal year end for both Infineon and the Company is 30 September of each year.
+The Consolidated Statement of Operations is presented using the cost of sales method.
+1,096
+(283)
+(283)
+4
+(9)
+4,486
+6
+(9)
+(333)
+59
+27
+(3)
+6,446
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Notes to the Consolidated
+Financial Statements
+114
+The Infineon Group ("Infineon") comprising Infineon Technologies AG ("the Company") and its subsidiaries design,
+develop, manufacture and market a broad range of semiconductors and related system solutions. The focus of
+activities is on applications for automotive electronics, industrial electronics, information and communications
+infrastructure as well as hardware-based security. The product range includes standard, application-specific and
+customer-specific components as well as system solutions for power, digital, analog, high frequency and mixed-
+signal applications. About two third of Infineon's revenue is generated by power semiconductors, the remaining
+revenue is attributable to high frequency components, sensors, and microcontrollers for automotive, industrial
+and security applications. Research and development sites, manufacturing facilities, investments and customers
+are located mainly in Europe, Asia and North America.
+Infineon Technologies AG is a listed company under German law and ultimate parent company of Infineon. The
+principal office of the Company is Am Campeon 1-15, 85579 Neubiberg (Germany). The Company is registered in
+the Commercial Register of the District Court of Munich (Germany) under the number HRB 126492.
+1 Basis of the Consolidated Financial Statements
+The Consolidated Financial Statements prepared by Infineon Technologies AG as ultimate parent company for the
+year ended 30 September 2018 have been prepared in accordance with International Financial Reporting Standards
+("IFRS") and related interpretations effective as of 30 September 2018 as issued by the International Accounting
+Standards Board ("IASB") to the extent to which the IFRS and interpretations have been endorsed by the European
+Union ("EU"). The Consolidated Financial Statements also comply with the supplementary requirements set out in
+section 315e, paragraph 1, of the German Commercial Code ("Handelsgesetzbuch" or "HGB"). The aforementioned
+standards were complied with in full.
+(37)
+113
+currency
+translation
+adjustment
+Hedges
+Net cash used in financing activities
+Net change in cash and cash equivalents
+Effect of foreign exchange rate changes on cash and cash equivalents
+15
+6
+26
+15
+(283)
+(248)
+(542)
+(340)
+(542)
+(340)
+(130)
+252
+2
+(17)
+Cash and cash equivalents at beginning of period
+Cash and cash equivalents at end of period
+860
+625
+Net cash used in financing activities from discontinued operations
+Net cash used in financing activities from continuing operations
+Dividend payments
+Proceeds from issuance of ordinary shares
+(1,163)
+(1,131)
+Net cash used in investing activities from discontinued operations
+Net cash used in investing activities
+Net change in short-term debt
+Net change in related party financial receivables and payables
+Proceeds from issuance of long-term debt
+Repayments of long-term debt
+Change in cash deposited as collateral
+(1,163)
+732
+(1,131)
+12
+(1)
+20
+(18)
+12
+2
+12
+(321)
+(119)
+74
+2222
+860
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+15
+1,132,673,109
+2,265
+3,527,820
+7
+17
+17
+1,136,200,929
+2,272
+1,136,200,929
+Amount
+2,272
+2
+1,136,995,834
+2,274
+Consolidated Financial Statements
+Consolidated Statement of Changes in Equity
+Additional
+paid-in capital
+Accumulated
+deficit
+Other reserves
+Foreign
+Securities
+794,905
+11
+Shares
+Notes
+Consolidated Statement of Changes in Equity
+112
+Consolidated Statement of Changes in Equity
+for the year ended 30 September 2018 and 2017
+€ in millions,
+except for number of shares.
+Balance as of 1 October 2016
+Net income
+Other comprehensive income (loss) for the period, net of tax
+Total comprehensive income (loss) for the period, net of tax
+Dividends
+Issuance of ordinary shares:
+Ordinary shares issued
+Exercise of stock options
+Other changes in equity
+Balance as of 30 September 2017
+Balance as of 1 October 2017
+Net income
+Other comprehensive income (loss) for the period, net of tax
+Total comprehensive income (loss) for the period, net of tax
+Dividends
+Issuance of ordinary shares:
+Exercise of stock options
+Share-based compensation
+Balance as of 30 September 2018
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Share-based compensation
+Property, plant and equipment
+4,871
+5,423
+Combined Management Report | Our 2018 fiscal year
+2017
+90,000
+15,000
+18,000
+123,000
+Wolfgang Mayrhuber²
+Géraldine Picaud³
+2018
+37,500
+37,500
+18,000
+93,000
+2017
+90,000
+90,000
+36,000
+216,000
+2018
+90,000
+20,000
+Corporate Governance
+Compensation report
+105
+> Instead, the LTI will be reduced in future proportionately if the length of service of a member of the Board - specifically
+in the year in which the LTI is allocated - is shorter than the fiscal year to which the LTI award relates. This situation
+usually arises when a member of the Board does not begin his duties exactly at the beginning of a fiscal year
+or does not leave office exactly at the end of a fiscal year. The allocation amount is reduced in each case by one
+twelfth for each full month missing for the fiscal year in which the LTI is allocated.
+Fixed
+Fiscal
+Peter Bauer
+Member of the Supervisory Board
+in €
+Supervisory Board compensation
+106
+Compensation report
+Corporate Governance
+Combined Management Report | Our 2018 fiscal year
+110,000
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Compensation of the Supervisory Board for the 2018 fiscal year
+Members of the Supervisory Board, moreover, are reimbursed for all expenses incurred in connection with the
+performance of their Supervisory Board duties and for any value-added tax payable by them in this connection.
+The Company also pays any value-added tax incurred on their total remuneration (including meeting attendance
+fees) for the members of the Supervisory Board.
+In the event that a member, during a fiscal year, joins (or leaves) the Supervisory Board or one of its committees, or
+takes on a Supervisory Board function for which an allowance is paid, the relevant compensation components are
+disbursed on a pro rata basis, i.e. payment of one twelfth of the relevant annual compensation component for each
+(started) month of membership or exercise of function.
+› A meeting attendance fee of €2,000 per meeting of the Supervisory Board or one of its committees that is
+attended in person. The meeting attendance fee is paid only once if more than one meeting of the relevant
+committees takes place on a given day.
+› Allowances recognizing the additional work involved in performing certain functions within the Supervisory
+Board: The Chairman of the Supervisory Board receives an allowance of €90,000, each Vice-chairman receives an
+allowance of €30,000, the Chairman of the Investment, Finance and Audit Committee and the Chairman of the
+Strategy and Technology Committee each receive an allowance of €25,000 and each member of a Supervisory
+Board committee receives an allowance of €15,000 - with the exception of the Nomination Committee and the
+Mediation Committee. The additional allowance is payable only if the body to which the Supervisory Board or
+committee member belongs has convened or passed resolutions in the fiscal year concerned. A member of the
+Supervisory Board performing more than one of the functions indicated receives only the highest single additional
+allowance payable to a member performing the functions concerned. The allowance is paid to the relevant holder
+of office within one month of the end of the fiscal year.
+› A fixed compensation (basic remuneration) of €90,000. This amount applies to each member of the Supervisory
+Board and is payable within one month of the close of the fiscal year.
+The compensation due to the Supervisory Board (total compensation) is governed by section 11 of the Company's
+Articles of Association and comprises the following:
+Compensation structure
+Supervisory Board compensation
+> In a change from the previous rules, the allocation amount will also be reduced in future proportionately in the
+case of a so-called "good leaver", i.e. a member of the Board leaving office without any fault on his/her part, for
+instance in the event of reaching the stipulated age limit. The group of “good leavers” now also includes cases
+in which a member of the Board fulfills his/her contract properly up to the end of the agreed term and leaves the
+Company only because the contract has not been extended. By contrast, if a member of the Board resigns from
+office (unless the resignation is for good cause for which the member is not responsible) or if a contract of a
+member of the Board is terminated by the Company for good cause (a so-called “bad leaver”), all performance
+shares not yet definitely allocated are forfeited when the member of the Board leaves office.
+The total compensation (including meeting attendance fees) paid to the individual members of the Supervisory
+Board in the 2018 fiscal year comprises the following (these figures do not include value-added tax at 19 percent):
+Allowance
+2017
+6,000
+2018
+90,000
+14,000
+104,000
+2017
+90,000
+12,000
+102,000
+Dr. Eckart Sünner
+2018
+90,000
+68,333
+24,000
+182,333
+2017
+90,000
+25,000
+20,000
+135,000
+Diana Vitale
+2018
+Kerstin Schulzendorf
+123,000
+18,000
+15,000
+66,000
+Dr. Manfred Puffer
+2018
+90,000
+90,000
+2017
+90,000
+20,000
+110,000
+Prof. Dr. Doris Schmitt-Landsiedel4
+60,000
+2018
+15,000
+15,000
+Jürgen Scholz
+2018
+90,000
+15,000
+20,000
+125,000
+2017
+90,000
+2017
+year
+compen-
+for specific
+15,000
+90,000
+2017
+125,000
+20,000
+15,000
+90,000
+2018
+Gerhard Hobbach
+123,000
+18,000
+15,000
+90,000
+2017
+123,000
+18,000
+15,000
+90,000
+2018
+Peter Gruber
+125,000
+18,000
+123,000
+Hans-Ulrich Holdenried
+2018
+15,000
+90,000
+2018
+Dr. Susanne Lachenmann
+106,000
+16,000
+90,000
+2017
+100,000
+10,000
+20,000
+90,000
+Prof. Dr. Renate Köcher
+129,000
+24,000
+15,000
+90,000
+2017
+127,000
+22,000
+15,000
+90,000
+2018
+15,000
+90,000
+2017
+2017
+148,000
+28,000
+30,000
+90,000
+2018
+Johann Dechant
+133,000
+18,000
+25,000
+90,000
+90,000
+133,000
+18,000
+25,000
+90,000
+2018
+Total
+compen-
+sation
+fees
+functions
+sation
+Meeting
+attendance
+2017
+90,000
+30,000
+146,000
+123,000
+18,000
+15,000
+90,000
+2018
+Annette Engelfried
+2017
+82,000
+12,000
+10,000
+26,000
+60,000
+Dr. Wolfgang Eder¹
+96,000
+6,000
+90,000
+2017
+100,000
+10,000
+90,000
+2018
+Dr. Herbert Diess
+2018
+14,000
+104,000
+2017
+Actuarial gains (losses) on pension plans and similar commitments¹
+Total items not expected to be reclassified to profit or loss in the future
+Currency translation effects
+Net change in fair value of hedging instruments
+Net change in fair value of available-for-sale financial assets
+Total items expected to be reclassified to profit or loss in the future
+Other comprehensive income (loss) for the year, net of tax
+Total comprehensive income for the year, net of tax
+Attributable to:
+109
+Notes
+2018
+2017
+15
+1,075
+790
+(4)
+118
+(4)
+118
+27
+(49)
+Net income
+€ in millions
+for the year ended 30 September 2018 and 2017
+Consolidated Statement of
+Comprehensive Income
+1.08
+0.70
+7
+(0.13)
+Basic earnings per share (in euro)
+7
+0.95
+0.70
+Diluted earnings per share (in euro) attributable to
+shareholders of Infineon Technologies AG:1
+Diluted earnings per share (in euro) from continuing operations
+Diluted earnings per share (in euro) from discontinued operations
+Diluted earnings per share (in euro)
+(2)
+7
+0.70
+7
+(0.13)
+7
+0.95
+0.70
+1 The calculation of earnings per share is based on unrounded figures.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Consolidated Statement of Comprehensive Income
+1.08
+4
+2
+25
+Other current assets
+Assets classified as held for sale
+Total current assets
+732
+860
+8
+1,811
+1,592
+9
+971
+Income tax receivable
+851
+1,480
+1,240
+5
+52
+5
+366
+300
+6
+11
+23
+10
+7
+Inventories
+Financial investments
+(43)
+21
+75
+1,096
+865
+Shareholders of Infineon Technologies AG
+1,096
+865
+1 Contains losses from investments accounted for using the equity method in the 2018 fiscal year of €1 million (2017: gains €1 million).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Trade receivables
+Consolidated Financial Statements
+110
+Consolidated Statement of Financial Position
+as of 30 September 2018 and 2017
+€ in millions
+Notes
+30 Septem-
+ber 2018
+30 Septem-
+ber 2017
+ASSETS
+Cash and cash equivalents
+Consolidated Statement of Financial Position
+123,000
+Basic earnings per share (in euro) from continuing operations
+Basic earnings per share (in euro) from discontinued operations
+1,075
+110 Consolidated Statement of Financial Position
+111 Consolidated Statement of Cash Flows
+112 Consolidated Statement of Changes in Equity
+114 Notes to the Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+107
+Consolidated Financial Statements
+Consolidated Statement of Operations
+Consolidated Statement of Operations
+for the year ended 30 September 2018 and 2017
+€ in millions
+108
+Notes
+2018
+2017
+Revenue
+Cost of goods sold
+Gross profit
+Research and development expenses
+3
+7,599
+109 Consolidated Statement of Comprehensive Income
+108 Consolidated Statement of Operations
+Consolidated Financial Statements
+Content
+90,000
+12,000
+102,000
+Total
+2018
+2017
+1,447,500
+1,425,000
+260,833
+284,000
+1,992,333
+7,063
+260,000
+1 Joined as Member of the Supervisory Board since 22 February 2018. The compensation for 2018 therefore was awarded on a pro rata basis.
+2 Joined as Member of the Supervisory Board until 22 February 2018. The compensation for 2018 therefore was awarded on a pro rata basis.
+3 Joined as Member of the Supervisory Board since 16 February 2017. The compensation for 2017 therefore was awarded on a pro rata basis.
+4 Joined as Member of the Supervisory Board until 8 November 2016. The compensation for 2017 therefore was awarded on a pro rata basis.
+1,973,000
+Members of the Supervisory Board did not receive any loans from Infineon in either the 2018 or 2017 fiscal years.
+Neubiberg, 20 November 2018
+Management Board
+Dr. Reinhard Ploss
+Dominik Asam
+Dr. Helmut Gassel
+Jochen Hanebeck
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+288,000
+(4,714)
+(4,442)
+2,885
+(5)
+3
+Income from continuing operations before income taxes
+1,411
+933
+Income tax
+5
+(193)
+(142)
+Income from continuing operations
+4
+Loss from discontinued operations, net of income taxes
+Attributable to:
+Shareholders of Infineon Technologies AG
+Basic earnings per share (in euro) attributable to
+shareholdersof Infineon Technologies AG:¹
+1,218
+791
+6
+(143)
+(1)
+1,075
+790
+Net income
+790
+Gain (loss) from investments accounted for using the equity method
+(68)
+2,621
+3
+(836)
+(776)
+Selling, general and administrative expenses
+3
+(850)
+(819)
+Other operating income
+6
+(63)
+332
+Other operating expenses
+(62)
+(57)
+Operating income
+1,469
+983
+Financial income
+15
+10
+Financial expenses
+14
+5
+3
+1 January 2020
+Other liabilities (current and non-current):
+Other provisions
+Pensions
+Provisions:
+Debt
+Trade payables
+LIABILITIES AND EQUITY
+Remaining other assets
+Measured at fair value through profit or loss
+Designated hedging instruments
+Loans and receivables
+Available-for-sale
+Other assets (current and non-current):
+Other financial assets:
+with definite useful life
+Intangible assets (except goodwill):
+Property, plant and equipment
+Goodwill
+Assets classified as held for sale
+Inventories
+Trade receivables
+Functional currency, reporting currency and foreign currency translation
+The functional currency of Infineon Technologies AG is the euro. The Consolidated Financial Statements have been
+prepared with the euro as the reporting currency.
+Foreign currency transactions of subsidiaries are translated into the functional currency of the relevant entity using
+the spot rate prevailing at the transaction date. Monetary foreign currency assets and liabilities are translated at the
+spot rate prevailing at the reporting date. Exchange rate gains and losses from the translation of foreign currency
+transactions are recognized in the Consolidated Statement of Operations.
+The assets and liabilities of subsidiaries with functional currencies other than the euro are translated into euros
+using the spot rate at the end of the reporting period. Income and expenses of these entities are translated using
+the average spot rate of the reporting period. All currency translation differences resulting from the consolidation
+are recognized directly in equity and presented as “other reserves".
+The euro/US dollar exchange rate is particularly significant for the preparation of the Consolidated Financial State-
+ments. As of the reporting date 30 September 2018 it was 1.1576 (30 September 2017: 1.1806) and the average for
+the 2018 fiscal year was 1.1892 (2017: 1.1060).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Other financial liabilities:
+Consolidated Financial Statements
+Recognition and measurement principles
+The following table summarizes the principal measurement bases used in the preparation of the Consolidated
+Financial Statements:
+Balance sheet item
+ASSETS
+Cash and cash equivalents
+Financial investments
+Notes to the Consolidated Financial Statements
+A list of subsidiaries of Infineon Technologies AG is provided in note 26.
+Measured at fair value through profit or loss
+Other financial liabilities
+Available-for-sale financial assets
+Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
+in an active market. At Infineon the balance sheet items "Cash and cash equivalents", "Financial investments",
+"Trade receivables" and current and non-current "Other assets" all contain financial assets which are classified in
+the category "Loans and receivables”. Loans and receivables are measured on initial recognition at their fair value
+plus incidental acquisition costs. Subsequently, they are measured at amortized cost using the effective interest
+method and are tested for impairment. They are considered to be impaired when there is objective evidence that
+Infineon will not receive all amounts contractually due at the relevant due date. Objective evidence that indicates
+that impairment should be recorded would include, for example, known financial difficulties or the insolvency of
+a debtor. The impairment is recorded as an expense in profit or loss (in a separate allowance account). When a
+payment default becomes certain, such loans and receivables are considered to be uncollectible and derecognized
+along with the previously recognized allowance.
+Loans and receivables
+Infineon classifies financial liabilities into the following categories: “Financial liabilities measured at fair value
+through profit and loss” and “Other financial liabilities”. Furthermore, “Designated hedging instruments (cash flow
+hedges)" belong to financial liabilities.
+Infineon classifies financial assets into the following categories: "Loans and receivables", "Available-for-sale financial
+assets" and "Financial assets measured at fair value through profit and loss". "Designated hedging instruments
+(cash flow hedges)" also belong to financial assets. Financial instruments of the category "Assets held-to-maturity"
+were not held by Infineon.
+119
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Financial assets are derecognized when the rights to receive payments from the investments have expired, or have
+been transferred and Infineon has transferred all risks and rewards associated with ownership. Financial liabilities are
+derecognized when they are extinguished, that is when the contractual obligation is discharged, canceled or expired.
+Regular purchases and sales of financial assets are recognized on the settlement date.
+Financial instruments are initially recognized at their fair value. Transaction costs directly attributable to the acqui-
+sition or issuance of financial instruments are only included in the carrying amount if the financial instruments are
+not measured at fair value through profit or loss.
+Financial instruments
+Cash and cash equivalents represent cash and all financial resources with a maturity at acquisition date of three
+months or less, and are measured at their nominal amount.
+Cash and cash equivalents
+118
+Fair value through profit or loss
+Fair value directly through equity
+Fair value/amortized cost
+Fair value/amortized cost
+Acquisition cost
+Remaining other liabilities
+Own shares
+Measurement principle
+Nominal amount
+Fair value/amortized cost
+Fair value/amortized cost
+Designated hedging instruments
+Lower of acquisition or production cost and net realizable value
+Lower of carrying amount and fair value less costs to sell
+(Amortized) Acquisition or production cost
+(Amortized) Acquisition or production cost
+Fair value/amortized cost
+Fair value directly through equity
+Fair value through profit or loss
+Fair value directly through equity
+(Amortized) Cost
+Fair value/amortized cost
+Fair value/amortized cost
+Projected unit credit method
+Expected settlement amount
+Impairment-only approach
+Available-for-sale financial assets are non-derivative financial assets that are either designated as available for sale,
+or are not allocated to any of the other categories (see above). Upon acquisition they are measured at fair value
+taking into account transaction costs and are subsequently measured at their fair value at the end of the relevant
+reporting period. Transaction costs relating to the acquisition of available-for-sale financial assets with a finite term
+and fixed or determinable payments are capitalized and recognized in the Consolidated Statement of Operations
+using the effective interest method. Changes in the fair value of available-for-sale financial assets are recognized
+directly in equity. If the fair value is permanently or significantly lower than the amortized cost, then an impairment
+loss is recognized through profit or loss. For available-for-sale financial assets, a significant or prolonged decline
+in the fair value of the financial asset below its acquisition cost is considered as an indicator that the assets are
+impaired. If any such evidence exists, the cumulative loss that had been recognized directly in equity - measured
+as the difference between the acquisition cost and the current fair value, less any impairment loss previously
+recognized in profit or loss – is removed from equity and transferred to profit or loss. When financial assets classified
+as available-for-sale are sold, the accumulated fair value adjustments previously recognized in equity are reclassified
+to profit or loss.
+The balance sheet effects of intragroup transactions as well as gains and losses arising from intragroup business
+relationships are eliminated on consolidation.
+An entity is included in the Consolidated Financial Statements from the date on which Infineon acquires control.
+Upon first-time consolidation of an entity, the acquired assets and liabilities are measured on the basis of their fair
+value at the acquisition date. Any excess of consideration paid (purchase price) over the share of the fair value of
+acquired assets, liabilities and contingent liabilities is recognized as goodwill. Any excess of Infineon's share of the
+fair value of items acquired over consideration paid is recognized as a gain.
+immaterial
+1 January 2019
+1 January 2018
+Annual IFRS improvement cycle
+Uncertainty over income tax treatments
+advance consideration
+IFRIC 23
+Foreign currency transactions and
+IFRIC 22
+1 January 2019
+Leases
+IFRS 16
+1 January 2018
+Revenue from contracts with customers including
+clarifications to IFRS 15
+IFRS 15
+1 January 2018
+1 January 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Standard/amendment/interpretation
+Effective date
+IAS 19
+IAS 28
+Plan amendment, curtailment or settlement (Amendments to IAS 19)
+Long-term interests in associated companies and joint ventures
+(Amendments to IAS 28)
+see explanations
+below the table
+see explanations
+below the table
+see explanations
+below the table
+1 January 2019
+none
+1 January 2019
+none
+IFRS 2
+IFRS 9
+Share-based payment (classification and measurement of
+share-based payment transactions - Amendment to IFRS 2)
+Financial instruments
+Expected impact
+on Infineon
+The financial statements of entities included in the Consolidated Financial Statements are prepared using uniform
+valuation and accounting policies.
+immaterial
+immaterial
+1 January 2018
+Control exists when Infineon is subjected to variable returns arising from its engagement with the subsidiary or has
+a right to such, and has the ability to influence these returns as a result of its power over the subsidiary. Power means
+that Infineon has existing rights that give Infineon the ability to direct the relevant activities of the subsidiary, that
+is the activities that significantly affect the aforementioned returns.
+The Consolidated Financial Statements presented here include the financial statements of Infineon Technologies AG
+and its direct and indirect subsidiaries on a consolidated basis. A subsidiary is defined as an entity which, directly
+or indirectly, is controlled by Infineon Technologies AG.
+Basis of consolidation
+2 Summary of significant accounting policies
+P see page 167 ff.
+117
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The new standard applies to fiscal years that begin on or after 1 January 2019, accordingly Infineon will apply the
+standard from the fiscal year that begins on 1 October 2019. In a cross-functional IFRS 16 project, divided into an
+analysis and design phase as well as an implementation phase, Infineon is evaluating the expected effect on the
+Consolidated Financial Statements. As of the balance sheet date the analysis phase has progressed considerably
+but is not completed. Infineon enters into leasing contracts mainly as lessee, these are primarily for operating
+leases. The application of IFRS 16 is expected to lead to an increase in assets and financial liabilities for Infineon.
+Infineon is expected to elect to use the exemptions for short term leases and leases for low value asset. Infineon is
+expected to make use of the modified retrospective approach for the transition to IFRS 16. A reliable estimate of
+the accounting effects is not possible at this stage of the project, but only after the completion of the system imple-
+mentation of the technical concept.
+IFRS 16 introduces a standardized accounting model by which leasing contracts are to be recorded in the balance
+sheet of the lessee and replaces all previous standards and lease accounting interpretations including IAS 17,
+IFRIC 4, and SIC 15 and SIC 27. This means that in future all assets and liabilities arising from a leasing agreement
+must be recognized by the lessee, unless it is a short term leasing arrangement (duration of twelve months or less)
+or a leasing arrangement for low-value assets (each may be elected by the lessee). The distinction between finance
+and operating leases is still required in the accounts of the lessor and therefore does not differ significantly from
+IAS 17 Leases.
+IFRS 16 "Leases"
+The transition to IFRS 15 will lead to an increase of current assets of around €43 million in particular as a result of
+the recognition of the contractual assets and a reduction to inventories, so that losses carried forward will decrease
+by €31 million as of 1 October 2018 after the effect of deferred taxes.
+In a cross-functional IFRS 15 project, divided into an analysis and design phase as well as an implementation
+phase, Infineon captured and evaluated the effect on the Consolidated Financial Statements. This company-wide
+investigation into the effects of the application of IFRS 15 has been completed. It has concluded that future revenue
+under particular contract types will be recognized over a period of time instead of at a particular point in time. For
+Infineon, this affects primarily customer-specific products with no alternative use for which Infineon has sufficient
+entitlement to payment. This will tend towards an earlier recognition of revenue than has previously been the case.
+For some customers with whom Infineon holds consignment stock, revenue recognition will shift from the point of
+withdrawal of goods and products by the customer to the point of delivery into the consignment warehouse. Based
+on the analyses, Infineon does not expect any material effect on earnings or financial position as a result of these
+changes, since Infineon's customer contracts generally only contain a contractual obligation that is fulfilled either
+over a period of time or at a particular point in time. The changes will involve the separate disclosure of contract
+assets in the Consolidated Statement of Financial Position as well as expanded quantitative and qualitative disclosure
+in the Notes to the Consolidated Financial Statements. The application of IFRS 15 requires changes to IT processes
+and systems, and where necessary new processes will be implemented.
+The new standard provides a comprehensive framework for determining whether, to what extent, and at which
+point in time or over which period revenue should be recognized. It replaces all previous standards and revenue
+recognition interpretations including IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31. For this purpose, the
+standard provides a principle-based, uniform, five-step model, which is to be applied to all categories of revenue
+transactions with customers. In essence, revenue is recognized at the point control is transferred to the customer.
+The amount to be recognized as revenue is based on the value of the consideration that the entity expects to receive.
+IFRS 15 is to be applied to fiscal years beginning on or after 1 January 2018. Infineon will apply the standard from
+the fiscal year beginning on 1 October 2018. Cumulative effects that arise from the first-time application will be
+recognized directly in equity whilst comparative information for previous periods will be disclosed according to
+the old requirements (modified retrospective approach).
+IFRS 15 "Revenue from Contracts with Customers"
+Changes to the classification and measurement categories at 1 October 2018 will not give rise to any transitional
+effects for Infineon. Infineon expects changes to allowances for cash and cash equivalents and financial investments
+of around €2 million as a result of the implementation of IFRS 9. The portfolio of allowances for trade receivables
+will decrease by around €2 million. In total, the implementation of IFRS 9 as of 1 October 2018, including the effect
+of deferred taxes, will have no net effect on retained earnings.
+none
+Annual IFRS improvement cycle 2015-2017 - Amendments
+to IFRS 3 and IFRS 11 as well as IAS 12 and IAS 23
+1 January 2019
+none
+Revised Conceptual Framework for Financial Reporting
+none
+2014-2016 - Amendments to IFRS 1 and IAS 28
+115
+IFRS 9 contains new rules for the classification and measurement of financial assets, as well as new regulations
+for impairments, although the requirements for financial liabilities most relevant to Infineon have largely been
+adopted from IAS 39. In addition the new standard contains comprehensive new disclosure requirements as well
+as accounting rules for hedging transactions. IFRS 9 is to be applied to fiscal years beginning on or after 1 January
+2018. Infineon will therefore apply the new standard from the fiscal year beginning on 1 October 2018. The cumulative
+effects arising from the transition to IFRS 9 will be recognized directly in the opening balance of equity, whilst
+comparative information for previous periods will be disclosed according to the old requirements (modified
+retrospective approach).
+In a cross-functional IFRS 9 project, divided into an analysis and design phase as well as an implementation phase,
+Infineon captured and evaluated the effect on the Consolidated Financial Statements. This company-wide investi-
+gation into the effects of the application of IFRS 9 has been completed. The future classification and measurement
+of financial assets will be based on the underlying business model of the portfolio according to which the financial
+asset is managed, as well as the specific form of the contractually agreed cash flows. A limited number of financial
+assets (debt instruments) held by Infineon, which are currently recognized at amortized cost or at fair value through
+equity, will be recognized at fair value through profit or loss. In the future, Infineon will measure all equity instruments
+held at the date of the transition at fair value through profit or loss. According to IFRS 9 the future recognition of
+the impairment of financial instruments will be based on expected losses, instead of losses already incurred as is
+the case at present under IAS 39. For this purpose, models have been developed to estimate expected credit losses
+for trade receivables (simplified impairment model) as well as cash and cash equivalents and financial investments
+(general impairment model), which will be integrated into the existing credit risk management processes. Infineon
+expects no material effects to arise from the transition to the new impairment model. The new rules for the application
+of hedge accounting, whose target is to better represent risk management strategy, will primarily result in changes
+to the documentation and effectiveness requirements for Infineon. All existing hedging arrangements fulfill the
+hedge accounting requirements as set out in IFRS 9 and will continue as before. There will be no changes to existing
+financial liabilities for Infineon. Additionally, expanded quantitative and qualitative disclosure in particular with
+regard to credit risk and expected credit losses will be required. The implementation of IFRS 9 will require changes
+to processes and systems.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+116
+IFRS 9 "Financial Instruments"
+Financial assets or liabilities measured at fair value through profit or loss
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Designated hedging instruments (cash flow hedges)
+1 Valuation parameters as of 30 June 2018 and 2017.
+Corporate
+Total
+2
+759
+2
+764
+1.5
+1.5
+10.4
+10.9
+14.1
+14.4
+704
+708
+& Multimarket
+Power Management
+1.5
+1.5
+9.4
+5
+5
+12.2
+12.3
+9.3
+9.2
+P see page 125
+1.5
+Industrial Power Control
+49
+48
+12.6
+12.4
+9.6
+1.5
+Automotive
+In addition, by applying different parameters that Infineon considers to be possible but not probable, sensitivity
+analyses are performed on the original assumptions behind the calculation of revenue growth, gross margins, the
+WACC and growth rates in the terminal value. In this way, Infineon takes account of the inherently uncertain nature
+of estimates and carries out impairment tests on goodwill based on scenarios that are less favorable than those
+considered most likely. Changes considered to be possible to the parameters identified would have had no effect
+on the value of goodwill.
+Intangible assets and other non-current assets
+At Infineon financial assets or liabilities measured at fair value through profit or loss comprise entirely of derivatives
+used to hedge currency risks for which hedge accounting is not applied.
+Cost of goods sold includes the manufacturing costs of products sold during the reporting period. In addition,
+among other things cost of goods sold contains idle costs, inventory risks, the cost of warranty cases as well as the
+amortization of capitalized development costs. Recognized foreign currency effects as well as changes in the fair
+value of undesignated derivative financial instruments that are connected to the operating business are recognized
+in cost of goods sold.
+Cost of goods sold
+In some cases, rebate programs are offered to specific customers or distributors whereby the customer or distributor
+is granted a rebate upon achievement of a defined sales volume. Such rebates are taken into account for revenue
+recognition purposes.
+Distributors can, subject to certain conditions, return a limited amount of inventory (stock return) or request scrap
+allowances. Stock return credit notes are accrued based on expected stock returns in accordance with the contractual
+agreement combined with historical experience. Distributor scrap allowances are accrued based on the contractual
+agreement and, upon submission of a valid claim, are granted up to a certain maximum based on turnover in a given
+period. Infineon monitors such product returns on an ongoing basis and adjusts accrual assumptions accordingly.
+Other returns are only permitted for quality defects within the ordinary warranty period.
+In principle, Infineon recognizes revenue on sales to distributors by using the "sell in" method, that is when a product
+is sold to the distributor. In accordance with established business practice in the semiconductor industry, under
+certain circumstances distributors can apply for price protection and ship and debit credit notes. Price protection
+allows distributors to request a credit (debit) note for unsold products held in inventory if Infineon has reduced
+(increased) the standard list price of these products. In addition, in certain cases distributors may request a ship
+and debit credit note for price adjustments. Infineon adjusts revenue for price protection and ship and debit in
+the period in which the related revenue is recorded. The ship and debit adjustment is determined based on rolling
+trends in the difference between contract prices and standard list prices to the distributors. The price protection
+adjustment is based on actual list prices and distributor inventory on hand. The availability of detailed distributor
+inventory data, the transparency of pricing for standard products and the long distributor pricing history enable
+Infineon to reliably estimate the adjustments for price protection and ship and debit credit notes at the end of the
+reporting period.
+Infineon generates revenues from the sale of semiconductor products and related system solutions. Infineon's
+semiconductor products include a wide variety of chips and components used in electronic applications ranging
+from automotive electronics and industrial applications to chip cards. Infineon's products are also used in a wide
+variety of microelectronic applications, such as computer systems, telecommunications systems and consumer
+goods. Revenue is allocated to the individual segments on the basis of differences in product type and applications.
+Revenues from product sales are recognized when the significant risks and rewards of ownership of the goods are
+transferred to the buyer and it is sufficiently probable that the economic benefits associated with the sale will flow
+to Infineon. The amount of revenues recognized is based on the fair value of the consideration received or receivable
+taking into account settlement discounts and bonuses.
+Revenue recognition
+Contingent liabilities are either possible obligations whose actual existence is dependent on the occurrence of
+one or more uncertain future events not wholly within the control of Infineon, or they are present obligations that
+will probably not result in the outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position, instead they are disclosed and
+described in the Notes to the Consolidated Financial Statements (see notes 18 and 19).
+Contingent liabilities
+P see page 147 ff.
+124
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+If the obligation decreases as a result of a change in the estimate, the provision is adjusted accordingly and the
+resulting income recognized in the same functional area of the Consolidated Statement of Operations in which the
+original charge was recognized.
+Where cash flows are expected to arise after more than one year and the interest effect is considered material,
+provisions are stated at the present value of expected cash outflows.
+Infineon reviews non-current assets, including property, plant and equipment and intangible assets for possible
+impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
+be recoverable. Regardless of whether an indication of impairment exists, intangible assets including capitalized
+development costs not yet subject to scheduled amortization undergo an annual impairment test (see also
+"Research and development expenses").
+The recoverability of an asset is measured by comparing its carrying amount with its recoverable amount. To the
+extent it is not possible to determine the recoverable amount of an asset, the book value of the CGU to which the
+asset is allocated is compared to its recoverable amount.
+The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and its value in use. The
+value in use is calculated based on discounted future cash flows. Considerable management judgment is necessary
+to estimate future cash flows.
+If an asset or CGU is considered to be impaired, the impairment recognized is measured as the amount by which the
+carrying value exceeds the recoverable amount. If the recoverable amount of a CGU is less than the carrying value,
+the impairment is allocated pro rata to the assets therein. An impairment loss recognized in prior periods for
+an asset is reversed insofar as, since the last impairment, a change in the underlying assumptions has occurred,
+which leads to a lower impairment requirement. The maximum possible reversal of an impairment loss is that which
+would lead to the carrying amount that would have been determined (net of scheduled depreciation and amortization)
+if no impairment loss had been recognized for that asset in prior years.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+As a result of the impairment tests and the resulting sensitivity analyses carried out, Infineon concluded that none
+of the operating segments gave rise to an impairment of goodwill in the year under report. As of the reporting date
+there was no indication that the recoverable amount of a CGU to which goodwill had been allocated could have
+fallen below the book value.
+Notes to the Consolidated Financial Statements
+Defined benefit pension plans
+The net pension obligation recognized in respect of defined benefit pension plans comprises the present value
+of the defined benefit obligation (DBO) at the end of the reporting period less the fair value of the plan assets. The
+present value of the DBO and the resulting pension expense are determined annually in accordance with IAS 19
+"Employee Benefits" for each separate plan by independent, qualified actuaries using the projected-unit-credit
+method. The calculation is subject to, among other things, assumptions on increases in salaries, future developments
+in pensions as well as the life expectancy of the beneficiaries. As of the balance sheet date, the obligations are
+discounted using discount rates determined on the basis of market yields of high-grade, fixed-interest corporate
+bonds from issuers carrying a very high credit rating.
+Provisions
+Provisions are recognized for present legal and/or constructive obligations arising from past events that are likely
+to result in a future outflow of resources, the amount of which can be reliably estimated.
+With regard to legal proceedings and litigation, for example, the Qimonda insolvency, Infineon regularly assesses
+the probability of an unfavorable outcome. Infineon records provisions and liabilities, including provisions for
+significant legal costs, for those obligations and risks relating to legal disputes which it assesses at the relevant
+reporting date are likely to occur. That is where, from Infineon's perspective at the date of assessment, there is
+compelling evidence which indicates an obligation or risk, and the obligation or risk can be quantified with reason-
+able accuracy at the time of assessment. As soon as additional information is available the affected estimates are
+reviewed and, where necessary, provisions for these proceedings are revised.
+Provisions are measured at their expected settlement amount. The amount recognized for a provision is the best
+estimate of the expenditure required to settle the present obligation. Estimates of outcomes and financial effects
+are dependent upon the judgment of management, supplemented by experience gained from similar transactions
+and, where appropriate, the assessment of independent experts. If the circumstances to be assessed encompass
+a large number of possible outcomes, the obligation is estimated by weighting all possible outcomes by their
+associated probabilities (expected value method).
+123
+2017
+All items of income and expense relating to defined benefit plans, with the exception of the net interest result, are
+recognized on a net basis in the functional areas within the operating result. The net interest result arising from the
+multiplication of the net pension obligation (pension obligation less plan assets) by the discount rate is presented
+as financial expense. Actuarial gains and losses arising from changes to actuarial assumptions and estimates as
+well as the difference between the normalized and actual return on plan assets are recognized directly in equity
+and recorded in the Consolidated Statement of Comprehensive Income in the periods in which they arise. Past
+service costs are recognized immediately in profit or loss.
+2017
+Technologies
+Customer relationships
+Capitalized development costs
+Scheduled amortization of intangible assets is based on the following useful lives:
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Intangible assets consist primarily of purchased intangible assets, such as licenses, technology and customer
+relationships, which are measured at acquisition cost, as well as capitalized development costs. These intangible
+assets have finite useful lives and are valued at their amortized acquisition or production costs with amortization
+recorded using the straight-line method over their expected economic life.
+1-10
+10-25
+3-10
+Years
+Intangible assets (excluding goodwill)
+Other plant and office equipment
+Technical equipment and machinery
+Buildings
+Scheduled depreciation on property, plant and equipment is recorded using the straight-line method. Land, property
+rights and construction in progress are not depreciated on a scheduled basis. Scheduled depreciation on property,
+plant and equipment is based on the following useful lives, as applied consistently throughout Infineon:
+Property, plant and equipment are measured at amortized acquisition or construction cost, and its value is reduced
+by scheduled depreciation and considering any impairment.
+Certain derivative financial instruments are used to hedge foreign currency risks or risks of commodity price changes
+(such as gold prices) for expected and highly probable future transactions in order to minimize the associated risk
+(cash flow hedges).
+2018
+Derivative financial instruments are measured at their fair value and included in "Other current assets" or "Other
+current liabilities".
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Licenses and similar rights
+120
+When a hedging instrument expires or is sold, or when a hedging relationship no longer meets the criteria for hedge
+accounting, any cumulative gain or loss existing at that time remains in equity until the underlying transaction
+actually occurs. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was
+reported in equity is immediately transferred to profit or loss.
+Other financial liabilities
+Upon acquisition other financial liabilities are measured at fair value after deduction of transaction costs. In
+subsequent periods they are measured at amortized cost using the effective interest method. The liabilities are
+derecognized when the contractual obligations are discharged, canceled or expired.
+Inventories
+Write-downs to net realizable value are recorded on inventories using a consistent approach throughout Infineon
+and are determined at product level for technically obsolete and slow-moving inventories on the basis of the
+amount of revenues expected to be generated by the relevant product.
+Property, plant and equipment
+The effective portion of changes in the fair value of derivative financial instruments that are designated as cash
+flow hedges and are part of hedging relationships that meet the criteria for hedge accounting is recognized directly
+in equity. "Effective" is the degree to which changes in the fair value or cash flows of the hedged items that are
+attributable to a hedged risk are offset by changes in the fair value or cash flows of the hedging instrument. The
+gain or loss relating to the ineffective portion is recognized in profit or loss. Amounts accumulated in equity are
+recycled in profit or loss in the periods in which the underlying hedged item affects profit or loss.
+Other intangible assets
+Inventories are measured at the lower of historical acquisition or fully absorbed production cost - calculated using
+the weighted-average method - and net realizable value. Net realizable value corresponds to realizable sale proceeds
+under normal business conditions less estimated expected costs to complete and sell. Production cost comprises
+costs of material, production wages and an appropriate portion of attributable overheads, along with attributable
+depreciation and amortization on property, plant and equipment and intangible assets. Overhead mark-ups are
+determined on the basis of normal capacity utilization levels.
+Years
+Book value of
+allocated goodwill
+pre-tax WACC¹
+after-tax-WACC¹
+terminal growth rate¹
+€ in millions
+in %
+122
+in %
+2018
+2017
+2018
+121
+2018
+2017
+Segment
+The following table shows the allocation of the carrying amount of goodwill to the segments, as well as the
+valuation parameters used:
+in %
+Consolidated Financial Statements
+4-12
+Notes to the Consolidated Financial Statements
+1-12
+3-5
+3-5
+2-8
+Recoverability of intangible assets and other long-lived assets
+Goodwill
+Infineon did not hold any intangible assets with indefinite useful lives in either the 2018 or 2017 fiscal years.
+Acquired goodwill is only impaired if there is evidence of impairment. Its value is tested at the operating segment
+level for possible impairment annually as of 30 June and, additionally, whenever there are events or changes in
+circumstances that indicate that the carrying amount may not be recoverable. The recoverable amount is the higher
+of the fair value less costs to sell and the value in use. If the carrying amount of the respective operating segment to
+which the goodwill is allocated exceeds the recoverable amount of this CGU, the goodwill is impaired accordingly.
+The reversal in subsequent periods of such impairments is not permitted.
+Infineon determines the recoverable amount of a particular CGU to which goodwill has been allocated on the
+basis of its value in use. The value in use is measured by estimating the present value of future cash flows that will
+be generated by the continuing operations of the CGU discounted using an appropriate discount rate.
+Cash flows, including the underlying parameters such as revenue growth and gross margin, are projected based on
+past experience, current operating results and the five-year business plan approved in the fiscal year just ended.
+The plan is established bottom-up based on certain central assumptions applied consistently throughout Infineon.
+Average revenue growth rates used over the planning timeframe lie between 9.3 percent and 11.8 percent and
+do not exceed the historical long-term average growth rate for the sector in which the relevant segment operates.
+Investments to increase capacity for which no cash outflow has taken place are not taken into account. Cash flows
+for periods beyond the planning horizon are estimated using a terminal value.
+The discount rate for future cash flows is based on the after-tax weighted average cost of capital (WACC) for the CGU
+in question. The Capital Asset Pricing Model (CAPM) is used to calculate the cost of equity. The relevant pre-tax
+WACC used to discount future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax
+cash flows and the after-tax WACC using a typical tax rate for each reporting segment. The risk-free interest rate
+is derived using the Svensson method taking into account risk premiums, and the beta factor and debt ratio are
+derived from a group of companies comparable to the operating segment. In this way, the discount rate derived
+reflects the current market rate of return as well as the specific risks attached to the respective segment.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Goodwill acquired in a business combination is the excess of the consideration transferred for an interest in a business
+over the net fair value of acquired, separately identifiable assets, liabilities and contingent liabilities as of the date
+of acquisition. Goodwill is reported in the line item "Goodwill and other intangible assets" in the Consolidated
+Statement of Financial Position and is allocated to the cash-generating units (CGUS) or groups of CGUS that will
+benefit from the synergies generated by the business combination. A CGU represents the smallest identifiable
+group of assets that generates cash inflows from continuing activities and that are largely independent of other
+assets or group of assets.
+Notes to the Consolidated Financial Statements
+P see page 121 f.
+126
+Consolidated Financial Statements
+P see page 125
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+and page 129 ff.
+P see page 120
+and page 133
+and page 134 ff.
+P see page 145 ff.
+page 137 and
+page 148 ff.
+P see page 123
+and page 138 ff.
+Estimates and assumptions
+The preparation of financial statements in accordance with IFRS requires management to make estimates and
+assumptions that have an impact on the presented amounts and the associated disclosures.
+Estimates and assumptions undergo regular review and must be adjusted where appropriate. They can vary from
+period to period and have a material effect on the financial condition, liquidity position and results of operations
+of Infineon.
+> recognition and recoverability of deferred tax assets (see "Current and deferred income taxes" and note 5),
+For uncertain tax positions additional tax provisions are recorded or, in case of tax losses carried forward, respective
+deferred tax assets are reduced accordingly. The assessment of uncertain tax positions is based on best estimates.
+Areas containing estimates and assumptions and that are consequently most likely to be affected when actual
+results vary from estimates are:
+Although these estimates and assumptions are applied by management to the best of its knowledge based on
+current events and circumstances, actual events may result in deviations from these estimates.
+P see page 123,
+Income taxes are recognized in the Consolidated Statement of Operations, with the exception of income taxes
+relating to items recognized directly in equity or in other comprehensive income.
+Consolidated Financial Statements
+Deferred tax assets in respect of deductible temporary differences and tax loss carry-forwards which exceed deferred
+tax liabilities in respect of taxable temporary differences, are only recognized to the extent that it is probable
+that the relevant Group entity can generate sufficient taxable profit to realize the corresponding benefit. Infineon
+reviews deferred tax assets for impairment at every reporting date. The assessment requires management to make
+assumptions about future taxable profits as well as other positive and negative influencing factors.
+5 2
+396
+> valuation of inventory (see "Inventories" and note 10),
+4
+769
+764
+15
+€ in millions
+Changes in property, plant and equipment and goodwill and other intangible assets 2017
+Notes to the Consolidated Financial Statements
+125
+P see page 134 f.
+P see page 127
+Research and development expenses
+Costs of research activities are expensed as incurred. Costs for development activities, the results of which lead
+to a plan or design for the production of new or substantially improved products or process improvements, are
+capitalized if the development costs can be measured reliably, the product or process is technically and commercially
+feasible, future economic benefits are probable and Infineon intends, and has sufficient resources, to complete
+development and use or sell the asset. The costs capitalized include the cost of materials, direct labor and directly
+attributable general overhead expense that serves to prepare the asset for use. Such capitalized costs are presented
+as internally generated intangible assets within "Goodwill and other intangible assets” (see note 11). Development
+costs, which do not fulfill the criteria for capitalization, are expensed as incurred. Capitalized development costs are
+stated at cost less accumulated amortization and impairment charges. After the completion of the development
+phase and following the ramp-up of production, internally generated intangible assets are generally amortized as
+part of cost of goods sold over a period of three to five years.
+Grants
+Grants are recognized when it is reasonably assured that Infineon will comply with the conditions attached to the
+grant, and it is reasonably assured that the grant will be received. Investment-related grants are deducted from the
+purchase and production cost of the related asset and thereby reduce depreciation and amortization expense in
+future periods.
+Grants that are related to expenses are presented as a reduction of the related expense in the Consolidated Statement
+of Operations (see note 3).
+Current and deferred income taxes
+The current income tax expense is calculated in accordance with taxation provisions in force at the end of the
+reporting period.
+Deferred taxes are calculated on temporary differences between the tax base and the book value of assets and
+liabilities, and on tax losses available for carry-forward. By contrast, no deferred tax is recognized on goodwill arising
+in connection with business combinations. Similarly, deferred taxes are not recognized on the initial recognition
+of an asset or liability in connection with a transaction that is not a business combination and which, at the time
+of the transaction, affects neither the pre-tax income according to IFRS nor taxable profit. Deferred tax assets and
+liabilities are measured using applicable tax rates and laws that have been enacted by the end of the reporting
+period or are about to be enacted, and are to be applied when the related deferred tax asset is realized or the
+deferred tax liability is settled.
+Deferred tax assets and liabilities are netted to the extent they relate to the same tax authority and to the same
+taxpayer or a group of different taxpayers who are jointly assessed for income tax purposes.
+> recoverability of non-financial assets especially goodwill (see "Recoverability of intangible assets and other
+long-lived assets" and note 11),
+127
+> valuation of defined benefit pension plans (see “Defined benefit pension plans" and note 14) and
+Personnel expenses comprised the following in the 2018 and 2017 fiscal years:
+€ in millions
+Wages and salaries
+Social insurance levies, pension plans and similar commitments
+Total (continuing and discontinued operations)
+2018
+2017
+1,982
+1,868
+365
+338
+2,347
+2,206
+The average number of employees by geographic region is as follows for the 2018 and 2017 fiscal years:
+Europe
+therein: Germany
+Asia-Pacific (excluding Japan, Greater China)
+Greater China
+therein: China
+288
+Japan
+Notes to the Consolidated Financial Statements
+> recognition and valuation of provisions (see "Provisions" and notes 13 and 19),
+Consolidated Financial Statements
+2,923
+> valuation of share-based compensation (see note 17).
+All assumptions and estimates are based on the circumstances and assessments as of the balance sheet date, and
+taking into account knowledge gained up to the approval by the Management Board of the Consolidated Financial
+Statements on 20 November 2018.
+3 Notes to the Statement of Operations
+Revenue
+P see page 159 ff.
+Breakdowns of revenue by segments, product groups and geographic areas are disclosed in note 24.
+Cost of materials and purchased services as well as personnel expense
+The Consolidated Statement of Operations (continuing and discontinued operations) includes the following
+expenses for purchased services, materials and personnel.
+Expenses for purchased services and materials comprised the following in the 2018 and 2017 fiscal years:
+€ in millions
+Cost of raw materials, supplies and purchased goods
+Cost of purchased services
+Total (continuing and discontinued operations)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+2018
+2017
+1,647
+1,497
+1,595
+1,426
+3,242
+P see page 147
+227
+5
+26
+283
+396
+(3)
+129
+517
+799
+Total goodwill and other intangible assets
+Other intangible assets
+Licenses and similar rights
+Technologies
+Customer relationships
+Capitalized development costs
+Goodwill acquired for consideration
+Goodwill and other intangible assets
+11,206
+(42)
+(14)
+(215)
+366
+874
+10,237
+2
+Total property, plant and equipment
+212
+(11)
+Americas
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+2 For the year ended 30 September 2017, transfers relate to assets that were classified as held for sale.
+1 For the year ended 30 September 2017, amounts shown under property, plant and equipment as "Acquisitions through business combinations" relate to assets acquired in
+connection with the acquisition of MoTo.
+2,306
+(60)
+18
+219
+(1)
+275
+(10)
+392
+(4)
+643
+759
+(45)
+(14)
+7
+148
+2,225
+18
+19
+18
+332
+(4)
+366
+32
+1,095
+Land, land rights and buildings
+Property, plant and equipment
+nations¹
+combi-
+ber 2017
+30 Septem-
+Foreign
+currency
+effects
+business
+fication
+through
+2016
+Transfers²
+Reclassi-
+Acquisitions Disposals
+Additions
+1 October
+Cost
+2,462
+(21)
+(1)
+45
+(6)
+(274)
+(2)
+329
+284
+and construction in progress
+Payments on account
+1,227
+(8)
+14
+(65)
+76
+1,210
+Other plant and office equipment
+8,146
+(27)
+215
+(127)
+437
+7,648
+Technical equipment and machinery
+1,501
+(10)
+1,480
+therein: USA
+2018
+1,592
+1,811
+56
+1,070
+466
+1,248
+563
+ber 2017
+30 Septem-
+30 Septem-
+ber 2018
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Financial investments
+Securities
+Investment funds
+Fixed-term bank deposits and money market funds
+€ in millions
+Financial investments as of 30 September 2018 and 2017 comprise the following (for further information see also
+notes 22 and 23):
+Financial investments comprise fixed-term deposits with banks, investment funds, money market funds and
+securities. While fixed-term deposits with banks with an original term of more than three months and money
+market funds qualify as loans and receivables in accordance with IAS 39 "Financial Instruments: Recognition and
+Measurement", investment funds and securities are categorized as available-for-sale financial assets (for valuation
+see note 2).
+0.70
+0.95
+(0.13)
+0.70
+1.08
+1,133.9
+1,134.1
+5.3
+3.6
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+9 Trade receivables
+Trade receivables due within one year as of 30 September 2018 and 2017 consist of the following:
+9
+2017
+2018
+Allowance for doubtful accounts at end of the fiscal year
+Current year's allowance, net of reversals
+Allowance for doubtful accounts at beginning of the fiscal year
+€ in millions
+Changes in the allowance for doubtful accounts for the 2018 and 2017 fiscal years were as follows:
+851
+971
+(9)
+(9)
+1,134.6
+(6.0)
+1,128.6
+860
+7
+860
+973
+30 Septem-
+ber 2017
+30 Septem-
+ber 2018
+133
+Trade receivables, net
+Allowance for doubtful accounts
+Trade receivables, gross
+Trade receivables, related parties
+Trade receivables, third parties
+€ in millions
+980
+11
+(6.0)
+1,130.5
+(1)
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+P see page 152 ff.
+P see page 117 ff.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+On 6 March 2018, the largest part of the Radio Frequency Power Components business was sold to Cree, Inc. for
+€345 million. The assets and selected liabilities were transferred separately. Overall, net assets with a carrying
+amount of €25 million were transferred. In addition, goodwill of €28 million was disposed of. €22 million of the
+purchase price was recognized as deferred income in connection with the long-term supply agreement for LDMOS
+wafers and related components from Infineon to Cree, Inc. The pre-tax gain realized in the 2018 fiscal year arising
+from the sale amounted to €270 million and was recognized in other operating income.
+Radio Frequency Power Components business
+(1)
+(143)
+7
+(1)
+(150)
+2017
+2018
+Others business' share of discontinued operations, net of income taxes
+Loss from discontinued operations, net of income taxes
+Qimonda's share of discontinued operations, net of income taxes
+€ in millions
+Loss from discontinued operations, net of income taxes
+The current risks and provisions relating to Qimonda's insolvency are described in detail in note 19 "Proceedings in
+relation to Qimonda".
+In the 2018 and 2017 fiscal years adjustments to individual provisions arose as a result of recent developments in
+connection with the insolvency of Qimonda, as well as subsequent income from other discontinued operations.
+These led to losses after tax as shown in the table below.
+On 23 January 2009, Qimonda AG (“Qimonda”), a majority owned company, filed an application at the Munich Local
+Court to commence insolvency proceedings. On 1 April 2009, the insolvency proceedings opened. Insolvency
+proceedings were also opened for further domestic and foreign subsidiaries of Qimonda. Some of these insolvency
+proceedings have already been completed. The impacts of these proceedings are reported as discontinued opera-
+tions in Infineon's Consolidated Statement of Operations and Consolidated Statement of Cash Flows, to the extent
+that the underlying events occurred before the commencement of insolvency proceedings. To the extent that the
+events occurred after the commencement of insolvency proceedings, their results are reported as part of continuing
+operations.
+Qimonda - discontinued operations
+classified as held for sale
+6 Disposals and discontinued operations and assets
+P see page 148 ff.
+132
+Assets classified as held for sale
+On 30 September 2018, land and buildings as well as technical equipment and machinery with a carrying amount
+of €11 million (previous year: €23 million) were disclosed as assets classified as held for sale.
+7 Earnings per share
+(143)
+791
+1,218
+790
+1,075
+2017
+2018
+8 Financial investments
+1 The calculation of earnings per share is based on unrounded figures.
+Earnings per share (in euro) - basic and diluted
+Earnings per share (in euro) from discontinued operations, net of income taxes
+Earnings per share (in euro) from continuing operations
+1,136.5
+Basic and diluted earnings per share¹ (in euro):
+- Effect of share-based compensation
+Adjustments for:
+Weighted-average number of shares outstanding - basic
+- Adjustment for own shares
+- Ordinary share capital
+Weighted-average number of shares outstanding (in millions):
+thereof from discontinued operations
+thereof from continuing operations
+Net income attributable to shareholders of Infineon Technologies AG - basic and diluted
+€ in millions (unless otherwise stated)
+Basic and diluted earnings per share are calculated as follows for the fiscal years ended 30 September 2018 and 2017:
+Basic earnings per share are calculated by dividing net income by the weighted average number of shares outstanding
+during the reporting period. The calculation of the diluted earnings per share is based on the assumption that all
+potentially dilutive instruments are converted into ordinary shares, resulting in a corresponding increase in the
+number of shares on the one hand and a corresponding reduction in the charge on earnings for these instruments,
+such as interest expense, on the other.
+Weighted-average number of shares outstanding - diluted
+(2)
+9
+9
+355
+332
+Total property, plant and equipment
+and construction in progress
+Payments on account
+1,248
+(2)
+53
+(95)
+65
+1,227
+Other plant and office equipment
+8,845
+266
+(156)
+589
+8,146
+Technical equipment and machinery
+1,593
+14
+(3)
+81
+1,501
+Land, land rights and buildings
+Property, plant and equipment
+11,206
+1,090
+(2)
+(333)
+2,306
+Total goodwill and other intangible assets
+18
+Other intangible assets
+(15)
+21
+219
+Licenses and similar rights
+8
+275
+Technologies
+392
+nations
+Customer relationships
+143
+643
+Capitalized development costs
+(28)
+18
+759
+Goodwill acquired for consideration
+Goodwill and other intangible assets
+12,038
+(2)
+(256)
+352
+(17)
+combi-
+ber 2018
+currency
+effects
+ber 2018
+30 Septem-
+30 Septem-
+Total
+Finished goods and merchandise
+Work in progress
+Raw materials and supplies
+€ in millions
+Inventories as of 30 September 2018 and 2017 consist of the following:
+10 Inventories
+Receivables with a maturity of more than one year are presented as other non-current assets.
+With respect to trade receivables that are not overdue and not impaired at the end of the reporting period, there are
+no indications that customers, based on their past credit history and current creditworthiness assessments, are not
+able to meet their obligations.
+ber 2017
+4
+831
+851
+3
+Past due
+> 31 days
+Past due
+0-30 days
+29
+932
+964
+Third party trade receivables, net of allowances as of 30 September 2018
+Third party trade receivables, net of allowances as of 30 September 2017
+thereof not
+past due
+Carrying
+amount
+€ in millions
+Third party trade receivables, net of allowances for doubtful accounts, at the reporting date comprise the following:
+16
+Income taxes recognized directly in equity mainly comprise taxes from actuarial gains and losses arising from the
+pension commitments.
+166
+895
+business
+30 Septem-
+Foreign
+Transfers
+Reclassi-
+fication
+Disposals
+Acquisitions
+through
+Additions
+1 October
+2017
+Cost
+134
+€ in millions
+131
+Changes in property, plant and equipment and goodwill and other intangible assets 2018
+11 Property, plant and equipment, goodwill and other intangible assets
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Inventories as of 30 September 2018 and 2017 were stated net of write-downs of €138 million and €131 million,
+respectively.
+years.
+Cost of goods sold consisted mainly of inventory-related expenses in the 2018 and 2017 fiscal
+1,240
+(60)
+360
+419
+749
+A summary of changes in property, plant and equipment as well as in goodwill and other intangible assets
+for the years ended 30 September 2018 and 2017 is as follows:
+(148)
+(148)
+28
+€ in millions
+Income tax from continuing operations for the fiscal years ending 30 September 2018 and 2017 is as follows:
+5 Income tax
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+As of 30 September 2018 and 2017, unrecognized capital contribution obligations in joint ventures amount to
+€5 million and €10 million.
+4
+(6)
+1
+(1)
+3
+(5)
+2017
+2018
+Total comprehensive income (loss) for the year, net of tax
+Other comprehensive income (loss) for the year, net of tax
+Income (loss) for the year, net of tax
+€ in millions
+The result of the investments accounted for using the equity method is not part of the segment result (see note 24).
+For the 2018 and 2017 fiscal years, Infineon's proportion of selected items from the statement of comprehensive
+income of the joint ventures were aggregated as follows:
+Psee page 161
+3
+3
+(8)
+3
+Current tax expense
+Deferred tax income (expense)
+Income tax
+129
+2018
+Non-deductible expenses and tax-exempt income, net
+(11)
+4
+Effects from the difference between local and functional currency (Malaysia)
+25
+35
+Tax rate differential
+49
+64
+Change in available tax credits
+(271)
+(350)
+(5)
+Expected income tax expense
+2018
+€ in millions
+A reconciliation of income taxes from continuing operations for the fiscal years ended 30 September 2018 and 2017,
+using as a basis the German combined statutory income tax rate of 28 percent (2017: 29 percent) is as follows:
+Taxable income earned by foreign subsidiaries is determined on the basis of the tax laws applicable in the relevant
+countries and is taxed based on country specific tax rates.
+Current tax expense includes an income tax expense of €23 million (2017: €4 million) relating to previous fiscal years.
+A deferred tax benefit of €37 million (2017: €51 million) results from the creation and reversal of temporary differences.
+The German combined statutory tax rate for Infineon Technologies AG is 28 percent for the 2018 fiscal year (2017:
+29 percent). This comprises a corporate income tax rate of 15 percent, plus a solidarity surcharge of 5.5 percent and
+a trade tax rate of 12 percent.
+(142)
+(193)
+(17)
+18
+(125)
+(211)
+2017
+2017
+2017
+2018
+Segment Industrial Power Control
+Selling, general and administrative expenses
+Research and development expenses
+Cost of goods sold
+Included in the Consolidated Statement of Operations in:
+€ in millions
+Infineon has received grants and subsidies from various governmental institutions under government business
+development programs including grants for the construction of manufacturing facilities, for research and develop-
+ment activities and employee development. Grants and subsidies taken into consideration in profit or loss in the
+Consolidated Financial Statements during the 2018 and 2017 fiscal years were as follows:
+Grants and subsidies
+36,962
+39,096
+2,062
+2,022
+3,767
+Total
+3,905
+191
+1,963
+1,921
+2,115
+2,076
+15,333
+16,167
+10,124
+10,980
+15,566
+16,757
+2017
+181
+(51)
+2018
+37
+Segment Automotive
+Attributable to:
+Gain (loss) from investments accounted for using the equity method
+€ in millions
+As of 30 September 2018 and 2017, the carrying amount of joint ventures accounted for using the equity method
+was €37 million and €28 million. The pro rata results from investments accounted for using the equity method were
+as follows for the 2018 and 2017 fiscal years:
+Summarized financial information
+The investment in SIAPM is allocated to the Automotive segment.
+On 7 February 2018, Infineon, together with SAIC Motor Corporation Ltd., established the joint venture SAIC
+Infineon Automotive Power Modules (Shanghai) Co., Ltd. ("SIAPM"), registered in Shanghai (China). Infineon holds
+49 percent of the company's shares. SIAPM offers power semiconductor solutions for electric vehicles in China.
+Volume production has been running at Infineon's site in Wuxi (China) since August 2018.
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd.
+The investment in Bipolar is allocated to the Industrial Power Control segment.
+Infineon Technologies Bipolar GmbH & Co. KG ("Bipolar") located in Warstein (Germany) develops and manufactures
+bipolar power semiconductors. Infineon accounts for the 60 percent interest in the joint venture by using the equity
+method as Infineon lacks controlling influence due to certain contractual participation rights of co-shareholder
+Siemens AG.
+Infineon Technologies Bipolar GmbH & Co. KG
+2017
+Investments accounted for using the equity method include shares in the joint ventures Infineon Technologies
+Bipolar GmbH & Co. KG and SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd.
+128
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+For compliance with the conditions attached to the grants and subsidies received and potential repayment
+requirements in case of nonfulfillment, see note 18.
+106
+125
+1
+2
+68
+86
+37
+4 Investments accounted for using the equity method
+Total
+34
+Change in valuation allowance on deferred tax assets
+The change of the net amount of deferred tax assets and liabilities can be broken down as follows:
+There are no tax loss carry-forwards for which material deferred tax assets were not recognized and which are
+subject to expiration under statutory tax regulations. Of the tax credits for which no deferred tax assets were
+recognized, €39 million (2017: €27 million) will expire in the coming five years.
+516
+388
+260
+224
+1,868
+1,357
+2017
+2018
+Temporary differences
+Tax credits
+Tax loss carry-forwards (corporate tax and local income tax)
+€ in millions
+No deferred taxes were recorded for the following items (gross amounts):
+Infineon assessed its deferred tax assets for the need for a valuation allowance. Based on the results of the assessment
+of deferred tax assets, considering all positive and negative factors and information relating to the foreseeable future,
+Infineon recognized deferred tax assets, after netting, of €648 million as of 30 September 2018 (30 September 2017:
+€612 million).
+In Germany, Infineon Technologies AG had corporate income tax loss carry-forwards of €1.6 billion and trade tax loss
+carry-forwards of €2.6 billion as of 30 September 2018 (30 September 2017: €1.8 billion and €2.9 billion, respectively).
+In other jurisdictions, corporate income tax loss carry-forwards amounted to €33 million (30 September 2017:
+€31 million) and local income tax loss carry-forwards amounted to €92 million (30 September 2017: €216 million).
+Additionally, there are unused tax credits and excess foreign tax credits of €360 million (30 September 2017:
+€401 million).
+(18)
+612
+(9)
+648
+Total
+536
+(536)
+350
+€ in millions
+Deferred taxes, net as of the beginning of the fiscal year
+Deferred taxes attributable to continuing operations
+Deferred taxes recognized in equity
+(6)
+17
+(142)
+(193)
+2017
+2018
+131
+Income taxes recognized directly in equity
+Income taxes
+Income taxes from continuing operations
+Income taxes from discontinued operations
+€ in millions
+Including the items recognized directly in equity and the expense/benefit from continuing and discontinued
+operations, the income tax consisted of the following:
+Notes to the Consolidated Financial Statements
+(350)
+Consolidated Financial Statements
+In connection with investments in subsidiaries there are taxable temporary differences of €120 million (2017:
+€668 million) for which no deferred taxes have been recognized because the timing of the reversal can be controlled
+and it is not probable that the temporary difference will reverse in the foreseeable future.
+594
+639
+(2)
+27
+(17)
+18
+613
+594
+2017
+2018
+Deferred taxes, net as of the end of the fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Netting
+(554)
+1,148
+Deferred tax
+liabilities
+Deferred tax
+assets
+30 September 2017
+30 September 2018
+€ in millions
+130
+Deferred tax assets and liabilities as of 30 September 2018 and 2017 comprise the following:
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The utilization of tax loss carry forwards, tax credits and temporary differences for which deferred tax assets had
+not previously been recorded resulted in current tax income of €2 million in the 2018 fiscal year (2017: €13 million).
+In the 2018 fiscal year, the profit or loss effect from the valuation allowances on deferred tax assets for tax credits
+amounted to €0 million (2017: €4 million), and from temporary differences €14 million (2017: €15 million). A write-up
+of deferred tax assets for tax loss carry forwards of €81 million was recorded (2017: €76 million). For temporary
+differences the write-up amounted to €31 million in the 2018 fiscal year (2017: €17 million), for tax credits the
+write-up was €19 million (2017: €6 million).
+Deferred tax
+assets
+Effects due to changes in tax rates arise mainly from changes to current and future applicable tax rates in the USA
+and in Singapore.
+(193)
+Actual income taxes
+(1)
+(1)
+(18)
+27
+Other
+Effects due to changes in tax rate
+39
+117
+12
+(38)
+(142)
+Prior year taxes
+Deferred tax
+liabilities
+Property, plant and equipment
+(359)
+998
+Total deferred taxes
+(92)
+165
+(13)
+137
+141
+136
+Unused tax credits and excess foreign tax credits
+Other
+430
+415
+Intangible assets
+Tax loss carry-forwards
+255
+(140)
+130
+Provisions, pension plans and similar commitments
+(40)
+122
+(23)
+142
+(210)
+35
+(183)
+38
+(212)
+164
+26
+790
+(26)
+13
+49
+185
+(1)
+(6)
+(1)
+159
+Provisions related to Qimonda (see note 19)
+Other
+Psee page 148 ff.
+42
+(16)
+(9)
+14
+33
+35
+Total provisions
+489
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Of the total provisions as of 30 September 2018 and 2017, a cash outflow of €590 million and €422 million,
+respectively, is expected to occur within one year. For the long-term provisions a cash outflow is expected to occur
+after more than one year. Of these, €31 million and €27 million as of 30 September 2018 and 2017, respectively, are
+attributable to length-of-service related anniversary awards.
+Other provisions comprise provisions for litigations (other than those relating to Qimonda), asset retirement
+obligations, onerous contracts and miscellaneous other liabilities.
+Provisions for warranties mainly represent the estimated future cost of fulfilling contractual requirements associated
+with products sold.
+Obligations to employees include, among others, costs of variable compensation, outstanding vacation and
+flextime, service anniversary awards, other personnel costs and social security costs.
+46
+590
+422
+67
+thereof long-term
+thereof short-term
+636
+(26)
+(316)
+489
+53
+Notes to the Consolidated Financial Statements
+Warranties
+(8)
+1,297
+126
+810
+41
+176
+40
+178
+503
+21
+41
+176
+44
+20
+44
+44
+1,533
+297
+1,836
+(275)
+303
+354
+Obligations to employees
+30 Septem-
+ber 2018
+2017
+Reversals
+Usage
+Additions
+1 October
+€ in millions
+Short-term and long-term provisions as of 30 September 2018 consist of the following:
+13 Provisions
+The financial result for the 2018 and 2017 fiscal year includes €45 million and €56 million, respectively, net interest
+expenses which include, in addition to borrowing costs, other interest expenses such as net interest expense for
+pension liabilities.
+355
+374
+21
+138
+14 Pension plans
+Actuarial gains (losses) for:
+(14)
+(4)
+(10)
+(19)
+(4)
+Experience adjustments
+(15)
+1
+1
+(3)
+(3)
+Past service income (cost)
+(1,136)
+(30)
+Interest cost
+(13)
+(3)
+(16)
+136
+8
+128
+(4)
+(4)
+Adjustments to financial assumptions
+་
+-
+(3)
+3
+(6)
+Adjustments to demographic assumptions
+(20)
+1
+(21)
+(6)
+P see page 95 ff.
+(24)
+(7)
+2018
+Change in defined benefit obligations taking
+€ in millions
+The development of Infineon's German (domestic) and non-German (foreign) pension plans and the plan assets to
+30 September 2018 and 2017 is presented in the following table:
+139
+Notes to the Consolidated Financial Statements
+2017
+Consolidated Financial Statements
+The Group-defined benefit pension plans are exposed to risks arising from changes to actuarial assumptions such
+as interest rates, salary and pension trends, investment risks and longevity risks. A low discount rate leads to higher
+pension liabilities. Equally, a lower than expected growth in plan assets could lead to a deterioration of the funded
+status, or require the payment of additional contributions.
+The valuation date of both the German and foreign pension plans is 30 September.
+The benefit obligation of some foreign plans is measured according to the income in the last month or year of
+service, others are dependent on average income over the service period. Foreign pension plans are managed
+by country-specific external pension funds or other pension schemes. The liabilities arising from foreign defined
+benefit pension plans are partly covered by plan assets. The management of existing foreign plan assets is
+performed by the respective pension scheme.
+In Germany, Infineon primarily offers defined contribution benefits which provide for the employees when they
+reach retirement age, or in the event of disability or death. The statutory framework is provided by the Company
+Pension Act (in German: Betriebsrentengesetz or "BetrAVG") and by employment law in general. With the Infineon
+pension plan new entrants receive a defined contribution benefit, which is funded by Infineon. Payments by
+the Infineon pension plan are generally made in twelve installments. For active employees who were entitled to
+benefits in form of an annuity before the Infineon Pension Plan came into force, this commitment was transferred
+into the Infineon Pension Plan and thereby the possibility of an annuity is guaranteed. Together with former
+employees, whose pension benefit obligations were not transferred into the Infineon Pension Plan, this group
+makes up the largest part of the obligation at this time. An appropriate provision is recorded for the German
+defined benefit pension plans, which are partly backed by plan assets. Individual agreements are in place for the
+members of the Management Board which are backed by plan assets (detailed in the chapter "Compensation
+report" in the Combined Management Report). The major portion of the plan assets is managed by a pension trust
+in the legal form of a registered association. This is composed of executives of Infineon Technologies AG and the
+investment strategy is defined by Infineon Technologies AG.
+Infineon's employee benefit plans consist of domestic and foreign defined benefit and defined contribution
+pension plans providing retirement, disability and surviving dependents' benefits. For Infineon, the significant
+benefit plans in Germany pertain to Infineon Technologies AG, and among the foreign benefit plans to Infineon
+Technologies Austria AG.
+Defined benefit pension plans
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Domestic
+Foreign
+Total
+(23)
+Current service cost
+(172)
+(964)
+(1,040)
+(164)
+(876)
+Present value at beginning of year
+into account future salary increases:
+Total
+Foreign
+plans
+plans
+plans
+plans
+Domestic
+(30)
+Benefits paid by Infineon
+48
+46
+32
+26
+28
+27
+102
+98
+ber 2017
+269
+431
+374
+Defined contribution plans
+In connection with defined contribution plans, fixed contributions are made to external insurance providers or
+funds. Infineon has no further performance obligations or risks with regard to these pension plans in excess of the
+fixed contributions paid. Additionally, the Group makes contributions to government pension schemes. Expenses
+for defined contribution plans amounted to €183 million and €165 million in the fiscal years ended 30 Septem-
+ber 2018 and 2017, respectively.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+223
+ber 2018
+30 Septem-
+30 Septem-
+(8)
+(36)
+Service costs are recorded within cost of goods sold to the extent that they relate to production employees, other-
+wise they are recorded as research and development or selling, general and administrative expenses. Interest costs
+and expected return on plan assets were recorded net as part of financial expense.
+Actuarial losses of €28 million for the 2018 fiscal year and actuarial gains of €115 million for the previous fiscal
+have been recognized outside profit and loss in other comprehensive income.
+1 year
+As of 30 September 2018 and 2017, cumulative actuarial losses amounted to €400 million and €368 million, respec-
+tively. The 2018 fiscal year includes cumulative actuarial losses from deferred compensation plans of €7 Million. In
+addition, cumulative actuarial losses amounting to €1 million resulting from health care plans, are also recognized
+directly in other comprehensive income.
+In the 2019 fiscal year, payments of €30 million are expected to be made to plan assets which relate to benefits paid
+directly to pension recipients by the Group companies.
+The weighted average duration of defined benefit plans is around 17 years as of 30 September 2018 and 2017,
+respectively.
+The following table shows the expected disbursements for defined benefit plans for the next ten fiscal years as of
+30 September 2018 and 2017:
+€ in millions
+Less than 1 year
+1-2 years
+2-5 years
+5-10 years
+Total
+Notes to the Consolidated Financial Statements
+(28)
+143
+15 Equity
+Changes in other reserves during the 2018 and 2017 fiscal years are as follows:
+€ in millions
+2018
+2017
+Pretax
+Tax
+Other reserves
+Net after tax
+Tax
+Net after tax
+Foreign currency translation differences
+27
+27
+(66)
+Pretax
+› Pursuant to section 4, paragraph 6, of the Articles of Association the share capital is conditionally increased by
+up to €260,000,000 through the issue of up to 130,000,000 new no par value registered shares to satisfy the rights
+of the holders of warrants or convertible bonds, which the Company may issue at any time prior to 21 February 2023
+(Conditional Capital 2018).
+> Pursuant to section 4, paragraph 5, of the Articles of Association the share capital is conditionally increased
+by up to €7,855,198 through the issue of up to 3,927,599 new no par value registered shares in connection with
+the Company's "Infineon Technologies AG Aktienoptionsplan 2010" ("Stock Option Plan 2010") (see note 17)
+(Conditional Capital 2010/1). During the 2018 fiscal year, a total of 794,905 new no par value shares with a
+proportionate amount of share capital of €2 per share were issued out of the Conditional Capital 2010/1 as a
+result of the exercise of share options in connection with the Stock Option Plan 2010. Conditional Capital 2010/1
+decreased accordingly by €1,589,810 to €6,265,388. The corresponding change to the Articles of Association
+was submitted after the end of the reporting period and entered into the Commercial Register as requested.
+As of 30 September 2018, the Company's Articles of Associations provide for two conditional capitals amounting to
+up to €267,855,198:
+Ordinary share capital
+The ordinary share capital of Infineon Technologies AG increased during the 2018 fiscal year by €1,589,810. 794,905
+new shares were issued (2017: 3,527,820) as a result of the exercise of stock options by employees as well as by
+current and past members of the Management Board. As of 30 September 2018, the ordinary share capital stood at
+€2,273,991,668 divided into 1,136,995,834 no par value registered shares, each representing €2 of the Company's
+ordinary share capital and is fully paid. Each share grants the holder one vote and an equal portion of the profits in
+the form of a dividend as resolved by the Annual General Meeting. As of 30 September 2018, of the above-mentioned
+total number of issued shares the Company held 6 million own shares (30 September 2017: 6 million). Own shares held
+by the Company as of the date of the Annual General Meeting carry no voting rights and are not entitled to dividend.
+Additional paid-in capital
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €288 million
+in the 2018 fiscal year, of which €283 million related to the dividend paid in February 2018. The exercise of stock
+options by employees as well as by current and past members of the Management Board increased additional
+paid-in capital by €4 million. Pro rata expenses for share-based compensation led to an increase in additional
+paid-in capital of €11 million in the 2018 fiscal year. In addition, negative €20 million (net after tax) was recorded
+in additional paid-in capital in the 2018 fiscal year mainly in connection with the settlement of the 2015 fiscal year
+tranche of the Performance Share Plan. The Management Board and the Supervisory Board decided to settle the
+tranche in cash for the 2015 fiscal year. This amount has been reclassified to other current liabilities (for details see
+note 17).
+Additional paid-in capital reported in the Consolidated Statement of Financial Position decreased by €242 million
+in the 2017 fiscal year, of which €248 million related to the dividend paid in February 2017. The exercise of stock
+options by employees as well as by current and past members of the Management Board increased additional
+paid-in capital by €19 million. Pro rata expenses amounting to €13 million for share-based compensation were
+recorded in the 2017 fiscal year, additional paid-in capital increased by the same amount. In addition, negative
+€26 million (net after tax) was recorded in additional paid-in capital in the 2017 fiscal year in connection with the
+settlement of the 2014 fiscal year tranche of the Performance Share Plan.
+Authorized share capital
+As of 30 September 2018, the Company's Articles of Associations provide for two authorized share capitals amount-
+ing to up to €706,000,000:
+> Section 4, paragraph 4, of the Articles of Association provides that the Management Board is authorized, with
+the approval of the Supervisory Board, to increase the share capital in the period until its expiry on 11 February
+2020 once or in partial amounts by a total of up to €676,000,000 through the issue of new no par value registered
+shares, carrying a dividend right from the beginning of the fiscal year in which they are issued, against contribu-
+tions in cash or in kind (Authorized Capital 2015/1). The Management Board is authorized, with the approval
+of the Supervisory Board, to exclude the subscription rights of the shareholders in certain cases. In accordance
+with German law, cash capital increases with subscription rights excluded pursuant to section 186, paragraph 3,
+sentence 4, of the AktG, are not permitted to exceed 10 percent of a company's share capital - neither at the
+time of the authorization becoming effective nor at the time of its exercise. For share capital increases against
+contributions in kind or a combination of cash contributions and contributions in kind, the authorization further
+provides an upper limit of 20 percent of the share capital, again measured either at the time the authorization
+becomes effective or, if the value is lower, at the time of its exercise.
+> Section 4, paragraph 7, of the Articles of Association provides that the Management Board is authorized, with the
+approval of the Supervisory Board, to increase the share capital in the period up to 17 February 2021 - either once
+or in partial amounts - by a total of up to €30,000,000 by issuing new no par value registered shares against con-
+tributions in cash for the purpose of increasing the issue to employees of the Company or its Group companies
+(Authorized Capital 2016/1). The subscription rights of the shareholders are excluded in relation to these shares.
+The shares may be issued in such a manner that the contribution to be paid on such shares is covered by the
+portion of the profit for the year that the Management Board and Supervisory Board could transfer to retained
+earnings in accordance with section 58, paragraph 2, AktG.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+144
+P see page 145 ff.
+Conditional capital
+P see page 146
+322
+(42)
+(34)
+72
+248
+320
+72
+229
+301
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Total
+225
+204
+204
+Long-term
+72
+23
+225
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Amounts of debt and interest maturing in the coming years are as follows:
+23
+Interest
+Debt
+Interest
+Debt
+30 September 2017
+30 September 2018
+137
+Total
+5 years and after
+3-4 years
+2-3 years
+1-2 years
+Less than 1 year
+€ in millions
+95
+(8)
+72
+97
+(14)
+Expected return on plan assets
+7
+3
+10
+5
+(4)
+2
+Amortization of unrecognized
+past service (cost) benefit
+Pension cost
+(3)
+(3)
+1
+1
+7
+(10)
+Total
+1,532
+Short-term
+Available
+Drawn
+Aggregate
+facility
+Available
+Drawn
+Aggregate
+facility
+Term
+30 September 2017
+30 September 2018
+€ in millions
+The total lines of credit as of 30 September 2018 and 2017 are summarized in the following table:
+Infineon has established further independent financing arrangements in the form of both short- and long-term
+credit facilities, in order to finance operating business requirements.
+The €300 million bond due on 10 September 2018 was repaid as scheduled.
+1,834
+25
+(66)
+15
+22
+957
+a 50 basis points lower discount rate
+1,073
+180
+1,253
+956
+153
+177
+a 50 basis points higher expected
+rate of salary increase
+a 50 basis points lower expected
+rate of salary increase
+998
+172
+1,133
+804
+1,065
+156
+The following sensitivity analysis table shows how the present value of all defined benefit pension obligations
+would be affected by changes in the aforementioned actuarial assumptions. In each case they reflect the effect of
+changes in one actuarial assumption while all other assumptions remain constant.
+€ in millions
+Present value of defined benefit pension
+plans with:
+30 September 2018
+30 September 2017
+Domestic
+plans
+Foreign
+plans
+Total
+Domestic
+plans
+Foreign
+Total
+plans
+a 50 basis points higher discount rate
+909
+1,170
+Sensitivity analysis
+887
+1,055
+863
+159
+1,022
+Increase in life expectancy by one year
+1,013
+171
+1,135
+1,184
+167
+1,063
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+141
+896
+163
+972
+rate of pension increase
+976
+163
+1,139
+866
+160
+1,026
+a 50 basis points higher expected
+rate of pension increase
+1,005
+172
+1,177
+893
+170
+1,063
+a 50 basis points lower expected
+168
+Investment strategies
+The 2018 G mortality tables by Dr. Klaus Heubeck were used for Germany, and for Austria the AVÖ 2018-P tables
+were applied.
+2.1
+30 September 2017
+Domestic
+plans
+Foreign
+plans
+Total
+Domestic
+plans
+30 September 2018
+Foreign
+plans
+Plans that are wholly unfunded
+14
+87
+101
+10
+81
+Total
+€ in millions
+140
+The funding of the defined benefit obligations is as follows:
+(419)
+(419)
+(373)
+(373)
+thereof: Infineon Technologies Austria AG
+(56)
+(56)
+(53)
+(53)
+1 In the reporting period, net obligations from deferred compensation plans amounting to €6 million were reclassified from other liabilities. In the
+previous year, other liabilities included net obligations from deferred compensation plans in the amount of €3 million, consisting of present values
+of defined benefit obligations of €56 million and fair values of plan assets of €53 million.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Pension obligations are reported in the Consolidated Statement of Financial Position under "Pension plans and
+similar commitments".
+Since no asset ceilings applied, the funded status of the Infineon pension plans corresponds to the amounts
+reported in the Consolidated Statement of Financial Position as of 30 September 2018 and 2017.
+91
+Discount rates are derived from high-grade fixed interest corporate bonds from issuers carrying a very high credit rating.
+Plans that are wholly or partly funded
+Total
+80
+Foreign
+plans
+Domestic
+plans
+Foreign
+plans
+1.7
+2.8
+1.8
+Domestic
+plans
+2.7
+2.1
+2.0
+2.6
+1.8
+2.0
+1.8
+2.0
+30 September 2017
+30 September 2018
+Projected future pension increases
+1,053
+866
+83
+949
+987
+167
+1,154
+876
+164
+1,040
+Actuarial assumptions
+The weighted-average assumptions used in calculating the actuarial values for the pension plans are as follows:
+in %
+Discount rate at the end of the fiscal year
+Rate of salary increase
+973
+7
+The pension plans' assets are invested with several fund managers. The investment guidelines require a mix of
+active and passive investment management programs covering different asset classes. Taking the duration of the
+underlying liabilities into account, a portfolio of investments of plan assets in equity, debt and other securities as
+well as real estate and reinsurance policies is targeted to maximize the total long-term return on assets for a given
+level of risk. Investment risk is monitored on an ongoing basis through periodic portfolio reviews, by coordination
+with investment managers and annual liability measurements. Investment policies and strategies are periodically
+reviewed as part of detailed studies of assets and liabilities by independent investment advisors and actuaries
+to ensure the objectives of the plans are met, taking into account any changes in benefit plan structure, market
+conditions or other material items. The aim is to optimize the risk-return portfolio of plan assets against the liabilities
+using a diversified portfolio of investments within a defined risk budget and to thereby increase the funding ratio
+in the long term.
+As of 30 September 2018 and 2017 the allocation of invested plan assets to the major asset categories is as follows:
+(7)
+20
+6
+14
+22
+(1)
+(22)
+(1)
+7
+2
+5
+10
+532
+62
+(1)
+(14)
+(5)
+(19)
+(552)
+(99)
+(453)
+Net pension liability
+537
+63
+474
+602
+68
+534
+Fair value of plan assets at end of year
+(2)
+(2)
+Foreign currency effects
+56
+470
+(402)
+537
+56
+Present value of defined benefit obligation
+at end of year
+4
+4
+1
+1
+Foreign currency effects
+(987)
+(62)
+(62)
+benefit obligations'
+Reclassification of present value of defined
+19
+5
+14
+662
+(167)
+(1,154)
+(876)
+Reclassification of fair value of plan assets¹
+(15)
+Benefits paid
+14
+Contributions from Infineon
+(2)
+Actuarial gains (losses)
+7
+Expected return on plan assets
+63
+474
+Fair value of plan assets at beginning of year
+Change in fair value of plan assets:
+(1,040)
+(164)
+3318EI
+Plan asset allocation
+(101)
+(4)
+160
+169
+150
+7
+2
+3
+2
+1
+1
+34
+11
+7
+3
+15
+34
+172
+127
+157
+€ in millions
+Government bonds
+Corporate bonds
+Equity securities
+Cash and cash equivalents
+Reinsurance policies
+Property
+Other
+Total
+30 September 2018
+Quoted
+in an active
+market
+Not quoted
+in an active
+market
+30 September 2017
+Quoted
+in an active
+market
+Not quoted
+in an active
+market
+21
+(19)
+19
+19
+Total
+plans
+plans
+plans
+Current service cost
+1,507
+Foreign
+(23)
+(30)
+(24)
+(6)
+(30)
+Interest cost
+(15)
+(7)
+Domestic
+Total
+Foreign
+538
+64
+468
+69
+Government and corporate bonds are traded in liquid markets and the majority of them have an investment grade
+rating. The geographical allocation of the equity component of plan assets is predominantly based on the MSCI
+World Index. As a matter of policy Infineon's pension plans do not invest in shares or debt instruments of Infineon.
+The position "Other" in the table above comprises exchange-traded commodities (ETC) and other investment funds.
+The actual return on plan assets in the fiscal year ended 30 September 2018 was €7 million (30 September 2017:
+€6 million).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+142
+Amounts recognized in profit or loss and in total comprehensive income
+The expenses and income of defined benefit plans for the years ended 30 September 2018 and 2017 comprise the
+following:
+€ in millions
+2018
+2017
+Domestic
+plans
+24
+thereof: Infineon Technologies AG
+Deal Contingent Forward
+6
+(50)
+(247)
+1,586
+1,596
+(866)
+(5)
+(11)
+7
+6
+(12)
+45
+47
+(180)
+166
+137
+(151)
+213
+167
+(229)
+396
+475
+(294)
+EWE!
+(1)
+(3)
+(179)
+(1)
+(49)
+(39)
+(731)
+2016
+30 Sep-
+tember
+30 Sep-
+tember
+2017
+Carrying amount
+2017
+30 Sep-
+tember
+Foreign
+currency
+effects
+amor-
+tization
+ments
+Impair-
+Transfers 2
+Reclassi-
+fication
+Disposals
+Depre-
+ciation/
+1 October
+2016
+Depreciation/amortization and impairment
+29
+(159)
+(720)
+(1)
+(11)
+15
+(20)
+(174)
+(109)
+(11)
+14
+14
+(822)
+4
+2
+3
+(60)
+(771)
+30 Sep-
+tember
+2017
+2018
+30 Sep-
+tember
+Carrying amount
+135
+2018
+30 Sep-
+tember
+currency
+effects
+Foreign
+Impair-
+ments
+amor-
+tization
+Transfers
+Reclassi-
+fication
+Disposals
+Depre-
+ciation/
+2017
+1 October
+Depreciation/amortization and impairment
+Notes to the Consolidated Financial Statements
+771
+730
+(6,669)
+(540)
+759
+764
+2,659
+3,038
+(9,000)
+3
+4
+332
+352
+242
+(702)
+(8,547)
+(60)
+120
+(1,109)
+1
+4
+95
+(102)
+(1,107)
+1,477
+1,776
+(7,069)
+2
+(6)
+144
+139
+15
+(1)
+2
+1-5 years
+Less than
+1 year
+Total
+€ in millions
+Debt as of 30 September 2018 and 2017 consists of the following:
+12 Debt
+As of 30 September 2017
+As of 30 September 2018
+Payments due in (€ in millions)
+Undiscounted future minimum lease payments to be received from operating lease arrangements for Infineon as
+lessor are as follows:
+Property, plant and equipment of €200 million (30 September 2017: €210 million) served mainly as collateral for the
+existing financing arrangements of MoTo Objekt Campeon GmbH & Co. KG ("MoTo") as of 30 September 2018.
+Depreciation on property, plant and equipment is presented in the Consolidated Statement of Operations, mainly
+in cost of goods sold. Amortization of intangible assets is mainly presented in cost of goods sold or selling, general
+and administrative expenses. Impairments on property, plant and equipment and intangible assets are reported
+under other operating expenses.
+136
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+1,656
+1,586
+(720)
+8
+7
+(11)
+12
+49
+45
+(174)
+5 years
+and after
+99
+23
+806
+USPP notes US$935 million, weighted average interest rate 4.09%, due 2024 - 2028
+Long-term debt
+496
+497
+198
+185
+27
+19
+Unsecured loans, weighted average interest rate 0.95% (2017: 0.73%), due 2019-2023
+Secured term loans, weighted average interest rate 2.03% (2017: 2.03%), due 2019-2021
+Bond €500 million, coupon 1.50%, due 2022
+Loans payable to banks:
+323
+25
+213
+299
+25
+30 Septem-
+ber 2017
+ber 2018
+30 Septem-
+Short-term debt and current maturities of long-term debt
+Current maturities of long-term debt, weighted average interest rate: 1.65% (2017: 1.65%)
+Bond €300 million, coupon 1.00%, due 2018
+15
+60
+21
+96
+15
+61
+24
+Consolidated Financial Statements
+166
+2
+2
+192
+(652)
+(8,118)
+284
+332
+128
+120
+(1,107)
+5
+64
+(94)
+(1,082)
+1,343
+1,477
+(6,669)
+20
+1
+113
+(498)
+(6,305)
+364
+730
+(771)
+4
+29
+(8,547)
+2,659
+2,119
+275
+213
+(179)
+312
+396
+(247)
+799
+759
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+(5)
+12
+(160)
+(109)
+(569)
+(10)
+10
+(21)
+(163)
+(41)
+(70)
+(58)
+(121)
+(5)
+12
+(39)
+(205)
+(1)
+6
+(503)
+118
+(59)
+(1)
+(60)
+The following table shows a reconciliation of accumulated deficit as of 30 September 2018 and 2017:
+As of 1 October 2016
+Net income attributable to shareholders of Infineon Technologies AG
+Actuarial losses on pension plans and similar commitments net of tax of €5 million
+As of 30 September 2017
+Net income attributable to shareholders of Infineon Technologies AG
+Actuarial gains on pension plans and similar commitments net of tax of €25 million
+As of 30 September 2018
+(2,312)
+790
+(1,404)
+1,075
+(4)
+(333)
+Dividends
+For the 2017 fiscal year, a cash dividend of €0.25 per share (total amount: €283 million) was paid. For the 2016 fiscal
+year, a cash dividend of €0.22 per share (total amount: €248 million) was paid.
+Due to the results achieved in the reporting period as well as a positive business outlook, a dividend of €0.27 for
+each share entitled to a dividend shall be proposed to be paid from the €491 million of distributable profits of
+Infineon Technologies AG for the 2018 fiscal year, an increase of €0.02 compared to the previous year. This would
+result in an expected distribution of approximately €305 million. The payment of this dividend depends on the
+approval of the Annual General Meeting on 21 February 2019.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+25
+2
+€ in millions
+1
+Realized (gains) losses resulting
+from hedge accounting
+1
+1
+23
+from hedge accounting
+(4)
+2
+(2)
+(2)
+Unrealized gains (losses) resulting
+(3)
+(1)
+1
+Accumulated deficit
+Total
+Unrealized gains (losses) resulting
+from securities
+1,511
+1
+from securities
+Realized (gains) losses resulting
+1
+(321)
+1,835
+1
+1,532
+2
+16
+1,834
+1
+(321)
+Related party financial payables
+Total
+Short-term debt
+balance
+Ending
+1
+changes
+In addition to the request for declaratory judgment against Infineon in an unspecified amount, on 14 February 2012 the
+insolvency administrator also lodged a request for payment based on an alternative claim (in German: "Hilfsantrag"),
+as well as making other additional claims. In conjunction with this alternative claim, the insolvency administrator
+has requested the payment of at least €1.71 billion plus interest in connection with the alleged activation of a shell
+company. On 15 June 2012, the insolvency administrator increased his request for the payment of 14 February 2012
+on the grounds of activation of a shell company to at least approximately €3.35 billion plus interest. Furthermore,
+the insolvency administrator continues to base a substantial part of his alleged payment claims, as already asserted
+out of court against Infineon in August 2011 for an unspecified amount, on liability for impairment of capital (in
+German "Differenzhaftung”). This claim is based on the allegation that, from the very beginning, the carved-out
+memory products business had a negative billion euro value. The insolvency administrator therefore asserts that
+Infineon is obliged to make good the difference between this negative value and the lowest issue price (in German:
+"geringster Ausgabebetrag") of the subscribed stock. Additionally, the insolvency administrator has asserted a
+claim for repayment of allegedly unjustly charged consultancy fees in an amount of €10 million in connection with
+the flotation of Qimonda.
+16
+2
+1,533
+22 Additional disclosures on financial instruments
+The following table presents the carrying amounts and the fair values of financial instruments by their respective
+classes, and a breakdown by category of financial instruments as defined by IAS 39.
+€ in millions
+Financial assets
+Balance as of 30 September 2018
+Current assets:
+Cash and cash equivalents
+Financial investments
+Trade receivables
+Other current assets
+Other
+changes
+1
+Currency
+effects
+17
+Cash- Aquisitions
+Other related
+companies
+Joint Other related
+ventures companies
+53
+2
+16
+2
+81
+15
+79
+Non-current assets:
+P see page 95 ff.
+As of 30 September 2018, sales and services relationships with related companies resulted in purchase commit-
+ments of €9 million (30 September 2017: €23 million).
+Related persons
+Members of the Management Board active in the 2018 fiscal year received fixed non-performance-related compen-
+sation for their services of €3.7 million (2017: €3.4 million). In addition, the members of the Management Board
+received variable performance-related compensation for their services in the 2018 fiscal year of €3.6 million (2017:
+€3.8 million). This comprised a Short Term Incentive of €1.9 million (2017: €2.0 million), and a Mid Term Incentive
+of €1.7 million (2017: €1.8 million). Furthermore, the Management Board received a Long Term Incentive (LTI) which,
+since 2014, takes the form of performance shares. The expense resulting from the LTI amounted to €0.8 million
+(2017: €0.9 million). The compensation granted to active members of the Management Board amounted to
+€8.1 million in the 2018 fiscal year (2017: €8.1 million).
+effective
+The compensation of the members of the Supervisory Board of Infineon Technologies AG in the 2018 fiscal year,
+including attendance fees, amounted to €2.0 million (2017: €2.0 million). Employee representatives in the Supervisory
+Board who are employed by Infineon also receive a salary for their activities as employees.
+As of 30 September 2018, pension liabilities for former members of the Management Board amounted to €68.8 million
+(30 September 2017: €67.9 million).
+Disclosure of the individual remuneration of the members of the Management Board and the Supervisory Board
+as required by section 315e, paragraph 1, in connection with section 314, paragraph 1, no. 6a, sentences 5 to 8,
+of the German Commercial Code, is provided in the Compensation Report which is part of the Combined Manage-
+ment Report.
+In the 2018 and 2017 fiscal years there were no further significant transactions between Infineon and related
+persons which fall outside of the scope of the existing employment, service or appointment terms, or of the
+contractual arrangements for their remuneration.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+152
+21 Supplemental cash flow information
+Cash and cash equivalents reported as of 30 September 2018 and 2017 totaling €732 million and €860 million,
+respectively, include €100 million and €128 million, respectively, which were subject to legal transfer restrictions
+and so were not available for general use by Infineon. This amount represents cash and cash equivalents of consoli-
+dated companies located in countries where the transfer of cash is legally restricted, for example China.
+The reconciliation below shows changes in those financial liabilities and hedging transactions for which payments
+received and made are shown under cash provided by/used in financing activities in the statement of cash flows.
+€ in millions
+The 2018 fiscal year
+Non-cash effective changes
+Starting
+balance
+Former members of the Management Board received payments (in particular pension payments) of €1.5 million in
+the 2018 fiscal year (2017: €1.3 million).
+Other non-current assets
+1,811
+Balance as of 30 September 2017
+Financial investments
+Trade receivables
+Other current assets
+860
+1,592
+851
+101
+3
+860
+860
+522
+1,070
+1,592
+851
+851
+97
+1
+101
+Non-current assets:
+Other non-current assets
+163
+Total
+3,567
+3
+40
+562
+123
+163
+3,001
+1
+3,567
+3,731
+Total
+3,125
+3
+Current assets:
+Cash and cash equivalents
+Categories of financial assets
+Carrying
+amount
+At fair value
+through
+profit or loss
+Available
+for sale
+Loans and
+receivables
+Designated
+cash flow
+Fair value
+hedges
+732
+1,811
+971
+113
+3
+732
+732
+563
+1,248
+Joint
+ventures
+971
+971
+110
+113
+104
+40
+64
+104
+3,731
+603
+2017
+2018
+Products and services received
+10.56
+80,964
+7.07
+Consolidated Financial Statements
+8.49
+956,206
+5.44
+Fiscal year 2015: Management Board
+30 September 2019
+30 September 2018
+100,702
+5.31
+The Management Board (for employees) and the Supervisory Board (for the Management Board) resolved to settle
+in cash the tranche for the 2015 fiscal year, which is due in October 2018. As a result, €21 million at a share price of
+€19.99 were reclassified from additional paid-in capital to other current liabilities at the same time. Accounting for
+outstanding tranches continues to be performed using the equity method.
+The reason for the cash settlement of the tranche due in October 2018 for the 2015 fiscal year is the still open question
+about the deductibility as operating expense of the costs of the performance share plan where the settlement is
+made out of treasury shares. If the deduction of operating expenses is not accepted when the settlement is out of
+treasury shares and the intention is to settle outstanding tranches in cash, the pro rata obligations from the remaining
+tranches would have to be reclassified to liabilities and revalued through profit and loss at each balance sheet date.
+Stock Option Plan 2010
+There were 1.2 million and 2.5 million stock options with an average exercise price of €7.00 and €7.08 per option
+outstanding as of 30 September 2018 and 2017, respectively. Of these, 1.2 million and 2.5 million were exercisable
+as of 30 September 2018 and 2017, respectively.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+8.49
+Notes to the Consolidated Financial Statements
+Fiscal year 2016: Management Board
+Fiscal year 2015: Employees
+1,112,568
+Fiscal year 2018: Management Board
+28 Februar 2022
+21.48
+54,464
+15.25
+Fiscal year 2017: Employees
+30 September 2020
+13.01
+7.26
+912,958
+Fiscal year 2017: Management Board
+30 September 2020
+13.01
+80,704
+11.25
+Fiscal year 2016: Employees
+30 September 2019
+10.56
+11.86
+Restricted Stock Unit Plan
+147
+In the 2017 fiscal year, Infineon introduced the Restricted Stock Unit Plan (RSUP), addressing Infineon US-employees
+and based on local market conditions. Restricted stock units are measured at the respective fair value at their grant
+dates. As of 30 September 2018, restricted stock units of €0.4 million (30 September 2017: €0.3 million) with fair values
+between €18.32 and €21.56 depending on the tranche were outstanding.
+Contracts already entered into for commenced or planned investments in property, plant and equipment (purchase
+commitments) as of 30 September 2018 amount to €557 million (30 September 2017: €359 million).
+In the course of its investing activities, Infineon also receives government grants related to the construction and
+financing of certain of its production facilities. Grants are also received for selected research and development projects.
+Certain of these grants have been received contingent upon Infineon complying with certain project-related
+requirements, such as creating a specified number of jobs over a defined period of time. From today's perspective,
+Infineon expects to comply with these requirements. Nevertheless, should such requirements not be met, as of
+30 September 2018, a maximum of €145 million (30 September 2017: €131 million) of subsidies already received
+could be refundable.
+Infineon, through certain sales and other agreements may, in the normal course of business, be obligated to
+indemnify its counterparties under certain conditions for warranties, patent infringement or other matters. The
+maximum amount of potential future payments under these types of agreements is not predictable with any
+degree of certainty, since the potential obligations are contingent on events that may or may not occur in the
+future, and depend on certain facts and circumstances specific to each agreement. Historically, payments made by
+Infineon under these types of agreements have not had a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+As part of an audit finding relating to the tax treatment of losses from the repurchase of convertible bonds in fiscal
+years 2011 and 2012, there is a contingent liability of €55 million for withholding tax payables. After receipt of the tax
+assessment notice, which is under suspension pending appeal proceedings, Infineon expects that there is sufficient
+likelihood of winning any potential legal action.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+148
+Rental expenses under operating lease arrangements amounted to €59 million and €60 million in the 2018 and 2017
+fiscal years, respectively, and related mainly to minimum lease payments made.
+19 Legal risks
+Smartcard antitrust litigation
+In October 2008, the EU Commission initiated an investigation into the Company and other manufacturers of chips
+for smartcards for alleged violations of antitrust laws. In September 2014, the EU Commission imposed a fine of
+€83 million on Infineon. Infineon brought an action against the decision before the General Court of the European
+Union in November 2014. The Court dismissed Infineon's action and in February 2017 Infineon filed an appeal to
+the European Court of Justice against this decision. On 26 September 2018 the European Court of Justice referred
+the case back to the court of first instance in order to re-review the proportionality of the fine.
+Two class actions for damages of an unspecified amount in connection with the EU Commission investigative
+proceedings have been filed in Canada: The first action was filed in the state of British Columbia in July 2013, and
+the second in the state of Quebec in September 2014. The actions followed the press reports on the investigation
+and subsequent decision of the EU Commission. No dates have been set for court proceedings.
+Any further statements about these matters by the Company could seriously compromise the Company's position
+in these proceedings.
+Proceedings in relation to Qimonda
+All significant assets, liabilities and business activities attributable to the memory business (Memory Products)
+were carved out from Infineon and transferred to Qimonda in the form of a contribution in kind with economic
+effect from 1 May 2006. Qimonda filed an application at the Munich Local Court to commence insolvency proceedings
+on 23 January 2009. On 1 April 2009, the insolvency proceedings formally opened. The insolvency of Qimonda has
+given rise to various disputes between the insolvency administrator and Infineon.
+Alleged activation of a shell company and liability for impairment of capital
+The insolvency administrator filed a request for declaratory judgment in an unspecified amount against Infineon
+Technologies AG and, by way of third party notice, Infineon Technologies Holding B.V. and Infineon Technologies
+Investment B.V., at Regional Court Munich I in November 2010. This requested that Infineon be deemed liable to
+make good the deficit balance of Qimonda as it stood when the insolvency proceedings in respect of the assets of
+Qimonda began, i.e., to refund to Qimonda the difference between the latter's actual business assets when the
+insolvency proceedings began and its share capital (in German: "Unterbilanzhaftung”). The insolvency administrator
+contended that the commencement of operating activities by Qimonda amounted to what is considered in case
+law to be the activation of a shell company (in German: "Wirtschaftliche Neugründung"), and that this activation
+of a shell company was not disclosed in the correct manner. On 6 March 2012, with respect to another matter, the
+German Federal High Court issued a ruling on principle that any liability resulting from the activation of a shell
+company only depends on the situation at the date of the activation of a shell company and not, as asserted by
+the insolvency administrator, on the situation at the date on which insolvency proceedings are opened.
+Litigation and government inquiries
+72
+140
+96
+Costs for share-based compensation
+The costs for share-based compensation amounted to €13 million in each of the 2018 and 2017 fiscal years.
+18 Other financial commitments
+In addition to provisions and liabilities, Infineon also has other financial commitments which are not recognized in
+the Consolidated Statement of Financial Position, relating in particular to lease arrangements and unconditional
+purchase commitments. These are explained in more detail below.
+Undiscounted future minimum lease payments arising from operating lease arrangements to be made by Infineon
+as lessee are the following:
+Payments due in (€ in millions)
+As of 30 September 2018
+As of 30 September 2017
+Total
+Less than
+1-5 years
+5 years
+1 year
+and after
+301
+105
+136
+60
+308
+15.76
+in €
+Fair value per
+performance share
+Number of performance
+shares outstanding as of
+30 September 2018
+689,226
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Infineon purchases certain raw materials and services from and sells certain products and services to related
+companies. These purchases from and sales to related companies are generally effected at arm's length.
+Related companies
+Infineon has transactions in the normal course of business with joint ventures and other related companies
+(collectively, "related companies"). The related companies are disclosed in note 26. Related persons are persons
+in key management positions in particular members of the Management and Supervisory Board (see note 26)
+and their close relatives (collectively "related persons").
+20 Transactions with related companies and persons
+P see page 164 ff.
+Related companies receivables and payables as of 30 September 2018 and 2017 consist of the following:
+P see page 167 ff.
+Any potential liability is reviewed again as soon as additional information becomes available and the estimates
+are revised if necessary. Provisions with respect to these matters are subject to future developments or changes in
+circumstances in each of the matters, which could have a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+Provisions and contingent liabilities for legal proceedings and other uncertain legal issues
+Provisions relating to legal proceedings and other uncertain legal issues are recorded when it is probable that a
+liability has been incurred and the associated amount can be reasonably estimated. To the extent that liabilities
+arising from legal disputes and other uncertain legal positions are not probable or cannot be reliably estimated,
+then they qualify as contingent liabilities.
+Based on its current knowledge, Infineon does not believe that the ultimate resolution of these other pending legal
+disputes and proceedings will have a material adverse effect on Infineon's financial condition, liquidity position
+and results of operations. However, future revisions to this assessment cannot be ruled out and any reassessment
+of the miscellaneous legal disputes and proceedings could have a material adverse effect on the financial condi-
+tion, liquidity position and results of operations, particularly in the period in which reassessment is made.
+Furthermore, in connection with its existing or previous business operations, Infineon is also exposed to numerous
+legal risks which have until now not resulted in legal disputes. These include risks related to product liability,
+environment, capital market, anti-corruption, competition and antitrust legislation as well as other compliance
+regulations. Claims could also be made against Infineon in connection with these matters in the event of breaches
+of law committed by individual employees or third parties.
+Infineon is also involved in various other legal disputes and proceedings in connection with its existing or previous
+business activities. These can relate to products, services, patents, environmental issues and other matters.
+Other
+150
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+A settlement or adverse judicial decision in any of the matters described above could result in significant financial
+liabilities for Infineon and other adverse effects, and these in turn could have a material adverse effect on its business
+and financial condition, liquidity position and results of operations. Irrespective of the validity of the allegations
+and the success of the aforementioned claims and other matters described above, Infineon could incur significant
+costs in the defense of these matters.
+€ in millions
+Trade and other receivables
+Financial receivables
+Sales and service charges
+€ in millions
+Sales and service charges to and products and services received from related companies in the 2018 and 2017 fiscal
+years consist of the following:
+1
+1
+10
+1
+1
+10
+1
+1
+18
+7
+Joint Other related
+ventures companies
+Joint Other related
+ventures companies
+30 September 2017
+30 September 2018
+151
+Financial payables
+Trade and other payables
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+There can be no certainty that the provisions recorded for Qimonda will be sufficient to cover all of the liabilities
+that could ultimately be incurred in relation to the insolvency of Qimonda and, in particular, the matters discussed
+above. In addition, it is possible that liabilities and risks materialize that are currently considered to be unlikely to
+do so, and accordingly represent contingent liabilities that are not included in provisions. Should the alleged claims
+relating to the activation of a shell company and liability for impairment of capital prove to be valid, substantial
+financial obligations above the provisions already recorded could arise for Infineon, which could have a material
+adverse effect on its business and its financial condition, liquidity position and results of operations.
+Infineon recognizes provisions and liabilities for such obligations and risks, which it assesses at the end of each
+reporting period, are more likely than not to be incurred (that is where, from Infineon's perspective at the end of
+each reporting period, the probability of having to settle an obligation or risk is greater than the probability of
+not having to) and the obligation or risk can be estimated with reasonable accuracy at this time.
+17 Share-based compensation
+The Company makes use of the Stock Option Plan 2010, from the 2014 fiscal year, the Performance Share Plan and,
+from the 2017 fiscal year, the Restricted Stock Unit Plan, in order to provide share-based compensation.
+Performance share plan
+A new Long Term Incentive Plan (LTI) consisting of a "performance share" plan was developed for the Management
+Board and selected senior executives as a successor to the Stock Option Plan 2010.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+146
+In the 2018 fiscal year Infineon was significantly above the minimum requirements of all covenants. Should
+Infineon not comply with the covenants attached to the USPP notes, then all USPP notes outstanding as of
+30 September 2018 amounting to US$935 million (see note 12) could become immediately repayable. Failure to
+comply with the covenants of financial liabilities taken over in connection with the acquisition of MoTo would
+only result in additional annual fees, but not in a repayment obligation.
+Under this plan, (virtual) performance shares are initially provisionally granted on 1 March (up to the 2017 fiscal
+year: on 1 October) of the 2018 fiscal year according to a pre-determined LTI grant amount in euro. With the granting
+of a virtual performance share, the participant in the plan acquires the right to receive (real) Infineon shares once a
+personal investment in Infineon shares - depending on position and LTI grant amount – has reached a four-year
+holding period.
+The fair value of the performance shares at the date of allocation was determined by an external expert using a
+recognized financial-mathematical method (Monte Carlo simulation model for the prediction of share price and
+index developments). The fair value of the instruments granted is determined taking into account future dividends
+as well as the payment cap.
+The following is an overview of the allocations made:
+Tranche
+End of the
+waiting period
+Average share price
+of the nine months
+before grant in €
+Fiscal year 2018: Employees
+28 Februar 2022
+21.48
+50 percent of the performance shares are performance-related, 50 percent are not dependent on performance.
+The performance-related shares are only finally granted if the Infineon share outperforms the Philadelphia Semi-
+conductor Index (SOX) during the period between the date of the provisional allocation and the end of the holding
+period. If at the end of the holding period the requirements for an allocation of performance shares - either all or
+only those that are not performance related – are fulfilled, then the entitlement to the transfer of the corresponding
+number of (real) Infineon shares is acquired. The value of the performance shares ultimately assigned to members of
+the Management Board may not exceed 250 percent of the respective LTI grant amount; above this cap performance
+shares are forfeited.
+The USPP notes of US$935 million issued in April 2016 contain a number of standard covenants, including among
+other things change of control clauses as well as the compliance with a debt coverage ratio, which provides for
+a certain relationship between the size of debt (adjusted) and earnings (adjusted). The financial liabilities, which
+were taken over in connection with the acquisition of MoTo, also contain three standard covenants based on certain
+financial ratios (equity ratio, debt ratio and liquidity ratio).
+With gross debt of €1,532 million as of 30 September 2018 (30 September 2017: €1,834 million) and EBITDA of
+€2,317 million for the 2018 fiscal year (30 September 2017: €1,801 million), gross debt to EBITDA ratio was 0.7 as
+of 30 September 2018 (30 September 2017: 1.0). Infineon continues to have sufficient financial flexibility to ensure
+that in addition to financing its planned investments it is also able to pay regular dividends (see note 15).
+The gross cash position increased from €2,452 million as of 30 September 2017 to €2,543 million as of 30 September
+2018 (for details see the chapter "Review of liquidity" in the Combined Management Report). Based on revenue
+of €7,599 million, the ratio of gross cash to revenue was €1 billion plus 20.3 percent of revenue as of 30 September
+2018, thereby slightly above the target range. In the previous year, the ratio of gross cash to revenue was €1 billion
+plus 20.6 percent of revenue.
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Infineon was a shareholder with personal liability of Qimonda Dresden until the carve-out of the memory business;
+as a result certain long-standing creditors have residual liability claims against Infineon. These claims can only
+be exercised by the insolvency administrator acting in the name of the creditors concerned. In the meantime,
+settlements have been concluded with most of the major liability creditors.
+Residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG
+On 21 September 2018, in consultation with the parties, the independent expert appointed by the court presented
+an interim report on his preliminary assessment of the value of the contribution in kind. The Company is in principle
+prepared to conduct discussions about an out of court settlement of the legal dispute on the basis of the interim report.
+It is not clear at this stage if the legal dispute can be resolved with an out of court settlement, and, if this is not the
+case, when a first-instance court decision would be reached.
+The legal dispute is being pursued with great effort by both parties, and many extensive written submissions have
+already been exchanged between the parties. Both sides have engaged numerous specialists and experts who are
+supporting the respective parties with assessments and opinions.
+The legal dispute has, in the meantime, focused on the claims asserted for alleged lack of value. On 29 August 2013,
+the court appointed an independent expert to clarify the valuation issues raised by the insolvency administrator
+and to address technical matters.
+The alleged impairment of capital runs contrary to two valuations prepared as part of the preparatory documentation
+for the capital increase by independent auditing companies, one of which had been engaged by Infineon and the
+other of which was acting in the capacity of a court-appointed auditor of contributions in kind and post-formation
+acquisitions. The auditing company engaged by Infineon concluded in its valuation that the business area con-
+tributed had a value of several times the lowest issue price of the shares issued, while the court-appointed auditor
+of contributions in kind and post-formation acquisitions confirmed to the court that the lowest issue price of
+the shares issued was covered - as legally required - by the value of the contributions in kind. Additionally, in the
+course of its defense against the claims asserted by the insolvency administrator, Infineon has commissioned several
+expert opinions, all of which arrived at the same conclusion that the objections raised by the insolvency administra-
+tor against the valuation of the contribution in kind are not valid.
+149
+Notes to the Consolidated Financial Statements
+P see page 71
+P see page 144
+P see page 136
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+145
+16 Capital management
+Infineon's main capital management objective is to ensure financial flexibility on the basis of a solid capital structure.
+As with comparable companies in the semiconductor industry, it is of prime importance that sufficient cash funds
+are available to finance operating activities and planned investments throughout all phases of the business cycle.
+On the other hand, debt should only constitute a modest portion of the financing mix.
+Based on these principles Infineon has defined key objectives for capital management. Accordingly, Infineon plans
+to maintain a liquidity level (gross cash position) of at least €1 billion plus additionally 10 to 20 percent of revenue.
+Gross debt shall amount to no more than two times EBITDA.
+Infineon is not subject to any statutory capital requirements, nor are any such defined in the Articles of Association.
+Capital management as well as the corresponding targets and definitions are based on indicators determined on
+the basis of the consolidated IFRS financial statements. Gross cash is defined as the total of cash, cash equivalents
+and financial investments. Infineon defines EBIT as earnings (loss) from continuing operations before interest and
+taxes and EBITDA as EBIT plus scheduled depreciation and amortization.
+As described above, Infineon faces certain risks in connection with the insolvency proceedings relating to the assets
+of Qimonda and that entity's subsidiaries. In consideration of the interim report from the court-appointed expert,
+Infineon recorded provisions relating to Qimonda of €185 million in total as of 30 September 2018. This comprises
+mainly provisions for the still pending legal dispute over the alleged activation of a shell company and liability for
+impairment of capital including legal costs. As of 30 September 2017, provisions relating to Qimonda amounted to
+€33 million.
+30 September 2018
+(96)
+Fair value
+40
+40
+1,566
+1,511
+1,511
+40
+Total
+Other non-current liabilities
+Long-term debt
+Non-current liabilities:
+137
+135
+2
+137
+Other current liabilities
+1,020
+3,031
+1,020
+2
+3,089
+Current assets:
+30 September 2018
+€ in millions
+The allocation to the levels as of 30 September 2018 and 2017 is as follows:
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+> Level 3: valuation parameters for assets and liabilities, which are not based on observable market data.
+> Level 2: valuation parameters whose prices are not the ones considered in Level 1, but which can be observed
+either directly or indirectly for the assets or liabilities,
+> Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities,
+Financial instruments measured at fair value are allocated to the following measurement levels in accordance with
+IFRS 13. The allocation to the different levels is based on the market proximity of the valuation parameters used in
+the determination of the fair value:
+Other non-current assets include €4 million (30 September 2017: €9 million) from an agreement related to the
+residual liability of Infineon as former shareholder of Qimonda Dresden GmbH & Co. OHG (see note 19), which are
+deposited in escrow in order to secure potential claims against Infineon. A security deposit of €75 million was
+repaid to Infineon during the 2018 fiscal year.
+The fair value of current and non-current liabilities that are measured at amortized cost is based either on quoted
+prices as of the reporting date (level 1) or is determined based on expected future cash flows discounted using a
+current market interest rate (level 3).
+For assets measured at amortized cost categorized as "Loans and receivables", it is assumed that the fair values
+correspond to their carrying amounts. The same assumption applies to liabilities resulting from trade payables
+and other current liabilities categorized as "Other financial liabilities (amortized cost)".
+Psee page 148 ff.
+3,029
+1,020
+Trade payables
+326
+Non-current liabilities:
+147
+3
+142
+2
+147
+Other current liabilities
+24
+1,181
+1,181
+1,181
+Trade payables
+25
+25
+Short-term debt and current
+Fair value
+Long-term debt
+Other non-current liabilities
+Total
+Balance as of 30 September 2017
+323
+323
+maturities of long-term debt
+Short-term debt and current
+2,910
+3
+2,894
+154
+2
+39
+39
+39
+1,519
+1,507
+1,507
+Current liabilities:
+2,899
+153
+Fair value by category
+Level 2
+Available-for-sale financial assets
+€ in millions
+The net gain or loss on financial instruments (including interest income and expense) within continuing operations
+in the Consolidated Statement of Operations amounted to the following:
+Other non-current assets include equity holdings and investments in funds. Where these are traded on an active
+market, the fair value is based on the actual market price (Level 1). For equity investments where no actively traded
+market price is available, the fair value is determined by considering existing contractual arrangements based on
+externally observable dividend policy (Level 3).
+Other current assets and liabilities contain derivative financial instruments, including cash flow hedges. Their fair
+value is determined by discounting future cash flows according to the discounted cash flow method. Where possible,
+valuation parameters observed on the reporting date in the relevant markets (such as currency rates or commodity
+prices) drawn from reliable external sources are used (Level 2).
+2
+2
+2
+2
+21
+60
+485
+566
+21
+19
+40
+Loan and receivables
+4
+Designated as fair value through profit and loss
+Other financial liabilities
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Interest income from financial instruments not measured at fair value through profit and loss in the 2018 fiscal year
+amounted to €15 million (2017: €9 million); interest expense from such financial instruments amounted to €50 million
+(2017: €49 million).
+The currency effects included within net gains and losses amount to negative €9 million (2017: positive €5 million).
+This net currency effect arose exclusively from recognized financial instruments.
+(37)
+(51)
+63
+(99)
+(2)
+(5)
+(2)
+59
+(6)
+2017
+2018
+Total
+Held for trading
+4
+56
+466
+581
+606
+Total
+22
+18
+40
+Other non-current assets
+Non-current assets:
+3
+3
+563
+563
+Other current assets
+Financial investments
+Level 3
+3
+22
+Current liabilities:
+Other current liabilities
+522
+Total
+Other current liabilities
+Current liabilities:
+Total
+Other non-current assets
+Non-current assets:
+Level 1
+Other current assets
+Current assets:
+30 September 2017
+5
+5
+5
+5
+Total
+Financial investments
+(cash flow
+hedges)
+maturities of long-term debt
+cost)
+Designated
+hedging
+instruments
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Notes to the Consolidated Financial Statements
+€ in millions
+Financial liabilities
+Balance as of 30 September 2018
+Current liabilities:
+Categories of
+financial liabilities
+Consolidated Financial Statements
+At fair value
+Other
+through
+financial
+profit or loss
+liabilities
+Carrying
+amount
+(amortized
+(36)
+(18)
+Other income and expense, net
+(15)
+272
+Gains (losses) on sales of assets, businesses, or interests in subsidiaries, net
+(153)
+(13)
+Acquisition-related depreciation/amortization and other expenses
+(13)
+Share-based compensation expense
+(3)
+Operating income
+(5)
+(118)
+Financial income
+(5)
+983
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Of the €118 million (2017: €153 million) “acquisition-related depreciation/amortization and other expenses"
+incurred in the 2018 fiscal year, €67 million (2017: €89 million) is attributable to cost of goods sold, €2 million (2017:
+€2 million) to research and development expenses and €49 million (2017: €62 million) to selling, general and
+administrative expenses.
+In the 2018 fiscal year, €10 million (2017: €3 million) of impairments/reversal of impairments of assets and assets
+classified as held for sale was allocated to the Power Management & Multimarket segment, €0 million (2017: €2 million)
+to the Digital Security Solutions segment and 1 million (2017: €0 million) to Other Operating Segments. Negative
+€4 million (2017: €0 million) was allocated to Corporate and Eliminations.
+1 Without impairments/reversals of impairments on capitalized development costs since 1 October 2017, but impairments in connection with the sale of the
+largest part of the Radio Frequency Power Components business to Cree, Inc. are included here. Previous periods' figures were not adjusted.
+933
+1,411
+1,469
+3
+(63)
+(68)
+Gain (loss) from investments accounted for using the equity method, net
+Income from continuing operations before income taxes
+Financial expenses
+10
+15
+53
+Impact on earnings of restructuring and closures, net
+The following table provides the reconciliation of Segment Result to income from continuing operations before
+income taxes:
+Plus/minus:
+474
+466
+2017
+2018
+Total
+Corporate and Eliminations
+256
+1,071
+2,376
+1,921
+1,735
+534
+463
+894
+2,599
+183
+532
+427
+1,208
+1,353
+Segment Result:
+2017
+2018
+€ in millions
+Consolidated Financial Statements
+1,208
+1,353
+(1)
+(2)
+1
+(4)
+124
+105
+Impairments on assets (excluding capitalized development costs) including assets classified
+as held for sale, net of reversals¹
+Notes to the Consolidated Financial Statements
+€ in millions
+Depreciation and amortization:
+1,240
+1,480
+401
+516
+49
+49
+The following is a summary of revenue in the 2018 and 2017 fiscal year and of non-current assets by geographic
+areas for the years ended 30 September 2018 and 2017:
+264
+129
+159
+397
+454
+ber 2017
+30 Septem-
+302
+€ in millions
+Revenue:
+Europe, Middle East, Africa
+881
+1,094
+1,171
+2,272
+2,443
+2017
+2018
+Total
+therein: USA
+Americas
+Japan
+therein: China
+Greater China
+Asia-Pacific (excluding Japan, Greater China)
+therein: Germany
+30 Septem-
+ber 2018
+€ in millions
+812
+129
+Other Operating Segments
+Digital Security Solutions
+Power Management & Multimarket
+Industrial Power Control
+1,129
+Automotive
+Corporate and Eliminations
+Inventories:
+Depreciation and amortization allocated to the segments
+Other Operating Segments
+Digital Security Solutions
+Power Management & Multimarket
+Industrial Power Control
+Automotive
+Depreciation and amortization not allocated to the segments
+Total depreciation and amortization
+Total
+Entity-wide disclosures in accordance with IFRS 8
+162
+103
+683
+758
+1
+3
+47
+46
+173
+174
+112
+128
+350
+407
+2017
+2018
+861
+719
++10%
+7,599
+> Infineon Technologies China Co., Ltd., Shanghai,
+People's Republic of China
+Member of the Board of Directors
+> Infineon Technologies Americas Corp., Wilmington,
+Delaware, USA (Chairman)
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+(Chairman)
+> Infineon Technologies Japan K.K., Tokyo, Japan
+(Chairman)
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+> Infineon Technologies China Co., Ltd., Shanghai,
+People's Republic of China (since 1 July 2018)
+> Infineon Technologies Austria AG, Villach, Austria
+Member of the Board of Directors
+> Infineon Technologies (Kulim) Sdn. Bhd., Kulim, Malaysia
+(Chairman) (until 1 November 2017)
+164
+The Supervisory Board
+The members of the Supervisory Board during the 2018 fiscal year, the Supervisory Board position held by them,
+their occupation, and their membership of other supervisory and governing bodies are as follows:
+Member of the Supervisory Board
+Name
+Delaware, USA
+Member of the Board of Directors
+Dr. Helmut Gassel
+Chief Marketing Officer
+Jochen Hanebeck
+Chief Operations Officer
+Membership of Supervisory Boards
+and governing bodies of domestic and
+> Infineon Technologies Americas Corp., Wilmington,
+foreign companies (as of 30 September 2018)
+> Infineon Technologies Austria AG, Villach, Austria
+(Chairman)
+Member of the Board of Directors
+> Infineon Technologies Americas Corp., Wilmington,
+Delaware, USA (since 5 October 2017)
+Member of the Supervisory Board
+> Infineon Technologies Austria AG, Villach, Austria
+> Zalando SE, Berlin, Germany
+Member of the Supervisory Board
+Dr. Eckart Sünner
+Chairman
+Johann Dechant¹
+Deputy Chairman
+Peter Bauer
+> Audi AG, Ingolstadt, Deutschland (since 7 May 2018)
+(Chairman)
+> SEAT S.A., Martorell, Spain (since 12 April 2018)
+(Chairman)
+> Skoda Auto a.s., Mladá Boleslav, Czech Republic
+(since 14 May 2018) (Chairman)
+> Porsche Austria GmbH, Salzburg, Austria
+> Porsche Holding GmbH, Salzburg, Austria
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+> Porsche Retail GmbH, Salzburg, Austria
+> FAW-Volkswagen Automotive Co., Ltd., Changchun,
+People's Republic of China
+> Shanghai Volkswagen Automotive Co., Ltd., Anting,
+People's Republic of China
+Member of the Advisory Board
+> Porsche Holding GmbH, Salzburg, Austria
+Member of the Board of Directors
+Wolfsburg, Germany
+Chairman of the Management Board, Member of the Supervisory Board
+Volkswagen AG,
+> Bragi GmbH, Munich, Germany
+Dr. Herbert Diess
+Occupation
+Membership of Supervisory Boards
+and comparable governing bodies of domestic
+and foreign companies (as of 30 September 2018)
+Chairman of the Supervisory Board, Member of the Supervisory Board
+Infineon Technologies AG
+(since 22 February 2018);
+Independent Attorney
+Vice-Chairman of the Joint Works
+Council and Chairman of the Works
+Council Regensburg,
+Infineon Technologies AG
+Independent
+Management Consultant
+> K+S AG, Kassel, Germany (until 15 May 2018)
+Member of the Administrative Board
+> SBK Siemens-Betriebskrankenkasse,
+Heidenheim/Brenz, Germany
+Member of the Supervisory Board
+> OSRAM Licht AG, Munich, Germany (Chairman)
+> OSRAM GmbH, Munich, Germany (Chairman)
+Chief Financial Officer
+Dominik Asam
+Chief Executive Officer,
+Labor Director
+Dr. Reinhard Ploss
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+2,516
+2,306
+2,020
+1,727
+969
+Total
+832
+41
+41
+41
+2
+2
+1,175
+42
+therein: USA
+Americas
+Japan
+7,063
+Psee page 127
+The allocation of revenues from external customers to geographic areas is based on the customers' locations. The
+average number of employees by geographic region is provided in note 3.
+No single customer accounted for more than 10 percent of Infineon's revenue during the 2018 and 2017 fiscal year.
+€ in millions
+30 Septem-
+ber 2018
+30 Septem-
+ber 2017
+Other Operating Segments
+Non-current assets:
+Europe
+therein: Germany
+Asia-Pacific (excluding Japan, Greater China)
+Greater China
+therein: China
+1,118
+714
+1,167
+4,704
+Fees for tax advisory services
+In addition to the amounts described above, KPMG charged €0.1 million in the 2018 fiscal year for tax consulting
+services in connection with the assessment of individual items.
+Fees for other services
+Fees of €0.2 million were charged by KPMG to the Company in the 2018 fiscal year for other services. These included
+quality assurance during the implementation of regulatory requirements and IT system changes as well as services
+for the evaluation of IT security management and business continuity management systems.
+Management Board and Supervisory Board
+Management compensation in the 2018 fiscal year
+In addition to the amounts described above, KPMG charged an aggregate of €0.1 million in the 2018 fiscal year for
+other audit services which include, in particular, the audit of the disclosures in the Sustainability Report, as well
+as other legally or contractually mandatory audits, e.g. audits according to the EEG, EMIR audit pursuant to section
+20 WPHG, and confirmations of compliance with contractual terms.
+As required by section 314, paragraph 1, no. 6a, sentences 5 to 8, German Commercial Code, the remuneration
+of the individual members of the Management Board and the Supervisory Board is disclosed in the Compensation
+Report which is part of the Combined Management Report.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Management Board
+The members of the Management Board during the 2018 fiscal year were as follows:
+Name
+Position
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Fees for other advisory services
+At the Annual General Meeting held on 22 February 2018, the shareholders elected KPMG AG Wirtschaftsprüfungs-
+gesellschaft ("KPMG"), Munich, as auditor for the 2018 Separate Financial Statements and the Consolidated
+Financial Statements of Infineon Technologies AG. The audit fees charged by KPMG in the 2018 fiscal year amounted
+to €1.9 million for the audit of the Consolidated Financial Statements and various Separate Financial Statements
+including an integrated audit review of the Interim Financial Statements.
+Year-end audit fees
+4,299
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Non-current assets do not include financial instruments, deferred tax assets and assets from employee benefits.
+163
+25 Significant events after the end of the reporting period
+Acquisition of 100 percent of the shares in Siltectra GmbH
+In November 2018, Infineon acquired all of the shares in Siltectra GmbH (Siltectra), which is based in Dresden
+(Germany). The preliminary purchase price is €124 million.
+Siltectra has developed a technology, that allows to cut the silicon carbide (SiC) crystal very precisely and efficiently,
+nearly without any losses especially compared to sawing. This technology can be used in two ways. One is cutting
+the boule into wafers yielding significantly more wafers than the conventional approach. The other use case is to
+lift off a very thin layer from the top of a wafer and to use the remaining wafer once more. This 2-out-of-1 concept is
+very important as the SiC wafer supply will be a limiting factor even longer-term, especially when SiC will ramp in a
+larger scale in electro-mobility. Infineon will translate the technology into volume production within the next years.
+Due to the proximity of the acquisition date to the date of the release of the Consolidated Financial Statements,
+additional disclosures as required by IFRS 3 cannot be made.
+P see page 95 ff.
+26 Additional information in accordance with HGB
+Information pursuant to section 161 Stock Corporation Act (AktG)
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the Management Board and the
+Supervisory Board and made permanently available to the public on Infineon's website.
+@www.infineon.com/cms/en/about-infineon/investor/corporate-governance/declaration-of-compliance/
+Accounting fees pursuant to section 314, paragraph 1, no. 9 HGB
+1,110
+Digital Security Solutions
+Other Operating Segments
+Industrial Power Control
+561
+(6)
+21
+(25)
+21
+(26)
+1
+(1)
+Interest rate risk
+Infineon is exposed to interest rate risk through its financial assets and debt instruments resulting from bond issuances
+and debt financing. Due to the cyclical nature of its core business and the need to maintain high operational flexibility,
+Infineon holds a relatively high level of liquid financial assets that are invested in short-term fixed-interest instruments.
+These investments generally have a contract duration of between one and twelve months in order to achieve short-
+term interest rate returns. The risk to these assets of changing interest rates is not material in the current period of
+low or zero interest rates.
+To reduce the net remaining risks caused by changes in interest rates, Infineon is able to make use of interest rate
+derivatives in order to align the fixed interest periods of assets and liabilities.
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market interest rates on profit or loss
+and equity. Infineon prepares this using the iteration method.
+Infineon does not hold any fixed-rate financial assets or liabilities that are measured at fair value through profit or
+loss. Furthermore, Infineon did not hold any fixed-rate available for sale financial assets either in 2018 or 2017.
+Other price risk
+According to IFRS 7 "Financial Instruments: Disclosures", other price risk is defined as the risk that the fair value or
+future cash flows of a financial instrument could fluctuate because of changes in market prices (other than those
+arising from interest rate risk or currency risk), irrespective of whether those changes are caused by factors specific
+to the individual financial instrument or its issuer, or by factors affecting all similar financial instruments traded in
+the market.
+In accordance with IFRS 7 "Financial Instruments: Disclosures", interest rate risk is defined as the risk that the fair
+value or future cash flows of a financial instrument will fluctuate because of changes in interest rates.
+Infineon held financial instruments that are exposed to market price risks. A change in the relevant market prices
+would have no significant impact on the result of the 2018 and 2017 fiscal years.
+5
+4
+Commodity swaps
+Designated cash flow hedges
+Forward exchange contracts purchased
+Forward exchange contracts sold
+€ in millions
+The nominal values and fair values of Infineon's derivative instruments as of 30 September 2018 and 2017 are as
+follows:
+(5)
+Infineon holds derivative financial instruments exclusively for hedging purposes. This includes the use of forward
+exchange contracts and commodity swaps. The objective is to reduce the impact of exchange rate and commodity
+price fluctuations on future net cash flows.
+Infineon does not net financial instruments. Infineon conducts derivative transactions according to the global
+netting agreement (Master Agreement) of the International Swaps and Derivatives Association (ISDA) and other
+comparable national framework agreements. Under the terms of these agreements, any netting arising from the
+occurrence of certain future events would have no material effect on the balance sheet presentation of these
+financial instruments.
+155
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
++10%
+(10%)
+Derivative financial instruments and hedging activities
+Additionally, Infineon is exposed to price risks with respect to raw materials upon which it is dependent. Infineon
+seeks to minimize these risks through its procurement policy (including the use of multiple sources, where possible)
+and its operating procedures. In line with these measures, Infineon concluded additional financial derivative contracts
+for certain commodity supplies (gold) for the following fiscal year in order to mitigate the remaining risk arising
+from the fluctuation of commodity prices. The change in relevant market prices as of 30 September 2018 and 2017
+had no significant impact on equity in the 2018 and 2017 fiscal years.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+2019
+2020
+2021
+2022
+2023
+Beyond 2023
+Total
+Non-derivative
+3,200
+1,406
+72
+219
+544
+35
+financial liabilities
+As of 30 September 2018
+159
+Due in the fiscal year
+Notes to the Consolidated Financial Statements
+158
+Credit risk
+Credit risk arises when a customer or other counterparty of a financial instrument fails to discharge its contractual
+obligations. Infineon is exposed to this risk as a consequence of its ongoing operations, its financial investments
+and certain financing activities. Infineon's credit risk arises primarily from trade receivables, cash and cash equiva-
+lents, financial investments and derivative financial instruments. Excluding the impact of any collateral received,
+the carrying amount of financial investments, cash and cash equivalents and trade receivables corresponds to the
+maximum credit risk.
+Credit risk with respect to trade receivables is limited by the large number and geographic diversity of the customer
+base. Infineon controls credit risk through comprehensive credit evaluations for all major customers, the use of
+credit limits and monitoring procedures. New customers are evaluated for creditworthiness in accordance with
+Infineon guidelines. Credit limits are also in place for individual customers and creditworthiness and credit limits
+are constantly monitored. A further measure taken to reduce credit risk is the use of reservation of title clauses.
+However, despite continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising from the
+default of one of its contract parties.
+Worldwide foreign exchange and interest hedging contracts as well as the investment of liquid assets in cash
+equivalents and financial investments are entered into with major financial institutions worldwide that have high
+credit ratings. Infineon assesses the creditworthiness of banks using a methodology that establishes investment
+limits for individual banks that are updated on a daily basis based on current ratings (S&P, Moody's or Fitch) and credit
+default swap premiums. Possible breaches of stipulated investment thresholds result in immediate notification and
+the requirement to reduce the risk.
+Infineon has spread its cash investments over more than ten banks. As of 30 September 2018, no financial institution
+was responsible for more than 13 percent (30 September 2017: 12 percent) of Infineon's cash investments. This
+gives rise to a maximum risk of €199 million (30 September 2017: €181 million) in the event of the default of a single
+financial institution assuming no deposit insurance scheme is in place. Infineon also holds derivative financial
+instruments with a positive fair value of €3 million at 30 September 2018 (30 September 2017: €4 million).
+Financing and liquidity risk
+Financing and liquidity risk is the risk that an entity will encounter difficulties in meeting obligations associated
+with financial liabilities.
+Liquidity risk could arise from a potential inability of Infineon to meet maturing financial obligations. Infineon's
+liquidity management provides that sufficient levels of cash and other liquid assets are available as well as ensur-
+ing the availability of funding through adequate levels of committed credit facilities.
+The following table discloses the maturity profile for non-derivative financial liabilities and a cash flow analysis for
+derivative financial instruments with negative fair values. The table shows the undiscounted contractually agreed
+cash flows that result from the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign currencies are translated using the
+closing rate at the reporting date. The value of financial instruments with variable interest payments is determined
+using the interest rate from the last interest fixing date before 30 September 2018. The cash outflows of financial
+liabilities that can be repaid at any time are assigned to the period in which the earliest redemption is possible.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+€ in millions
+Total
+30 September 2018
+30 September 2017
+Nominal
+value
+Net statement of financial position exposure
+(101)
+40
+As of 30 September 2017
+Net exposure
+10
+Forward exchange contracts
+(53)
+(36)
+(119)
+(17)
+Other
+US$
+Currency
+129
+(269)
+101
+(229)
+Equity
+Profit or Loss
+Other
+Euro/US Dollar
+30 September 2017
+Other
+Euro/US Dollar
+30 September 2018
+€ in millions
+The following table shows the effects on profit or loss for the 2018 and 2017 fiscal year and equity as of 30 Septem-
+ber 2018 and 2017 for continuing operations of a 10 percent shift in exchange rates. The assumed exchange rate
+changes relate only to financial instruments within the meaning of IFRS 7.
+157
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Net exposure
+Forward exchange contracts
+924
+Net statement of financial position exposure
+€ in millions
+(2)
+1
+33
+(3)
+33
+1
+2
+126
+239
+281
+129
+Fair
+value
+Nominal
+value
+Fair
+value
+1
+Foreign exchange derivatives are entered into by Infineon to offset the exchange risk from anticipated cash receipts
+from operating activities. In 2018 as in 2017, no foreign exchange derivatives used to hedge ongoing business were
+designated as cash flow hedges.
+To offset the price risks of highly probable gold purchases in the coming fiscal years, Infineon entered into swaps,
+which are designated as cash flow hedges. The fair value of these swaps amounted to negative €3 million as of
+30 September 2018 and positive €1 million as of 30 September 2017. €4 million of unrealized losses arose from
+these transactions in the 2018 fiscal year (2017: €2 million), these decreased other reserves by a corresponding
+amount. No significant gains or losses were realized in the 2018 fiscal year on swap transactions concluded in
+the previous year (2017: €1 million losses); this amount was transferred from other reserves into the Consolidated
+Statement of Operations. As in the previous year, no hedge ineffectiveness was recorded in the Consolidated
+Statement of Operations for these hedging relationships. As in the previous year, no gains or losses were transferred
+from other reserves to profit or loss as a result of cash flow hedges for future raw material purchases being canceled
+following the decision that the occurrence of the hedged transaction had become unlikely.
+23 Financial risk management
+Foreign exchange risk at Infineon arises predominantly from US dollar positions. The following table shows the net
+risk as of 30 September 2018 and 2017.
+For the net result related to foreign currency derivatives and foreign currency transactions included within net
+income see note 22.
+The Management Board has established policies that require Infineon's individual legal entities to manage the
+foreign exchange risk with respect to their functional currency. Group entities prepare a monthly rolling cash flow
+forecast by currency in order to determine foreign exchange risks. The net foreign exchange positions determined
+in these forecasts are required to be hedged, usually by entering into internal hedging contracts. Infineon's policy
+with respect to limiting short-term foreign currency exposure is to hedge at least 75 percent of its estimated net
+cash flow for the following two months, at least 50 percent of its estimated net cash flow for the third month and,
+depending on the nature of the underlying transactions, a portion for the periods thereafter. Part of the foreign
+currency risk cannot be mitigated due to differences between actual and forecasted amounts. Infineon calculates
+this remaining risk based on net cash flows considering items in the Statement of Financial Position, actual orders
+received or placed and all other planned cash receipts and payments.
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying but significant portion of its
+revenue as well as cost of goods sold, research and development and product distribution costs are denominated
+in currencies other than the euro, primarily the US dollar. Fluctuations in the exchange rates of these currencies
+compared to the euro had an effect on the results of Infineon in the 2018 and 2017 fiscal years.
+Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes to foreign exchange rates.
+Accordingly, foreign exchange risks are associated with monetary financial instruments that are denominated in
+a foreign currency that does not correspond to the functional currency, and the foreign currency represents the
+relevant risk variable. Risks arising from the translation into Infineon's reporting currency are not risks within the
+meaning of IFRS 7.
+Foreign exchange risk
+Infineon is exposed to various market risks in the ordinary course of business, primarily resulting from changes
+in foreign exchange rates and interest rates. Infineon enters into a range of derivative financial transactions with
+various counterparties to limit such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+Market risk is defined as the risk of losses resulting from adverse changes in the market prices of financial
+instruments, including those related to foreign exchange rates, interest rates and other price risks.
+Market risk
+P see page 154
+156
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Infineon's activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest
+rate risk and price risk), credit risk, financing and liquidity risk. Infineon's financial risk management program seeks
+to minimize potential adverse effects on its profitability and liquidity. Infineon uses derivative financial instruments
+to hedge certain risks to which it is exposed. Financial risk management is carried out by the central Finance &
+Treasury (FT) department in accordance with policies approved by the Chief Financial Officer. The FT department
+identifies, evaluates and hedges financial risks in close cooperation with the operating units. The FT department's
+policy contains principles for overall risk management as well as policies covering specific areas such as foreign
+exchange risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the
+investment of excess liquidity.
+As of 30 September 2018
+Power Management & Multimarket
+Derivative
+Cash outflow
+2,111
+1,847
+599
+595
+574
+547
+2,989
+Industrial Power Control
+1,206
+1,323
+1,206
+Power Management &
+Multimarket
+2,318
+1,323
+2,148
+3,284
+Revenue:
+Segment information
+€ in millions
+Total
+2018
+Power
+Embedded control
+Automotive
+RF & Sensors
+2018
+2017
+2018
+2017
+2018
+2017
+2017
+1,758
+1,554
+560
+Corporate and
+Eliminations
+3
+Total
+7,599
+7,063
+9
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Notes to the Consolidated Financial Statements
+161
+There are currently limited levels of trading relationships between the operating segments. Costs are recharged in
+general without impact on profit or loss.
+€ in millions
+Segment Result:
+Automotive
+Consolidated Financial Statements
+10
+Segments
+Other Operating
+594
+Digital Security Solutions
+664
+708
+664
+708
+Subtotal
+7,589
+7,051
+5,192
+4,607
+1,263
+1,303
+1,134
+1,141
+The exception to this approach is certain inventory information which is regularly analyzed at a segment level.
+Infineon also allocates depreciation and amortization expense to the operating segments based on production
+volume and products produced using standard costs.
+Neither assets, liabilities nor cash flows per segment are reported to the Management Board, nor is segment
+performance assessed on this basis.
+Segment Result is defined as the operating income (loss) excluding: asset impairments (net of reversals) excluding
+capitalized development costs; impact on earnings of restructuring measures and closures; share-based com-
+pensation expense; acquisition related depreciation/amortization and other expenses; gains (losses) on sales of
+assets, businesses, or interests in subsidiaries and other income (expense), including the costs of legal proceedings.
+Decisions relating to financing and the investment of cash funds are taken at a Group level and not at a segment
+level. For this reason, financial income and financial expense (including interest income and expense) are not
+allocated to the segments.
+Based on revenue and Segment Result, the Management Board assesses performance and defines operating
+targets and budgets for the segments.
+2022
+Beyond 2022
+Non-derivative
+financial liabilities
+3,390
+1,532
+2021
+68
+246
+539
+936
+Derivative
+financial liabilities:
+Cash outflow
+69
+2020
+2019
+2018
+136
+136
+Cash inflow¹
+(134)
+(134)
+Total
+3,202
+1,408
+72
+219
+544
+35
+924
+As of 30 September 2017
+Total
+208
+financial liabilities:
+208
+Total
+Digital Security Solutions
+Effective 1 October 2018, the "Chip Card & Security" segment changed its name to "Digital Security Solutions".
+The change in name has no impact on the organizational structure, strategy or scope of business. The Digital
+Security Solutions segment designs, develops, manufactures and markets semiconductor-based security products
+for card-based applications, government documents, and security functions in networked devices.
+(10%)
+Other Operating Segments comprise the remaining activities of businesses that have been disposed of, and other
+business activities. Since the sale of the Wireless mobile phone business, supplies to Intel Mobile Communications
+are included in this segment. Also included are, since the sale of the major part of Infineon's Radio Frequency
+Power Components business, supplies of LDMOS wafers and related components, as well as packaging and test
+services for Cree, Inc.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Consolidated Financial Statements
+The Power Management & Multimarket segment designs, develops, manufactures and markets semiconductors
+for energy-efficient power supplies, mobile devices, mobile phone network infrastructures, human-machine
+interaction as well as applications with special demands on their robustness and reliability.
+Notes to the Consolidated Financial Statements
+Corporate and Eliminations
+Corporate and Eliminations reflects the elimination of intragroup revenue and profits/losses to the extent that
+these arise between the segments.
+Similarly, certain items are included in Corporate and Eliminations, which are not allocated to the other segments.
+These include certain corporate headquarters costs and selected topics, which are not allocated to the segments
+since they arise from corporate decisions and are not within the direct control of segment management.
+Furthermore, raw materials, supplies and work in progress of the common frontend production, and raw materials
+and supplies of the common backend production, are not under the control or responsibility of the operating
+segment management and are therefore allocated to corporate functions. Only work in progress of backend
+production and finished goods are allocated to the operating segments.
+Chief Operating Decision Maker, definition of Segment Result and allocation of assets and liabilities to
+the individual segments
+The Management Board, as joint Chief Operating Decision Maker, decides how resources are allocated to the
+segments.
+160
+Power Management & Multimarket
+The Industrial Power Control segment designs, develops, manufactures and markets semiconductors for
+the conversion of electrical energy for small, medium and high-power applications. The products are used in
+applications for generation, low loss transmission and efficient use of electrical energy.
+Industrial Power Control
+(206)
+3,392
+(206)
+1,534
+68
+69
+246
+539
+936
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+24 Segment reporting
+Identification of segments
+Infineon identifies reportable segments on the basis of the differences between the products and applications.
+During the 2018 fiscal year, Infineon's business was structured on the basis of four operating segments, namely
+Automotive, Industrial Power Control, Power Management & Multimarket and Digital Security Solutions. Additionally,
+Infineon differentiates between Other Operating Segments and Corporate and Eliminations.
+Automotive
+The Automotive segment designs, develops, manufactures and markets semiconductors for use in automotive
+applications.
+Cash inflow¹
+(7)
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
+we are required to report that fact. We have nothing to report in this regard.
+0
+Tokyo, Japan
+7
+4.88
+7.51
+0
+100
+7
+Klagenfurt, Austria
+0.77
+2.11
+0
+100
+Milan, Italy
+100
+7
+0.39
+100
+100
+Dublin, Ireland
+0.00
+0.12
+0
+100
+7
+Rotterdam, The Netherlands
+1.43
+10.60
+0
+0.12
+0
+20.98
+4.60
+0.31
+5.16
+0
+100
+Kista, Sweden
+7
+0.00
+34.75
+0
+100
+Bristol, Great Britain
+5
+(0.25)
+14.05
+0
+100
+Neu-Isenburg, Germany
+3.00
+23.29
+0
+100
+7
+Rotterdam, The Netherlands
+1.26
+4.64
+0
+100
+Seoul, Republic of Korea
+7
+100
+7
+4
+0.50
+100
+Neubiberg, Germany
+4.44
+7
+(3.45)
+0
+100
+Wilmington, Delaware, USA
+0.00
+0.02
+0
+100
+Neubiberg, Germany
+50
+8
+224.27
+100
+100
+Dresden, Germany
+7,17
+11
+(1.83)
+5.82
+0
+100
+Herlev, Denmark
+11
+15.42
+0.00
+369.89
+0.00
+7,13,14
+1.86
+0
+100
+of China
+7
+Hong Kong, People's Republic
+0.23
+23.88
+0
+100
+7
+Hong Kong, People's Republic
+of China
+177.60
+4,700.82
+100
+100
+7
+Rotterdam, The Netherlands
+71.96
+1,447.20
+0
+100
+Singapore, Singapore
+7
+0.56
+8.82
+0
+100
+St. Denis, France
+Bangalore, India
+163.42
+Muntinlupa City, Philippines
+0
+100
+7
+Wilmington, Delaware, USA
+(€ in
+millions)
+millions)
+logies AG
+in %
+(€ in
+Techno-
+note
+Infineon
+holdings
+Foot-
+0
+Net result
+thereof
+Share-
+Registered office
+168
+MoTo Objekt Campeon GmbH & Co. KG
+Rectificadores Internacionales, S.A. de C.V.
+Shanghai International Rectifier Trading Ltd.
+Molstanda Vermietungsgesellschaft mbH
+International Rectifier Mauritius, Inc. (in liquidation)
+International Rectifier HiRel Denmark ApS
+International Rectifier HiRel Products, Inc.
+International Rectifier Japan Co., Ltd.
+Innoluce B.V.
+Infineon Technologies US InterCo LLC
+Infineon Technologies US Investment LLC
+Infineon Technologies
+Vermögensverwaltungsgesellschaft mbH
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Name of company
+Equity
+1,546.38
+74.25
+12
+7
+43.02
+99.58
+0
+100
+7
+Wilmington, Delaware, USA
+0.16
+1.87
+0
+100
+Herlev, Denmark
+0.14
+6.79
+0
+100
+9
+Nijmegen, The Netherlands
+7,13,15
+0.00
+125.22
+100
+100
+Neubiberg, Germany
+n.a.
+n.a.
+0
+100
+Wilmington, Delaware, USA
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+100
+7
+2,192.26
+Infineon Technologies Newport Holding Limited
+Infineon Technologies Nordic AB
+Infineon Technologies Neu-Isenburg Vertriebs GmbH
+Infineon Technologies Japan K.K.
+Infineon Technologies Korea Co., Ltd.
+Infineon Technologies Maasstad C.V.
+Infineon Technologies India Private Limited
+Infineon Technologies Investment B.V.
+Infineon Technologies Ireland Limited
+Infineon Technologies Italia s.r.l.
+Infineon Technologies IT-Services GmbH
+Infineon Technologies Hong Kong Ltd.
+Infineon Technologies Hong Kong Sales Limited
+Infineon Technologies Holding Asia Pacific Pte. Ltd.
+Infineon Technologies Holding B.V.
+Infineon Technologies France S.A.S.
+Infineon Technologies Finance GmbH
+Infineon Technologies Epi Services, Inc.
+Infineon Technologies Dresden Verwaltungs GmbH
+Infineon Technologies Dresden GmbH & Co. KG
+Infineon Technologies Denmark ApS
+Infineon Technologies Philippines, Inc.
+Bucharest, Romania
+25.85
+181.58
+0
+100
+Bristol, Great Britain
+7
+39.86
+85.43
+100
+100
+Cheonan, Republic of Korea
+0.10
+0.00
+7
+Infineon Technologies Power Semitech Co., Ltd.
+Infineon Technologies Reigate Limited
+Infineon Technologies Romania & Co. Societate
+in Comandita
+0
+100
+Wilmington, Delaware, USA
+0.41
+1.55
+0
+100
+Bristol, Great Britain
+7
+1.40
+4.59
+0
+100
+7
+Taipei, Taiwan
+0.43
+2.39
+100
+100
+7
+7
+1.08
+3.14
+0
+100
+Infineon Technologies US HoldCo Inc.
+Infineon Technologies U.K. Limited
+Infineon Technologies Taiwan Co., Ltd.
+Infineon Technologies Shared Service Center, Unipessoal Lda. Maia, Portugal
+69.11
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+100
+Shanghai, People's Republic of China
+Former members of
+the Supervisory Board
+Wolfgang Mayrhuber
+Diana Vitale¹
+Name
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+> BKK of BMW AG, Dingolfing, Germany
+Member of the Administrative Board
+> Krones AG, Neutraubling, Germany
+Member of the Supervisory Board
+> Athene Holding Ltd., Pembroke, Bermuda
+Member of the Supervisory Board
+(since 30 August 2018)
+(until 22 February 2018)
+> Oldenburgische Landesbank AG, Oldenburg, Germany
+› Nova KBM Bank, Maribor, Slovenia
+> Bankhaus Neelmeyer, Bremen, Germany
+(until 30 August 2018)
+> Bremer Kreditbank AG, Bremen, Germany
+> Athene Lebensversicherung AG, Wiesbaden, Germany
+Member of the Supervisory Board
+(since 25 April 2018)
+> Huaxin Cement Co., Ltd., Wuhan, People's Republic of China
+(since 2 July 2018)
+> LafargeHolcim Maroc Afrique SAS, Casablanca, Morocco
+(since 2 July 2018)
+> LafargeHolcim Maroc SAS, Casablanca, Morocco
+(since 2 July 2018)
+> EVO Banco, Madrid, Spain (since 25 June 2018)
+1 Employee representative
+Occupation
+Deputy Chairwoman of the Infineon
+Works Council, Warstein,
+Infineon Technologies AG
+Prof. Dr. Renate Köcher
+Dr. Wolfgang Eder (Chairman)
+Nomination Committee
+Jürgen Scholz
+Dr. Susanne Lachenmann
+Hans-Ulrich Holdenried
+Peter Gruber
+Dr. Wolfgang Eder
+Peter Bauer (Chairman)
+Strategy and Technology Committee
+Annette Engelfried
+Dr. Wolfgang Eder
+Johann Dechant
+Dr. Eckart Sünner (Chairman)
+Investment, Finance and Audit Committee
+Hans-Ulrich Holdenried
+Gerhard Hobbach
+Johann Dechant
+Dr. Eckart Sünner (Chairman)
+Executive Committee
+and comparable governing bodies of domestic
+and foreign companies (as of 30 September 2018)
+Membership of Supervisory Boards
+Jürgen Scholz
+Hans-Ulrich Holdenried
+Johann Dechant
+Dr. Eckart Sünner (Chairman)
+Mediation Committee
+Supervisory Board committees
+Management Consultant
+> Lafarge Maroc SA, Casablanca, Morocco
+Dr. Manfred Puffer
+(since 22 January 2018)
+(since 22 January 2018)
+and foreign companies (as of 30 September 2018)
+and comparable governing bodies of domestic
+Membership of Supervisory Boards
+Expert in the frontend-production,
+Infineon Technologies Dresden
+GmbH & Co. KG
+IG Metall Regensburg
+First authorized agent of
+Independent
+Management Consultant
+Chief Financial Officer,
+LafargeHolcim Ltd.,
+Jona, Switzerland
+Leading Development Engineer
+Managing Director
+Institut für Demoskopie
+Allensbach GmbH,
+Allensbach, Germany
+Member of the Infineon
+Works Council, Campeon,
+Infineon Technologies AG
+Independent
+Management Consultant
+Chief Financial Officer Operations,
+Infineon Technologies AG
+Labor union secretary
+IG Metall district management,
+Berlin-Brandenburg-Saxony
+Member of the Supervisory Board
+Chairman of the Management
+Board, voestalpine AG, Linz, Austria
+Kerstin Schulzendorf 1
+Jürgen Scholz¹
+Dr. Manfred Puffer
+Dr. Susanne Lachenmann'
+Géraldine Picaud
+Prof. Dr. Renate Köcher
+Hans-Ulrich Holdenried
+Gerhard Hobbach 1
+Peter Gruber¹
+Representative of
+Senior Management
+Annette Engelfried1
+(since 22 February 2018)
+Dr. Wolfgang Eder
+Name
+165
+Occupation
+> OBERBANK AG, Linz, Austria
+> voestalpine High Performance Metals GmbH, Vienna, Austria
+(Chairman)
+> voestalpine Metal Engineering GmbH, Leoben, Austria
+(Chairman)
+> Holcim Group Services Ltd, Holderbank, Switzerland
+(until 15 December 2017)
+› Artgri Group International Pte. Ltd., Singapore
+People's Republic of China (until 15 December 2017)
+> Xiamen Yarui Optical Co. Ltd., Xiamen,
+(until 11 December 2017)
+> Essilor India Private Limited, Bangalore, India
+(until 23 November 2017)
+> Vision Direct Group Ltd., London, Great Britain
+> Alstom S.A., Saint-Ouen, France (until 31 July 2018)
+Member of the Board of Directors
+> Nestlé Deutschland AG, Frankfurt/Main, Germany
+> Robert Bosch GmbH, Gerlingen, Germany
+> BMW AG, Munich, Germany
+Member of the Supervisory Board
+> Bridge imp GmbH, Grünwald, Germany
+Member of the Advisory Board
+> Infineon Technologies (Kulim) Sdn. Bhd., Kulim, Malaysia
+(until 1 November 2017)
+Member of the Board of Directors
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Neubiberg, Germany
+Member of the Supervisory Board
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Neubiberg, Germany
+Member of the Supervisory Board
+> voestalpine Rohstoffbeschaffungs GmbH, Linz, Austria
+(Chairman)
+(until 1 April 2018) (Chairman)
+> voestalpine Personal Services GmbH, Linz, Austria
+Member of the Advisory Board
+> voestalpine Stahl GmbH, Linz, Austria (Chairman)
+> voestalpine Metal Forming GmbH, Krems, Austria
+(Chairman)
+> Holcim Technology Ltd, Jona, Switzerland
+166
+The members of the Company's Supervisory Board, individually or in aggregate, do not own more than 1 percent of
+Infineon Technologies AG's outstanding share capital as of 30 September 2018.
+The business address of each member of the Supervisory Board is: Infineon Technologies AG, Am Campeon 1-15,
+D-85579 Neubiberg (Germany).
+293.84
+0
+100
+Singapore, Singapore
+7
+74.81
+2,504.91
+0
+100
+7
+Wilmington, Delaware, USA
+0.36
+6.97
+76.54
+0
+11
+Xi'an, People's Republic of China
+Villach, Austria
+Bayswater, Australia
+Infineon Technologies Austria AG
+Infineon Technologies (Xi'an) Co., Ltd.
+Infineon Technologies Americas Corp.
+Infineon Technologies Asia Pacific Pte Ltd.
+Infineon Technologies Australia Pty Limited
+11.19
+117.08
+0
+100
+11
+Wuxi, People's Republic of China
+Infineon Technologies (Wuxi) Co., Ltd.
+100
+7
+100
+0
+0.22
+3.14
+0
+100
+11
+Shanghai, People's Republic of China
+Cegléd, Hungary
+Batam, Indonesia
+Infineon Technologies China Co., Ltd.
+Infineon Technologies Center of Competence
+(Shanghai) Co., Ltd.
+1.32
+16.36
+0
+100
+7
+7
+1.32
+11.75
+0
+100
+Infineon Technologies Cegléd Kft.
+Infineon Technologies Batam PT
+143.20
+917.94
+0.004
+100
+7
+0.14
+1.45
+14.80
+210.19
+0
+100
+100
+Karlsruhe, Germany
+3.61
+3.66
+0
+72
+DICE Danube Integrated Circuit Engineering GmbH & Co. KG Linz, Austria
+Hitex GmbH
+7
+Fully consolidated subsidiaries:
+millions)
+(€ in
+(€ in
+millions)
+logies AG
+in %
+Techno-
+note
+Infineon
+Foot-
+Net result
+Equity
+thereof
+Share-
+holdings
+167
+Registered office
+Name of company
+Subsidiaries, joint ventures and other related companies as of 30 September 2018
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+100
+Tokyo, Japan
+2.16
+7,13,14
+Melaka, Malaysia
+7
+0.89
+205.89
+0
+100
+Kulim, Malaysia
+3.07
+36.31
+0
+100
+Melaka, Malaysia
+7
+0.31
+38.85
+0
+100
+11
+Wuxi, People's Republic of China
+11
+2.00
+16.29
+0
+100
+Beijing, People's Republic of China
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+Infineon Technologies (Advanced Logic) Sdn. Bhd.
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+Infineon Semiconductors (Wuxi) Co. Ltd.
+0.00
+100
+0
+7.27
+Qimonda Europe GmbH in liquidation
+2
+77
+Dresden, Germany
+2
+Qimonda Dresden Verwaltungsgesellschaft mbH
+in insolvency
+77
+Dresden, Germany
+2
+77
+Bratislava, Slovakia
+2
+77
+Qimonda Finance LLC in insolvency
+Munich, Germany
+77
+Leuven, Belgium
+2
+77
+Singapore, Singapore
+2
+28
+77
+Munich, Germany
+2
+77
+Melaka, Malaysia
+2
+2
+Qimonda Flash Geschäftsführungs GmbH in liquidation
+Qimonda Flash GmbH in insolvency
+Munich, Germany
+Qimonda Korea Co. Ltd. in liquidation
+Qimonda Italy s.r.l. in liquidation
+Qimonda IT (Suzhou) Co., Ltd. in liquidation
+Qimonda Investment B.V.
+1 Certain subsidiaries were not consolidated due to immateriality.
+Qimonda UK Ltd. in liquidation
+Qimonda Taiwan Co. Ltd. in liquidation
+2
+77
+Shanghai, People's Republic of China
+Qimonda International Trade (Shanghai) Co. Ltd.
+2
+77
+2
+Rotterdam, The Netherlands
+Qimonda Holding B.V. in insolvency
+77
+St. Denis, France
+Qimonda France SAS in liquidation
+2
+77
+Dresden, Germany
+2
+77
+Dresden, Germany
+77
+Wilmington, Delaware, USA
+2
+77
+40
+Qimonda Licensing LLC
+Vila do Conde, Portugal
+17
+7
+Wilmington, Delaware, USA
+millions)
+millions)
+logies AG
+in %
+(€ in
+(€ in
+Techno-
+note
+Infineon
+holdings
+Foot-
+100
+Net result
+thereof
+Share-
+Registered office
+169
+XMOS Limited
+Schweizer Electronic AG
+Silicon Alps Cluster GmbH
+R Labco, Inc.
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+Name of company
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+0.00
+Equity
+0
+0.00
+0.00
+Colorado Springs, Colorado, USA
+2
+Qimonda Dresden GmbH & Co. OHG in insolvency
+Qimonda Bratislava s.r.o. in liquidation
+Qimonda Beteiligungs GmbH in insolvency
+Qimonda Belgium BVBA in insolvency
+Qimonda Asia Pacific Pte. Ltd.
+Qimonda AG in insolvency
+Qimonda (Malaysia) Sdn. Bhd. in liquidation
+Itarion Solar Lda.
+Celis Semiconductor Corp.
+Qimonda AG and its subsidiaries:²
+n.a.
+n.a.
+0
+n.a.
+16
+Bristol, Great Britain
+5.11
+56.37
+9
+9
+Schramberg, Germany
+11
+n.a.
+n.a.
+0
+n.a.
+Villach, Austria
+2
+Qimonda Memory Product Development
+Center (Suzhou) Co., in liquidation
+Qimonda North America Corp. in insolvency
+Qimonda Richmond LLC in insolvency
+Please refer to the notes to the Consolidated Financial Statements for more information on the accounting policies
+applied. The assessment of the underlying assumptions is presented under note 2 and disclosures on legal risks
+under note 19.
+Risks associated with the insolvency of Qimonda AG
+Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
+of the Consolidated Financial Statements for the financial year from 1 October 2017 to 30 September 2018. These
+matters were addressed in the context of our audit of the Consolidated Financial Statements as a whole, and in
+forming our opinion thereon, we do not provide a separate opinion on these matters.
+Key Audit Matters in the Audit of the Consolidated Financial Statements
+173
+Independent Auditor's Report
+Further Information
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+We conducted our audit of the Consolidated Financial Statements and of the Group Management Report in
+accordance with Section 317 HGB and the EU Audit Regulation No. 537/2014 (referred to subsequently as "EU Audit
+Regulation") and in compliance with German Generally Accepted Standards for Financial Statement Audits promul-
+gated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Our responsibilities
+under those requirements and principles are further described in the "Auditor's Responsibilities for the Audit of the
+Consolidated Financial Statements and of the Group Management Report" section of our auditor's report. We are
+independent of the group entities in accordance with the requirements of European law and German commercial
+and professional law, and we have fulfilled our other German professional responsibilities in accordance with these
+requirements. In addition, in accordance with Article 10 (2) point (f) of the EU Audit Regulation, we declare that we
+have not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regulation. We believe that the
+evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the Consolidated
+Financial Statements and on the Group Management Report.
+Basis for the opinions
+Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led to any reservations relating to the
+legal compliance of the Consolidated Financial Statements and of the Group Management Report.
+> the accompanying Group Management Report as a whole provides an appropriate view of the Group's position.
+In all material respects, this Group Management Report is consistent with the Consolidated Financial Statements,
+complies with German legal requirements and appropriately presents the opportunities and risks of future
+development.
+> the accompanying Consolidated Financial Statements comply, in all material respects, with the IFRSS as adopted
+by the EU, and the additional requirements of German commercial law pursuant to Section 315e (1) HGB (Handels-
+gesetzbuch: German Commercial Code) and, in compliance with these requirements, give a true and fair view of
+the assets, liabilities, and financial position of the Group as at 30 September 2018, and of its financial performance
+for the financial year from 1 October 2017 to 30 September 2018, and
+The financial statement risk
+We have audited the Consolidated Financial Statements of Infineon Technologies AG, Neubiberg, and its subsidiaries
+(the Group), which comprise the Consolidated Statement of Financial Position as at 30 September 2018 and the
+Consolidated Statement of Operations, the Consolidated Statement of Comprehensive Income, the Consolidated
+Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the financial year from 1 October
+2017 to 30 September 2018, and notes to the Consolidated Financial Statements, including a summary of significant
+accounting policies. In addition, we have audited the Combined Management Report of Infineon Technologies AG and
+the Group (hereinafter "Group Management Report”) for the financial year from 1 October 2017 to 30 September 2018.
+In our opinion, on the basis of the knowledge obtained in the audit,
+Report on the Audit of the Consolidated Financial Statements
+and of the Group Management Report
+To Infineon Technologies AG, Neubiberg
+Independent Auditor's Report
+For the Consolidated Financial Statements and Group Management Report we have issued an unqualified
+auditor's report. The English language text below is a translation of the auditor's report. The original German text
+shall prevail in the event of any discrepancies between the English translation and the German original. We do not
+accept any liability for the use of, or reliance on, the English translation or for any errors of misunderstandings that
+may derive from the translation.
+172
+Independent Auditor's Report
+Further Information
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Jochen Hanebeck
+Dr. Helmut Gassel
+Dominik Asam
+Dr. Reinhard Ploss
+Infineon Technologies AG
+Opinions
+For the risks associated with the insolvency of Qimonda AG, provisions in the amount of EUR 185 million were
+recognised as at 30 September 2018 (as at 30 September 2017: EUR 33 million). There are also disclosures on
+contingent liabilities and further explanatory notes added to the notes to the financial statements.
+With economic effect from 1 May 2006, all material assets and liabilities as well as business activities relating to
+memory business were spun off from Infineon Technologies AG to Qimonda AG as a non-cash contribution. On
+23 January 2009, Qimonda AG filed an application to open insolvency proceedings with the Munich District Court,
+which commenced on 1 April 2009. The insolvency of Qimonda AG resulted in various legal disputes between the
+insolvency administrator and Infineon. The focus of this litigation is on claims asserted by the insolvency adminis-
+trator with respect to valuation of the non-cash contribution to Qimonda AG. Infineon valued the non-cash contri-
+bution using an appraisal from an independent expert. On 21 September 2018 the court-appointed independent
+expert presented his preliminary valuation of the capitalised earnings value of non-cash contributions (in a range)
+in the form of an interim report.
+The recognition of a provision, explanatory notes on contingent liabilities or further disclosures on risks from the
+insolvency of Qimonda AG are largely dependent upon the estimates and assumptions of the Management Board
+taking into account the interim report from the court-appointed independent expert. The same applies to the
+valuation of provisions made. Consequently, there are risks with respect to the presentation of the related risks in
+compliance with accounting standards as well as their valuation.
+> otherwise appears to be materially misstated.
+> is materially inconsistent with the Consolidated Financial Statements, with the Group Management Report or our
+knowledge obtained in the audit, or
+Management is responsible for the other information. The other information comprises the annual report, with the
+exception of the audited Consolidated Financial Statements and Group Management Report and our auditor's report.
+Our opinions on the Consolidated Financial Statements and on the Group Management Report do not cover the other
+information, and consequently we do not express an opinion or any other form of assurance conclusion thereon.
+In connection with our audit, our responsibility is to read the other information and, in so doing, to consider
+whether the other information
+Other Information
+The determination of the gain on disposal from the sale of the majority of the Radio Frequency Power Business and
+the determination of the underlying methods and assumptions made are appropriate.
+Our observations
+The purchase price paid was reconciled with the contract and evidence of payments that were presented to us.
+Furthermore, we reviewed all relevant agreements associated with this transaction in respect of their accounting
+effects. We verified the proper and full derecognition of the net assets transferred to the purchaser and reconciled
+this with the contract. We audited the methodology and valuation underlying the assumptions regarding the
+determination of proportional outgoing goodwill. Furthermore, we also evaluated whether the relevant supply
+agreements were concluded at arm's length. We verified the determination of deferred income for future supplies
+from Infineon to the purchaser.
+There is the risk for the Consolidated Financial Statements that the gain on disposal was not properly determined.
+Our audit approach
+Both the determination of the outgoing goodwill and the determination of the amount of deferred income require
+judgment.
+The net assets that were transferred had a book value of €53 million. This includes the proportional outgoing good-
+will of €28 million, which was allocated to the segment "Power Management & Multimarket". In connection with a
+long-term supply agreement concluded with the purchaser €22 million was treated as deferred income. These will
+be recognized as revenue over the contractual period.
+The gain on disposal corresponds to the difference between the purchase price and the carrying amount of the
+assets and liabilities that have been sold. Part of the net assets being disposed of also includes goodwill associated
+with the sale, which thus reduces the gain on the disposal. Furthermore, a long-term supply agreement that had
+been concluded was also taken into consideration as part of the sale. In connection to this, a portion of the obtained
+purchase price payment for future supplies from Infineon to the purchaser was treated as deferred income and thus
+reduced in addition the gain on disposal.
+In the 2018 financial year Infineon recognised a pre-tax profit resulting from the sale of the majority of the Radio
+Frequency Power Business on 6 March 2018 of €270 million under other operating income.
+The financial statement risk
+174
+Independent Auditor's Report
+Further Information
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Please refer to the notes to the Consolidated Financial Statements for more information on the accounting policies
+applied. Disclosures on the sale of the majority of the Radio Frequency Power Business can be found in the notes to
+the Consolidated Financial Statements in the section "Sales of company shares, discontinued operations and
+assets held for sale".
+of the Radio Frequency Power Business
+Accuracy of the determination of the gain on disposal from the sale of the majority
+The Management Board's assumptions are reasonable and balanced overall. The disclosures on contingent liabilities
+and other disclosures in the notes are complete and adequate.
+Our observations
+notes.
+Finally, we ascertained the completeness of disclosures on contingent liabilities as well as other disclosures in the
+Furthermore, we consulted the valuation expert commissioned by the Company regarding the opinions drawn up
+in connection with the Company's defence against the claims asserted by the insolvency administrator and
+assessed the method applied with the assistance of a valuation expert.
+We obtained an external legal opinion to audit the Management Board's risk assessment.
+We had regular meetings with the Management Board and legal department of the Company to gain an under-
+standing of current developments and reasons for the judgements in question. We obtained a written statement
+in this regard from the Company. We verified the assessment of the probability of utilisation undertaken by the
+Management Board by inspecting the documents underlying the Management Board's estimates, in particular the
+written statement from the court-appointed independent expert.
+In the course of our audit we assessed the process established by the Company to ensure the documentation,
+assessment of the outcome of proceedings and reporting of litigation in the financial statements.
+Our audit approach
+Neubiberg, 20 November 2018
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Finan-
+cial Statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group,
+and the Combined Management Report includes a fair review of the development and performance of the business
+and the position of the Group, together with a description of the principal opportunities and risks associated with
+the expected development of the Group.
+171
+Responsibility Statement by the
+Management Board
+77
+77
+2
+77
+Wilmington, Delaware, USA
+2
+77
+Wilmington, Delaware, USA
+2
+77
+2
+Suzhou, People's Republic of China
+77
+Fort Lauderdale, Florida, USA
+2
+77
+Seoul, Republic of Korea
+2
+77
+Padua, Italy
+77
+2
+Suzhou, People's Republic of China
+77
+Rotterdam, The Netherlands
+High Blantyre, Scotland
+Taipei, Taiwan
+Dresden, Germany
+Qimonda Solar GmbH
+2
+0.02
+77
+3 Share of not more than 5 percent.
+Further Information
+Responsibility Statement by the Management Board
+Further Information
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Jochen Hanebeck
+Dr. Helmut Gassel
+Dominik Asam
+Dr. Reinhard Ploss
+170
+Management Board
+Infineon Technologies AG
+Neubiberg, 20 November 2018
+Notes to the Consolidated Financial Statements
+Consolidated Financial Statements
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+18 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report and to disclose the annual financial statements.
+17 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report and notes and from the obligations to disclose the annual
+financial statements.
+15 Exemption pursuant to Section 264, paragraph 3, German Commercial Code from certain obligations to prepare annual financial statements and a management report pursuant
+to section 264 et seq. German Commercial Code and from the obligations to disclose the annual financial statements pursuant to section 325 German Commercial Code.
+16 Pursuant to Section 285, No. 11b, German Commercial Code investments in the affiliate are not to be disclosed.
+14 Exemption pursuant to Section 264, paragraph 3, German Commercial Code from the obligations to disclose the annual financial statements pursuant to Section 325
+German Commercial Code.
+13 Control and profit transfer agreement.
+12 The entity was founded in the 2018 fiscal year.
+11 Equity and net result as of 31 December 2017.
+10 Equity and net result as of 30 September 2017 (period from 2 June 2017 until 30 September 2017).
+9 Equity and net result as of 30 September 2017 (period from 1 January 2017 until 30 September 2017).
+8 Equity and net result as of 30 September 2017 (period from 24 November 2016 until 30 September 2017).
+7 Equity and net result as of 30 September 2017.
+6 Equity and net result as of 4 July 2017 (period from 1 October 2016 until 4 July 2017).
+5 Equity and net result as of 30 June 2017.
+4 Equity and net result as of 31 March 2017.
+2 On 23 January 2009 Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally opened on 1 April 2009. The
+equity and earnings of Qimonda AG and its subsidiaries are not disclosed due to the substantial and ongoing restriction of Infineon's rights as a result of Qimonda AG's insolvency.
+Additionally, Qimonda and its subsidiaries are not included in the Company's consolidated financial statements. In addition, the list of subsidiaries held by Qimonda AG was based
+on information from 30 September 2010, since Infineon had not received any further information from the insolvency administrator of Qimonda AG with respect to the insolvency
+or liquidation of Qimonda companies. Since all Qimonda-related investments were written down in full in previous years, this has no effect on Infineon's net assets, financial
+position and results of operations.
+Notes to the Consolidated Financial Statements
+100
+7
+Infineon Technologies Bipolar Verwaltungs GmbH
+0.41
+1.83
+0
+100
+7
+Coventry, Great Britain
+Hitex (UK) Limited
+n.a.
+n.a.
+n.a.
+n.a.
+Berlin, Germany
+Warstein, Germany
+3
+0.06
+100
+100
+Duisburg, Germany
+7
+0.19
+0.55
+100
+100
+Duisburg, Germany
+7
+0.00
+0.11
+0.00
+60
+60
+60
+Infineon Technologies South America Ltda
+Infineon Technologies Schweiz GmbH in liquidation
+Infineon Technologies RUS LLC
+Infineon Technologies Romania s.r.l.
+Infineon Technologies Mantel 29 GmbH
+Infineon Technologies Polska Sp. z o.o.
+Infineon Technologies Iberia, S.L.U.
+Infineon Technologies Holding GmbH
+Infineon Technologies Mantel 26 AG
+Infineon Technologies Mantel 27 GmbH
+Infineon Technologies Gamma GmbH
+0.00
+0.02
+100
+100
+Neubiberg, Germany
+Infineon Technologies Delta GmbH
+7
+0.00
+0.00
+0
+100
+7
+St. John, New Brunswick, Canada
+Infineon Technologies Canada, Inc.
+0.02
+0.04
+0
+100
+Infineon Technologies Campeon Verwaltungsgesellschaft mbH Neubiberg, Germany
+7
+0.00
+0.03
+0
+IR International Holdings China, Inc.
+72
+Linz, Austria
+100
+11
+Shanghai, People's Republic of China
+0.96
+10.48
+0
+100
+7
+Tijuana, Mexico
+9,18
+17.81
+76.51
+0
+0
+93
+7,13,14
+0.00
+133.40
+6
+100
+Neubiberg, Germany
+0.00
+1.85
+0
+100
+7
+Curepipe, Mauritius
+0.09
+Neubiberg, Germany
+2.69
+(0.48)
+Wilmington, Delaware, USA
+Vienna, Austria
+EPOS embedded core & power systems Verwaltungs GmbH
+Futurium gGmbH
+EPOS embedded core & power systems GmbH & Co. KG
+DICE Danube Integrated Circuit Engineering GmbH
+n.a.
+n.a.
+n.a.
+n.a.
+3
+0.00
+0.00
+0
+100
+Computertechnik TTX Auto Technologies AG
+CHIL Semiconductors Corporation
+Other companies (not consolidated):1
+n.a.
+n.a.
+25
+49
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd. Shanghai, People's Republic of China
+12
+1.79
+54.05
+60
+60
+Warstein, Germany
+Infineon Technologies Bipolar GmbH & Co. KG
+7
+Joint ventures:
+7
+IR International Holdings, Inc.
+KAI Kompetenzzentrum Automobil- und
+Industrieelektronik GmbH
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+24
+24
+Lippstadt, Germany
+11
+0.00
+0.09
+0
+100
+Villach, Austria
+11
+0.00
+0.00
+0
+1.94
+7
+0.00
+0.00
+0
+0.00
+0.10
+0
+11
+0.01
+0.15
+0
+6
+0.05
+0.15
+7
+0.15
+Hong Kong, People's Republic
+of China
+n.a.
+n.a.
+0
+n.a.
+3
+Kaohsiung, Taiwan
+Neubiberg, Germany
+n.a.
+n.a.
+0
+3
+0.00
+0.00
+0
+10
+0.01
+0.01
+0
+9
+0.00
+0.00
+0
+10
+oooo
+n.a.
+Dover, Delaware, USA
+100
+100
+Singapore, Singapore
+Wilmington, Delaware, USA
+100
+0
+11
+OOOOO
+100
+0.00
+0.04
+100
+100
+Neubiberg, Germany
+8,13,14
+0.00
+0.03
+100
+100
+Neubiberg, Germany
+0.04
+0.15
+0
+100
+Madrid, Spain
+7
+0.00
+0.02
+100
+100
+Neubiberg, Germany
+7
+OSPT IP Pool GmbH
+MicroLinks Technology Corp.
+Metawave Corporation
+Merus Audio, Inc. (in liquidation)
+Merus Audio Singapore Pty. Ltd. (in liquidation)
+Merus Audio (Hong Kong) Ltd. (in liquidation)
+Neubiberg, Germany
+100
+100
+0.03
+Wilmington, Delaware, USA
+100
+Wilmington, Delaware, USA
+100
+São Paulo, Brazil
+100
+Baden, Switzerland
+100
+Moscow, Russian Federation
+0.01
+0.04
+0
+100
+11
+Bucharest, Romania
+9
+(0.03)
+0.07
+0
+100
+Warsaw, Poland
+0.00
+0.03
+100
+100
+Neubiberg, Germany
+8,13,14
+7,13,14
+0.00
+100
+Consolidated Financial Statements
+3
+ΑΙ
+Published by:
+TM
+in
+f
+Imprint
+Visit us on the web: www.infineon.com
+1 preliminary
+fiscal year 2019 results
+Tuesday, 12 November 20191
+Editors:
+Publication of third quarter 2019 results
+Publication of second quarter 2019 results
+Tuesday, 7 May 2019¹
+ICM - International Congress Center Munich
+(Germany)
+(Start 10:00 a.m. CET)
+Annual General Meeting 2019
+Thursday, 21 February 2019
+Publication of first quarter 2019 results
+Tuesday, 5 February 2019¹
+Financial calendar
+Thursday, 1 August 2019¹
+178
+Copy deadline:
+Independent auditors:
+Visit us on the web:
+Contact for Investors and Analysts:
+Media Contact:
+INFINEON TECHNOLOGIES AG
+Headquarters:
+The IHS Markit reports, data and information referenced herein (the "IHS Markit Materials") are the copyrighted property
+of IHS Markit Ltd. and its subsidiaries (“IHS Markit”) and represent data, research, opinions or viewpoints published by
+IHS Markit, and are not representations of fact. The IHS Markit Materials speak as of the original publication date thereof and
+not as of the date of this document. The information and opinions expressed in the IHS Markit Materials are subject to change
+without notice and neither IHS Markit nor, as a consequence, Infineon have a duty or responsibility to update the IHS Markit
+Materials or this presentation. Moreover, while the IHS Markit Materials reproduced herein are from sources considered reliable,
+the accuracy and completeness thereof are not warranted, nor are the opinions and analyses which are based upon it. IHS Markit
+and the IHS Markit globe design are trademarks of IHS Markit. Other trademarks appearing in the IHS Markit Materials are the
+property of IHS Markit or their respective owners.
+Specific disclaimer for IHS Markit reports, data and information referenced in this document:
+Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligation to update
+forward-looking statements.
+These statements are based on assumptions and projections resting upon currently available information
+and present estimates. They are subject to a multitude of uncertainties and risks. Actual business development
+may therefore differ materially from what has been expected.
+This report contains forward-looking statements about the business, financial condition and earnings
+performance of the Infineon Group.
+Forward-looking statements
+Fiscal year:
+The following were brand names of Infineon Technologies AG in the 2018 fiscal year: Infineon, the Infineon logo,
+AURIX™, CIPOS™, CIPURSE™, CoolGaNTM, CoolMOSTM, CoolSiCTM, Hybrid PACK™, iMOTION™, OPTIGA™, OptiMOS™,
+REAL3™M, SECORATM, XENSIV™
+G. Peschke Druckerei GmbH, Parsdorf (Germany)
+HGB Hamburger Geschäftsberichte GmbH & Co. KG, Hamburg (Germany)
+Werner Bartsch, Hamburg (Germany): page 2, 6-7
+KPMG AG Wirtschaftsprüfungsgesellschaft, Munich (Germany)
+1 October to 30 September
+Investor Relations, Accounting, Consolidation & Reporting
+20 November 2018
+Infineon Technologies AG, Neubiberg (Germany)
+Printing:
+Photography:
+Designed by:
+Note
+Am Campeon 1-15, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+VSD
+IC
+HVDC High-voltage DC transmission
+Human machine interaction
+HMI
+Global positioning system
+GPS
+Galliumnitride
+GaN
+Full hybrid electric vehicles
+Integrated circuit
+FHEV
+FACTS
+Complementary metal-oxide-semiconductor
+Controller area network
+Application-specific integrated circuit
+Artificial intelligence
+CMOS
+CAN
+ASIC
+List of Abbreviations
+Flexible alternating current transmission system
+Variable speed drive
+IGBT
+IPM
+Trusted platform module
+TPM
+Time-of-flight
+ToF
+Siliconcarbide
+Sic
+Radio frequency
+RF
+Plug-in hybrid electric vehicles
+Insulated gate bipolar transistor
+PHEV
+NFC
+MOSFET Metal-oxide-semiconductor field-effect transistor
+Micro-electromechanical system
+MEMS
+Local interconnected network
+LIN
+Light-emitting diode
+LED
+Intelligent power module
+Near-field communication
+www.infineon.com
+Publication of fourth quarter and
+The German Public Auditor responsible for the engagement is Michael Pritzer.
+From the matters communicated with those charged with governance, we determine those matters that were of
+most significance in the audit of the Consolidated Financial Statements of the current period and are therefore
+the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public
+disclosure about the matter.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Further Information
+Independent Auditor's Report
+Further Information pursuant to Article 10 of the EU Audit Regulation
+We were elected as group auditor by the annual general meeting on 22 February 2018. We were engaged by the
+supervisory board on 2 May 2018. We have been the group auditor of the Infineon Technologies AG, Neubiberg,
+without interruption since the financial year 1999/2000.
+We declare that the opinions expressed in this auditor's report are consistent with the additional report to the
+audit committee pursuant to Article 11 of the EU Audit Regulation (long-form audit report).
+German Public Auditor Responsible for the Engagement
+Munich, 20 November 2018
+We also provide those charged with governance with a statement that we have complied with the relevant indepen-
+dence requirements, and communicate with them all relationships and other matters that may reasonably be
+thought to bear on our independence, and where applicable, the related safeguards.
+KPMG AG
+Braun
+Wirtschaftsprüfer
+(German Public Auditor)
+Pritzer
+Wirtschaftsprüfer
+(German Public Auditor)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+177
+Further Information
+List of Abbreviations
+Wirtschaftsprüfungsgesellschaft
+We communicate with those charged with governance regarding, among other matters, the planned scope and
+timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
+identify during our audit.
+Further Information
+> Evaluate the consistency of the Group Management Report with the Consolidated Financial Statements, its con-
+formity with German law, and the view of the Group's position it provides.
+> Perform audit procedures on the prospective information presented by management in the Group Management
+Report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions
+used by management as a basis for the prospective information, and evaluate the proper derivation of the pro-
+spective information from these assumptions. We do not express a separate opinion on the prospective information
+and on the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ
+materially from the prospective information.
+175
+Responsibilities of Management and the Supervisory Board for the Consolidated Financial Statements
+and the Group Management Report
+Management is responsible for the preparation of the Consolidated Financial Statements that comply, in all material
+respects, with IFRSS as adopted by the EU and the additional requirements of German commercial law pursuant to
+Section 315e (1) HGB and that the Consolidated Financial Statements, in compliance with these requirements, give
+a true and fair view of the assets, liabilities, financial position, and financial performance of the Group. In addition,
+management is responsible for such internal control as they have determined necessary to enable the preparation
+of Consolidated Financial Statements that are free from material misstatement, whether due to fraud or error.
+In preparing the Consolidated Financial Statements, management is responsible for assessing the Group's ability to
+continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going
+concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting
+unless there is an intention to liquidate the Group or to cease operations, or there is no realistic alternative but to
+do so.
+Furthermore, management is responsible for the preparation of the Group Management Report that, as a whole,
+provides an appropriate view of the Group's position and is, in all material respects, consistent with the
+Consolidated Financial Statements, complies with German legal requirements, and appropriately presents the
+opportunities and risks of future development. In addition, management is responsible for such arrangements
+and measures (systems) as they have considered necessary to enable the preparation of a Group Management
+Report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient
+appropriate evidence for the assertions in the Group Management Report.
+Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
+and of the Group Management Report
+Our objectives are to obtain reasonable assurance about whether the Consolidated Financial Statements as a
+whole are free from material misstatement, whether due to fraud or error, and whether the Group Management
+Report as a whole provides an appropriate view of the Group's position and, in all material respects, is consistent
+with the Consolidated Financial Statements and the knowledge obtained in the audit, complies with the German
+legal requirements and appropriately presents the opportunities and risks of future development, as well as to
+issue an auditor's report that includes our opinions on the Consolidated Financial Statements and on the Group
+Management Report.
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
+with Section 317 HGB and the EU Audit Regulation and in compliance with German Generally Accepted Standards
+for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material
+misstatement. Misstatements can arise from fraud or error and are considered material if, individually or in the
+aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
+these Consolidated Financial Statements and this Group Management Report.
+The supervisory board is responsible for overseeing the Group's financial reporting process for the preparation of
+the Consolidated Financial Statements and of the Group Management Report.
+> Identify and assess the risks of material misstatement of the Consolidated Financial Statements and of the
+Group Management Report, whether due to fraud or error, design and perform audit procedures responsive to
+those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions. The
+risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
+fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
+› Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
+activities within the Group to express opinions on the Consolidated Financial Statements and on the Group
+Management Report. We are responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our opinions.
+We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
+> Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on
+the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
+significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty
+exists, we are required to draw attention in the auditor's report to the related disclosures in the Consolidated
+Financial Statements and in the Group Management Report or, if such disclosures are inadequate, to modify our
+respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's
+report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern.
+> Evaluate the overall presentation, structure and content of the Consolidated Financial Statements, including the
+disclosures, and whether the Consolidated Financial Statements present the underlying transactions and events
+in a manner that the Consolidated Financial Statements give a true and fair view of the assets, liabilities, financial
+position and financial performance of the Group in compliance with IFRSS as adopted by the EU and the additional
+requirements of German commercial law pursuant to Section 315e (1) HGB.
+> Evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates
+made by management and related disclosures.
+> Obtain an understanding of internal control relevant to the audit of the Consolidated Financial Statements and
+of arrangements and measures (systems) relevant to the audit of the Group Management Report in order to
+design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
+on the effectiveness of these systems.
+Independent Auditor's Report
+Independent Auditor's Report
+Further Information
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+176
+7
+Helmut Gassel has been a member of the
+Management Board and Chief Marketing Officer
+of Infineon Technologies AG since 2016. He is
+responsible for Sales & Marketing, Regions,
+Strategy Development, Mergers & Acquisitions
+and Intellectual Property.
+Helmut Gassel was born on 13 March 1964
+in Dortmund. He holds a Diploma in physics
+from the Ruhr-University in Bochum. He
+received his PhD in electrical engineering
+from the University of Duisburg. He joined
+Infineon (Siemens AG until 1999) in 1995.
+Jochen Hanebeck
+Chief Operations Officer
+Jochen Hanebeck has been a member of
+the Management Board and Chief Operations
+Officer of Infineon Technologies AG since 2016.
+He is responsible for Operations, including
+Manufacturing, Logistics, Quality, Customs
+and Purchasing.
+Jochen Hanebeck was born on 2 February
+1968 in Dortmund. He received a degree
+in electrical engineering from RWTH Aachen
+University. He has been with Infineon since
+1994 (Siemens AG until 1999).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Dr. Helmut Gassel
+Chief Marketing Officer
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Report of the Supervisory Board to the Annual General Meeting
+8
+Report of the Supervisory Board
+to the Annual General Meeting
+Ladies and Gentlemen,
+Infineon remains firmly on course for profitable growth. Our success story
+is epitomized in particular by two public announcements made during the
+previous fiscal year. The first of these gave notice of Infineon's intention to
+build a new 300-millimeter facility for manufacturing power semiconductors
+at its site in Villach, Austria, involving a total investment of some €1.6 billion
+over a period of six years. The second announcement provided information on
+the Management Board's decision to modify Infineon's target operating model,
+which reflects targets set for revenue, segment result margin and investment
+ratio, and is now geared to achieving stronger long-term growth. Following
+extensive discussions, the Supervisory Board concurred with both of the deci-
+sions taken by the Management Board. Our support is based on the fact that
+global developments such as climate change, demographic structures and
+the trend towards digitalization will continue to drive Infineon's growth in the
+coming years. Electric vehicles, interconnected battery-powered devices,
+data centers, and the generation of electricity from renewable sources all
+require efficient, reliable power semiconductors. With its leading technologies
+and intelligent manufacturing strategies, Infineon has carved out an excellent
+position in its various core markets. Infineon will continue to exploit opportunities to achieve future sustainable
+growth. As in previous years, it is particularly important to us that you, as shareholders, participate in Infineon's
+profitable growth, not least through the payment of a commensurate dividend. Accordingly, the Management Board
+and the Supervisory Board recommend a further increase in the dividend, this year to €0.27 per share.
+Dr. Eckart Sünner
+Chairman of the Supervisory Board
+Main activities of the Supervisory Board
+During the 2018 fiscal year, the Supervisory Board again performed its duties with great diligence in accordance with
+the law, the Company's statutes and its own terms of reference. We both advised and supervised the Management
+Board in a constructive manner. Our input was mainly based on in-depth reports presented by the Management Board
+at Supervisory Board and committee meetings, dealing with current business developments, significant transac-
+tions, the quarterly financial reports and corporate planning. The Management Board discussed and coordinated
+corporate strategy as well as key operational issues in collaboration with us. The Supervisory Board was given
+ample opportunity to thoroughly examine any reports and resolutions proposed by the Management Board at all
+times. In this context, we undertook various measures to assure ourselves that the governance of Infineon's corpo-
+rate affairs was lawful, compliant and appropriate.
+The Management Board
+Management Board and Supervisory Board
+Management Board and Supervisory Board
+Management Board and Supervisory Board
+The Management Board
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Management Board and Supervisory Board
+Letter to shareholders
+Report of the Supervisory Board to the Annual General Meeting
+After not closing the acquisition of Wolfspeed in 2017, we reassessed our options for radio-frequency power compo-
+nents and sold the largest part of the business to Cree, Inc. for approximately €345 million, a logical consequence.
+Without the acquisition of Wolfspeed and under the present conditions it appeared impossible to achieve a strong
+position in this market for radio-frequency power components with reasonable effort. On the other hand Cree, with
+its excellent reputation, is the ideal owner for this part of our portfolio.
+Since 1 October 2018 our security technology business bears the new name Digital Security Solutions. In addition
+to continuing established solutions for banking cards and electronic identity documents, our embedded security
+solutions have for years addressed entirely new customers with a significantly larger number of applications. As of
+the new 2019 fiscal year, we renamed the segment Digital Security Solutions, a name that describes much better
+what we already do today.
+We want to further develop the company with large and small measures like the ones mentioned here and we
+want to continue our success story. There are, however, things outside our control. We benefit from a good macro-
+economic environment and the growth of the world economy; we also benefit from open markets and low trade
+barriers. Accordingly, we observe the present protectionist tendencies with great concern. We are monitoring the
+situation closely in order to adapt our strategies quickly if and when signs of economic slow-down occur. You can
+rest assured that we will lead Infineon into the future with a great sense of responsibility and attention to detail.
+We sincerely regret that Wolfgang Mayrhuber will no longer be actively accompanying us with his wisdom and sup-
+port. He left the Supervisory Board on his own wish after the Annual General Meeting in February 2018. As chairman
+of the Supervisory Board, he has had a decisive and constructive influence on the recent history of Infineon with
+his personality and his experience. I would like to take this opportunity to thank him once again personally - and in
+your name - and to wish him all the best. The Annual General Meeting elected Dr. Wolfgang Eder to the Supervisory
+Board, therewith selecting a highly respected corporate personality. The Chairman of the Supervisory Board is now
+Dr. Eckart Sünner, who knows Infineon very well after his many years as Chairman of the Investment, Finance and
+Audit Committee.
+We achieved a lot in the 2018 fiscal year. We turned our eyes to tomorrow, without neglecting the world of today.
+We seeded, we harvested. A company can only master this challenge when it can count on qualified and dedicated
+employees. I therefore thank you, our employees, most sincerely in the name of the entire Management Board for
+the passion and commitment with which you make Infineon successful. The future offers many opportunities -
+we grasp them together.
+Sincerely
+Reiterad of
+Dr. Reinhard Ploss
+Chief Executive Officer
+6
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The Management Board
+Dominik Asam
+Chief Financial Officer
+Dominik Asam has been the Chief Financial
+Officer of Infineon Technologies AG since
+2011, responsible for Accounting & Reporting,
+Financial Controlling, Financial Planning,
+Investor Relations, Tax, Treasury, Audit,
+Compliance, Export Control, Risk Manage-
+ment, Business Continuity and Information
+Technology.
+Dominik Asam was born on 6 March 1969
+in Munich. He studied at the Technical
+University of Munich and the École Centrale
+in Paris. He is a graduate mechanical
+engineer and an "Ingénieur des Arts et
+Manufactures". In addition, he completed an
+MBA at INSEAD in Fontainebleau, France.
+Dominik Asam joined Infineon in 2003.
+Dr. Reinhard Ploss
+Chief Executive Officer
+Reinhard Ploss has been a member of the
+Management Board of Infineon Technologies AG
+since 2007. He has been Chief Executive Officer
+since 1 October 2012, responsible for Segments,
+Group Strategy, Communications & Government
+Relations, Human Resources (Labor Director),
+Legal, Research and Development.
+Reinhard Ploss was born on 8 December 1955
+in Bamberg. He studied process engineering
+at the Technical University of Munich and in
+1986 received his doctorate. He began his
+career at Infineon (Siemens AG until 1999) in
+the same year.
+Management Board and Supervisory Board
+5
+The Supervisory Board was provided with written quarterly reports on Infineon's business performance, key financial
+data, risks and opportunities, major areas of litigation and other important topics. Between quarterly reports, the
+Management Board also kept us informed of current developments in the form of monthly reports.
+In our capacity as Chairmen of the Supervisory Board, at first Mr. Wolfgang Mayrhuber and - following his resignation
+from the Supervisory Board on 22 February 2018 – me thereafter maintained regular contact with the Company's
+Chief Executive Officer (CEO) and Chief Financial Officer (CFO). The same applies to Mr. Peter Bauer and myself in
+our capacity as Chairmen of the Strategy and Technology Committee respectively the Investment, Finance and
+Audit Committee. I was promptly informed by the CEO of all events of significance to Infineon, when necessary
+outside of the regular Supervisory Board meetings.
+Investment, Finance and Audit Committee
+At the two extraordinary meetings, the LTI topic was deliberated upon in greater depth and a diversity concept for
+the composition of the Management Board was discussed. The Executive Committee also approved new business
+travel rules for the Management Board.
+The Executive Committee held one ordinary and two extraordinary meetings during the fiscal year under report.
+The ordinary meeting focused on preparing the Supervisory Board's resolutions with respect to determining the
+level of the Management Board's variable compensation. The main aspects of this work were to determine the
+degree to which targets for the 2017 fiscal year were achieved and to set new targets for the 2018 fiscal year. Other
+matters arising were the adjustment of rules for LTI purposes when a member leaves the Management Board as
+well as decisions relating to mandate extensions.
+Executive Committee
+13
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The Mediation Committee did not need to convene.
+The Nomination Committee convened once during the fiscal year under report and made a recommendation to the
+Supervisory Board that Dr. Wolfgang Eder be proposed for election to the Supervisory Board at the Annual General
+Meeting. The decision was preceded by several meetings of the Nomination Committee during the 2017 fiscal year,
+at which succession matters on the shareholder side as a whole were also discussed.
+Nomination and Mediation Committee
+The committees are responsible for drawing up resolutions and preparing topics that need to be dealt with by the
+full Supervisory Board. Certain decision-making powers have been delegated to the committees, to the extent
+permitted under German law. The chairpersons of each committee routinely report on committee meetings at the
+next relevant full Supervisory Board meeting.
+Committee work
+At the Supervisory Board meeting held immediately after the Annual General Meeting, I was elected to succeed
+Mr. Mayrhuber as the new Chairman of the Supervisory Board. In this function, I also chair the Mediation Committee
+and the Executive Committee. Dr. Eder was elected to the Investment, Finance and Audit Committee, the Strategy
+and Technology Committee as well as the Nomination Committee. Dr. Eder chairs the Nomination Committee.
+For this reason, it was necessary to elect a new member of the Supervisory Board to fill the vacancy. Based on the
+Nomination Committee's recommendation and the Supervisory Board's proposal, the Annual General Meeting
+elected Dr. Wolfgang Eder to the Supervisory Board on 22 February 2018.
+With effect from the end of the Annual General Meeting held on 22 February 2018, Mr. Mayrhuber resigned his
+mandate as member and Chairman of the Supervisory Board. On behalf of the Supervisory Board, the Management
+Board and the entire workforce, I sincerely wish to thank Mr. Mayrhuber for seven extraordinarily commendable
+and successful years at the helm of our Supervisory Board. Due to his competence and vision, combined with his
+constructive and engaging manner, Mr. Mayrhuber made a significant contribution to Infineon's success. I am
+delighted that Mr. Mayrhuber will remain closely linked to Infineon as Honorary Chairman of the Supervisory Board
+going forward.
+Composition of the Supervisory Board
+Composition of the Supervisory Board; committee work
+@www.infineon.com/corporate-governance-report
+@www.infineon.com/declaration-on-corporate-governance
+The Investment, Finance and Audit Committee convened four times during the fiscal year under report.
+Further information on corporate governance at Infineon can be found in the joint Corporate Governance Report
+of the Management Board and the Supervisory Board and in the Corporate Governance Statement. Both of these
+documents as well as all terms of reference of the Company's boards and its committees are publicly available on
+the Infineon website.
+Its activities centered on monitoring the financial reporting process, reviewing the half-year and quarterly financial
+statements, conducting the preliminary audit of the Separate Financial Statements, Consolidated Financial State-
+ments and Combined Management Report for Infineon Technologies AG and Infineon, and discussing the audit
+reports with the auditor. In addition, the committee examined the financial and investment budget. Furthermore,
+the committee considered the effectiveness of the internal control, internal audit, risk management and compliance
+management systems. The committee's members also received reports from the Compliance Officer on a regular
+basis as well as timely updates on significant legal disputes.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Strategy and Technology Committee
+The Supervisory Board's Strategy and Technology Committee convened three times during the fiscal year under
+report. It was provided with in-depth reports on growth prospects, electro-mobility scenarios and Infineon's posi-
+tioning compared to that of its major competitors. Manufacturing strategies were also discussed and individual
+fields of business presented in greater detail. The committee also deliberated at great length on the topic of digitali-
+zation at Infineon.
+Separate and Consolidated Financial Statements
+KPMG audited the Separate Financial Statements of Infineon Technologies AG and the Consolidated Financial
+Statements as of 30 September 2018 as well as the Combined Management Report for Infineon Technologies AG
+and the Group, and issued unqualified audit opinions thereon.
+The Half-Year Financial Report was also subject to a review. No issues were identified that might indicate that the
+abridged Interim Group Financial Statements and Interim Group Management Report had not been prepared,
+in all material respects, in accordance with the applicable provisions.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Management Board and Supervisory Board
+Report of the Supervisory Board to the Annual General Meeting
+14
+KPMG has audited the Separate Financial Statements of Infineon Technologies AG and the Consolidated Financial
+Statements of the Group and reviewed the Interim Financial Statements of the Group since the 1999 fiscal year
+(short fiscal year from 1 April 1999 to 30 September 1999). Mr. Karl Braun signed the auditors' report for the first
+time for the 2012 fiscal year (1 October 2011 to 30 September 2012) and Mr. Michael Pritzer for the first time for
+the 2017 fiscal year (1 October 2016 to 30 September 2017).
+At the meeting of the Investment, Finance and Audit Committee on 9 November 2018, continued in a telephone
+conference on 19 November 2018, intensive discussions were held with the auditor regarding the Separate Financial
+Statements, the Consolidated Financial Statements, the Combined Management Report, the proposed profit
+appropriation, and the auditor's findings. The committee deliberated at length on the key audit matters and on the
+related audit procedures performed by the auditor. The Investment, Finance and Audit Committee resolved to
+propose to the Supervisory Board that the financial statements drawn up by the Management Board be approved
+and the proposed profit appropriation agreed to.
+The Separate Financial Statements, the Consolidated Financial Statements, the Combined Management Report,
+the Management Board's proposal for the appropriation of unappropriated profit (all prepared by the Management
+Board) and KPMG's long-form audit reports were all made available to the Supervisory Board at the meeting held on
+20 November 2018. At this meeting, the Chairman of the Investment, Finance and Audit Committee reported in depth
+on the corresponding recommendations of the Committee. In addition, all material issues relevant to the financial
+statements and the audit, including key audit matters, were discussed in detail with the auditor and examined by
+the Supervisory Board. The examination also covered the proposal to pay a dividend of €0.27 per entitled share.
+The Supervisory Board concluded that it has no objections to the financial statements and the audits performed
+by the auditor. In its opinion, the Combined Management Report complies with legal requirements. Likewise, the
+Supervisory Board concurs with the assertions regarding Infineon's future development made therein. The Super-
+visory Board therefore concurred with the results of the audit and approved the Separate Financial Statements of
+Infineon Technologies AG and the Consolidated Financial Statements of Infineon. The Separate Financial Statements
+were accordingly adopted. The Supervisory Board also approved the Management Board's proposal for the appro-
+priation of unappropriated profit.
+In conjunction with the presentation of the sustainability report, the Investment, Finance and Audit Committee
+and the full Supervisory Board also deliberated on the separate non-financial report of Infineon Technologies AG
+(Company and Group) from 30 September 2018, which was drawn up for the first time by the Management Board.
+KPMG performed a "limited assurance" review and issued an unqualified statement thereon. The documents were
+carefully examined by the Investment, Finance and Audit Committee at its meeting held on 9 November 2018, con-
+tinued in a telephone conference on 19 November 2018, and by the Supervisory Board at its meeting on 20 November
+2018. The Supervisory Board acknowledged and approved the separate non-financial report (Company and Group)
+drawn up by the Management Board.
+The Supervisory Board wishes to thank the Management Board and the entire staff of Infineon once again for their
+great commitment and outstanding achievements during the 2018 fiscal year.
+Neubiberg, November 2018
+On behalf of the Supervisory Board
+Eckert Scanner
+Dr. Eckart Sünner
+Chairman of the Supervisory Board
+Before the committee recommended to the full Supervisory Board that KPMG AG Wirtschaftsprüfungsgesellschaft
+Munich (KPMG) be proposed for election as Company and Group auditor at the Annual General Meeting 2018, a
+Declaration of Independence was obtained from KPMG. In addition, the committee carefully considered the non-
+audit services provided by KPMG. There were no indications of conflicts of interest, grounds for exclusion, or lack
+of independence on the part of the auditor. The recommendation was also based on the committee's confirmation
+that its recommendation was free from undue influence by third parties and that it had not been subject to any
+restriction regarding the selection of auditors within the meaning of section 16, paragraph 6 of the EU Statutory
+Audit Regulation. The committee also considered the fee arrangements and issued the contracts for the corres-
+ponding audit engagements. In addition, supplementary areas for audit emphasis were defined.
+Prior to members of the Management Board assuming sideline activities, particularly supervisory board mandates
+outside the Company, the DCGK requires that permission be given by the Supervisory Board. During the 2018 fiscal
+year, , the Supervisory Board and the Executive Committee gave their permission for Dr. Ploss and Dr. Gassel to assume
+mandates, given that no conflicts of interest were discernible.
+The members of the Management Board and the Supervisory Board are required to disclose any conflicts of interest
+to the Supervisory Board without delay. No conflicts of interest in connection with the members of the Management
+Board and the Supervisory Board have been disclosed in the 2018 fiscal year.
+Examination of potential conflicts of interest
+By contrast, the composition of the Management Board has not yet been subject to any specific diversity concept.
+The Supervisory Board therefore considered this matter at length and adopted a comprehensive diversity concept
+during the fiscal year under report. The Supervisory Board considers it important that any decision to appoint a
+person to a specific role on the Management Board must always be made in Infineon's best interests, taking all the
+circumstances of each individual case into account. The primary focus must be on the professional and personal
+suitability of the person concerned. Consideration must be given to ensuring that the members of the Management
+Board as a whole possess - to the fullest possible extent - the knowledge, skills and experience required to run a
+technology company. Within the framework of these requirements, the Supervisory Board also considers diversity
+aspects, particularly age, gender, education and professional background as well as internationality. In addition to
+ensuring the greatest possible personal suitability of each individual member, it is equally important that different
+perspectives on managing the corporation's business are encouraged by having a Management Board with a
+diverse composition. The various aspects of diversity are therefore an integral component of the decision-making
+process, but not an exclusive criterion. The target quota for women on the Management Board remains unchanged
+at 20 per cent.
+A concept of this nature has been in place for Infineon's Supervisory Board for several years. The competency profile
+and catalog of objectives adopted by the Supervisory Board for its own composition (last updated in August 2017)
+deals not only with the general criteria for making appointments but also with diversity aspects.
+The European Corporate Social Responsibility (CSR) Directive and the German CSR Directive Implementation Act
+provide for large-sized listed companies such as Infineon to report on the diversity concepts developed in connection
+with the composition of their management and supervisory boards.
+Diversity concept for the composition of the Management Board
+In view of the successful work of the Management Board, the Supervisory Board decided to extend Mr. Asam's
+mandate, which would otherwise run until 31 December 2018, by a further five years to 31 December 2023. Further-
+more, the mandates of Dr. Gassel and Mr. Hanebeck, which run until 30 June 2019, were also extended by a further
+five years to 30 June 2024. By extending these mandates, the Supervisory Board acknowledges the excellent contri-
+butions these members of the Management Board have made to Infineon's sustainable and profitable growth and
+thanks them for their outstanding contributions.
+Extension of Management Board mandates
+Personnel matters relating to the Management Board
+10
+10
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Furthermore, the Supervisory Board discussed potential opportunities for mergers and acquisitions. These discus-
+sions also included a disinvestment decision, namely the sale of the RF Power product line to the US semiconductor
+company Cree, Inc. for a consideration of approximately €345 million. As technology leaders, collaboration between
+Infineon and Cree goes back a long way. The Supervisory Board agrees with the Management Board that it makes
+good commercial sense to sell this product line to Cree and that it also offers good professional prospects for the
+employees concerned. After thoroughly deliberating on these points, the Supervisory Board gave the transaction
+its approval.
+Sustainable growth is an integral part of Infineon's corporate strategy. The corresponding growth prospects were
+also discussed at the strategy meeting and, additionally, the subject of further Supervisory Board meetings, at which
+specific decisions were put forward by the Management Board for approval. As mentioned earlier, the Supervisory
+Board deliberated in detail on the planned large-scale investment in Villach (Austria) to build a new power semi-
+conductor facility and on the modification of Infineon's target operating model to bring it in line with the expected
+rate of growth and, in both cases, approved the proposed decisions.
+As in the previous year, a separate meeting of the full Supervisory Board was again held for the sole purpose of
+dealing with strategic topics. In the course of the strategy meeting, the Management Board provided information
+on global mega-trends as well as specific market and product trends, explained the external influences on the
+semiconductor industry, such as the risks arising from global trade conflicts, described Infineon's positioning in
+terms of international competition, and explained the corporate strategy it had developed, taking the framework
+parameters referred to above into account. Against this background, Infineon's strategic direction, including
+measures to expand expertise in core markets, broaden the product portfolio and optimize manufacturing strategy,
+was extensively discussed. Furthermore, the meeting dealt with the question of how far Infineon should go down
+the route of developing software for use in the hardware components it produces.
+Business strategy; growth prospects
+At its meeting held on 21 November 2017 and at the recommendation of the Investment, Finance and Audit
+Committee, the Supervisory Board approved the financial and investment budget (including the total investment
+budget) for the 2018 fiscal year, as presented by the Management Board. At its meeting held on 16 May 2018, again
+at the recommendation of the Investment, Finance and Audit Committee, the Supervisory Board approved an
+increase in the previously approved total investment budget.
+Financial and investment planning
+In the 2018 fiscal year, the full Supervisory Board met seven times (five ordinary and two extraordinary meetings)
+and passed one written resolution. Attendance measured in relation to these various proceedings averaged nearly
+92 percent. Dr. Diess, Ms. Engelfried and Dr. Puffer were each unable to attend two meetings and Mr. Holdenried,
+Ms. Picaud and Prof. Köcher were each unable to attend one meeting. Attendance at Supervisory Board committee
+meetings was a good 96 percent. Dr. Eder was excused from attending one meeting of the Strategy and Technology
+Committee and Mr. Holdenried from one meeting of the Executive Committee. Accordingly, all members of the
+Supervisory Board attended more than half of the meetings of the Supervisory Board and of the committees to
+which they belonged during the 2018 fiscal year.
+Details of the diversity concepts (for the composition of both the Management Board and the Supervisory Board),
+their objectives, the way they are implemented, and the results achieved during the year under report are provided
+in the Corporate Governance Statement, which is available on the Infineon website.
+@www.infineon.com/declaration-on-corporate-governance
+Management Board compensation
+In accordance with section 4.2.2 of the German Corporate Governance Code (DCGK), the Supervisory Board regularly
+engages an external, independent compensation expert to review Infineon's Management Board compensation
+system and to conclude on its compliance with applicable legislation as well as its overall appropriateness. The
+most recent system review was conducted in 2016. During the fiscal year under report, the Supervisory Board again
+engaged an external independent compensation expert to review the system and the target annual incomes of the
+members of the Management Board. The expert concluded that the compensation system complies with legal
+requirements and with the recommendations contained in the DCGK. In particular, the expert concluded that the
+compensation of Infineon's Management Board is commensurate with market conditions and that the variable
+compensation component is oriented towards the sustainable growth of the company. In addition, the target annual
+incomes of the members of the Management Board were found to be appropriate in all material respects. The expert
+pointed out, however, that there was scope for raising the level of compensation, particularly for the Chairman of
+the Management Board. The results of the compensation expert's review were discussed in detail at the Executive
+Committee meeting held on 25 October 2018 and by the full Supervisory Board on 20 November 2018. The Super-
+visory Board concurs with the opinion of the compensation expert.
+Already during the 2017 fiscal year, the Supervisory Board resolved to change the allocation date for granting perfor-
+mance shares to members of the Management Board for the purposes of the long-term incentive (LTI) from 1 October
+to 1 March of a fiscal year. The amendment was applied for the first time for the allocation in the 2018 fiscal year.
+12
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The Supervisory Board examines the efficiency of its activities on an annual basis. In the previous fiscal year,
+the examination was performed with the assistance of an external, independent consultant. The examination for
+the 2018 fiscal year was based on a structured questionnaire. The examination provided a positive picture of the
+work of the Supervisory Board and its collaboration with the Management Board. No noteworthy shortcomings
+were identified.
+Efficiency examination for Supervisory Board activities
+In the current Declaration of Compliance dated November 2018, the Management Board and the Supervisory Board
+declared that, with the exception of a deviation from section 5.3.2, paragraph 3, sentence 3, DCGK, as described
+above, Infineon complies with all other recommendations contained in the DCGK and will continue to do so in future.
+The original versions of the Declarations of Compliance are available on Infineon's website.
+@www.infineon.com/cms/en/about-infineon/investor/corporate-governance/declaration-of-compliance/
+The Declaration of Compliance issued in November 2017 was updated in February 2018 in view of the fact that
+I was elected Chairman of the Supervisory Board at the meeting of the Supervisory Board on 22 February 2018 in
+parallel to my function as Chairman of the Investment, Finance and Audit Committee. The Management Board and
+Supervisory Board declared a deviation from section 5.3.2, paragraph 3, sentence 3, DCGK, according to which the
+Chairman of the Supervisory Board should not additionally chair the Audit Committee. The reason given for the
+deviation was that it is in the Company's interest that I continue to contribute my financial expertise and wealth of
+experience in Audit committee matters in my capacity as Chairman of the Infineon Audit Committee.
+Declaration of Compliance 2018
+9
+Corporate Governance
+Litigation
+Details of Management Board compensation - in particular the amounts paid to individual members in the 2018
+fiscal year - are available in the comprehensive Compensation Report in the Annual Report.
+After extensive discussions held by the full Supervisory Board and prepared by the Executive Committee, a new,
+simplified rule was adopted for the treatment of current LTI tranches in the event of a member leaving the Manage-
+ment Board. The rule came into force on 1 October 2018. Details on this are outlined in the Compensation Report.
+For the second time, a tranche of performance shares fell due for settlement at the end of the 2018 fiscal year.
+As the stipulated performance hurdle was surpassed, the tranche allocated in 2014 is required to be settled in full
+following the expiry of the four-year holding period. As in the previous fiscal year, the Supervisory Board resolved
+to settle the entitlement of members of the Management Board resulting from this tranche in cash rather than in
+shares. Equality of treatment was therefore achieved with Infineon employees, for whom the Management Board
+also decided upon cash settlement of the current tranche.
+P see page 95 ff.
+P see page 95 ff.
+11
+Report of the Supervisory Board to the Annual General Meeting
+Management Board and Supervisory Board
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The Supervisory Board was regularly provided with detailed information regarding major legal disputes during the
+2018 fiscal year, which were then thoroughly discussed with the Management Board. These included in particular
+the Company's appeal, brought before European courts, against the antitrust fine imposed by the EU Commission in
+2014 and the dispute with the insolvency administrator of Qimonda AG pertaining to alleged residual liability claims.
+The auditor attended the meetings of the Investment, Finance and Audit Committee and reported in detail on its
+audit activities.
+The committee also dealt in detail with the CSR Directive and the CSR Directive Implementation Act as well as the
+implications for non-financial reporting. It prepared the resolution of the full Supervisory Board to engage KPMG to
+perform the non-mandatory, limited assurance review of the separate report on non-financial information.
+43% Automotive: €3,284 million
+8.9 8.6 8.3 8.2 8.1
+11.9
+Sony Semiconductor
+Renesas
+Media Tek
+Infineon
+7.9
+Western Digital
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Competitive Landscaping Tool - 2018 (Q2 Update)," August 2018.
+Foundries and subcontractors are not included in this market research.
+AMD
+ON Semiconductor
+Analog Devices
+5% market share
+10% market share
+STMicroelectronics
+6.9
+6.5
+6.1
+In July 2018, the acquisition of NXP by Qualcomm, announced in October 2016, was cancelled. The planned
+acquisition of Qualcomm by Broadcom was also unsuccessful; it had been announced in November 2017 and was
+cancelled in March 2018.
+The 20 largest vendors represented 74.4 percent (previous year: 70.5 percent) of global revenue. The remaining
+25.6 percent (previous year: 29.5 percent) are spread over more than 1,500 other semiconductor companies.
+The semiconductor industry is thus highly fragmented. The consolidation process has reached different levels,
+depending on the product category.
+Samsung, SK Hynix and Micron are the leaders in memory. Because of the boom in memory, the three companies
+also had the highest revenue growth rates of 53.6 percent, 81.2 percent and 79.7 percent, respectively. Intel is
+the leader in processors. Infineon is neither active in memory nor in processors, which means Infineon does not
+directly compete with these four companies in these product categories. Among the 20 largest semiconductor
+vendors, the following companies compete with Infineon: Samsung (only in security ICs; this revenue accounts for
+less than 1 percent of Samsung revenue), Texas Instruments, Toshiba, NXP, STMicroelectronics, Renesas and
+ON Semiconductor.
+Toshiba
+Texas Instruments
+Qualcomm
+Broadcom
+Micron
+SK Hynix
+Intel
+Samsung
+Apple
+5.1
+5.2
+5.8
+nVidia
+NXP
+....17.8 16.9 14.5
+22.8
+2015
+2014
+2013
+2012
+2011
+2010
+10
+12
+12
+0% Other Operating Segments,
+Corporate and Eliminations:
+€10 million
+Content
+Combined
+Management Report
+Our Group
+16 Finances and strategy
+16 2018 fiscal year
+20 Business focus
+2016
+Looking at the regional distribution of semiconductor sales, China has been the dominant factor for many years.
+In the 2017 calendar year, 47 percent (previous year: 45 percent) of all semiconductors were absorbed by that
+market. In China, contract manufacturers - so called EMS (Electronic Manufacturing Services) - play a special role.
+These companies assemble electronic products predominantly for Western customers. The business model plays
+a significant role for durable consumer goods on the one hand and information and telecommunications sector-
+related products such as servers, PCs, notebooks and cellular phones on the other hand. A large portion of the
+semiconductors mounted in China are subsequently re-exported as part of a finished product.
+2017
+1 Proposal to the Annual General Meeting to be held on 21 February 2019.
+26.6
+61.4
+62.0
+Revenue in billion US$
+Top 20 semiconductor manufacturers for 2017 calendar year
+2018 fiscal year
+Finances and strategy
+Combined Management Report | Our Group
+19
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+In the 2017 calendar year, worldwide semiconductor revenues reached US$429.674 billion, an increase of 21.9 percent
+compared to US$352.597 billion in the previous year (Source: IHS Markit). Only the four largest competitors had a
+market share of more than 5 percent. Samsung had revenue of US$62.031 billion representing 14.4 percent market
+share, and Intel had revenue of US$61.406 billion representing 14.3 percent market share. Far behind them were
+the two memory manufacturers SK Hynix (revenue of US$26.638 billion; market share of 6.2 percent) and Micron
+(revenue of US$22.843 billion; market share of 5.3 percent). With revenue amounting to US$8.148 billion and a market
+share of 1.9 percent, Infineon was ranked number 13.
+Evaluation of the 2017 calendar year (in US dollars)
+Worldwide semiconductor revenues totaled €392.020 billion in the 2018 fiscal year (Source: World Semiconductor
+Trade Statistics (WSTS)). This represents an increase of 10.8 percent compared to the previous year's value of
+€353.966 billion. As in the previous year, this increase is attributable to the increase in prices in the memory product
+category. This product category, which essentially includes DRAM and flash memory products, increased by
+34 percent to €133 billion accounting for approximately 34 percent of the entire semiconductor market. The semi-
+conductor market excluding memory products increased by 1.7 percent. During the same period Infineon increased
+its revenues by 7.6 percent.
+Evaluation of the 2018 fiscal year (in Euro)
+Developments in the semiconductor industry
+2018
+20 Group strategy
+31 Growth drivers
+Global semiconductor sales 2017 by region (total market size US$430 billion)
+China 47%
+21
+agriculture, for example, can achieve higher yields with more environmentally friendly methods. At the same
+time the digital transformation opens up new possibilities for consumers. The prerequisite for this is the protection
+of data exchange from abuse in order to ensure the acceptance of the ever-increasing degree of networking in
+our society.
+Business focus Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Strategic guideline:
+Semiconductors are essential in tapping renewable energy sources. They reduce the power consumed by electric
+devices; thanks to the developments described above, the number of these devices is constantly increasing.
+Furthermore, semiconductors enable systems that make transportation cleaner, safer and smarter, and they are the
+technological backbone of modern communication and data technologies. Answers to the challenges of our time
+would be unthinkable without the use of semiconductors. And this becomes even more true as the real and digital
+worlds converge. Digitalization and networks increase the productivity of industrial manufacturing processes.
+This development, also referred to as the Industry 4.0, reaches far beyond automation. Thanks to digitalization,
+We want to continue to grow and to create value for our customers and our shareholders as well as for our employ-
+ees and for society. Therefore, our strategy follows global megatrends which are fundamentally shaping the world
+today: demographic and social change, climate change and scarce resources, urbanization and digital trans-
+formation. Our focus on energy efficiency, mobility, security, the Internet of Things (IoT) and Big Data opens up
+extraordinary growth opportunities for us that we want to leverage with innovative approaches. Our products
+and solutions contribute directly to mastering the major challenges of our time, which also makes us particularly
+attractive as an employer.
+TCL
+Business focus
+Group strategy
+As a result of the major success of Chinese manufacturers in recent years, especially in the area of smartphones,
+the number of Chinese semiconductor purchasers increased from two in 2013 to seven in 2017: Lenovo, Huawei,
+Oppo, Xiaomi, Vivo, ZTE and TCL. With Bosch and Continental, there are two European companies represented in
+the top 20. The above-average growth rate of the automotive semiconductor market is evident in the development
+of Bosch. After a purchasing volume of US$2.7 billion and being ranked 19th in 2013, in 2017, Bosch moved up to
+position 14 with a purchasing volume of US$4.9 billion.
+Hitachi
+ZTE
+According to the United Nations, a total of 8.6 billion people will be living on earth by 2030 - 1 billion more than
+today. Thanks to better healthcare and advances in medicine, people are living ever longer lives. At the same time,
+fossil fuels are becoming scarcer and current concepts – for example, for traffic, industry and communications
+infrastructure - are reaching their limits. Microelectronics plays a key role in providing a constantly growing popula-
+tion with energy and a higher standard of living while minimizing the impact on the environment. The key is making
+"more from less”.
+Strengthening the core business and unlocking new growth markets
+Our Group strategy is focusing on the megatrends mentioned above and thus ensures Infineon's long-term struc-
+tural growth. Our course of action in the individual markets depends on our competitive position, which we analyze
+in terms of technologies, products and application understanding. This results in three possible categories to start
+with: Core business, adjacent business and new applications.
+The core business includes all those areas in which we have a comprehensive understanding of applications or
+master the base technologies, and in which we can therefore offer a differentiating product portfolio. Here, we want
+to at least grow with the market and, in doing so, to maintain or strengthen our leading positions (grow in scale).
+One example: Power semiconductors are instrumental in the generation, transmission and use of electric power.
+We understand the systems that are used for electric power conversion and we supply particularly compact and
+energy-efficient MOSFETs and IGBTs for this purpose. As the clear world market leader in this area, our broad tech-
+nology and product portfolio lets us actively shape the transition of certain applications to new semiconductor
+materials such as silicon carbide (SiC) and gallium nitride (GaN), offering our customers the ideal solutions for their
+needs. Our high-volume manufacturing offers economies of scale and makes it possible for us to provide manufac-
+turing capacities and to grow with our customers.
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The greatest growth potential is to be found in markets that are adjacent to our core business, which we have
+however as of yet not addressed at all or only partly. For example, here we can adapt existing technologies and
+products for additional applications with reasonable effort and can thus increase sales potentials. And in the appli-
+cation fields we have already addressed we can use our system understanding to grow the scope of our business
+with a broader portfolio of products and solutions to generate higher revenue. Thus, the core mentioned at the
+beginning is not to be regarded as a static portfolio of activities; much more the adjacent areas will in the mid-term
+become part of our core business. The core is growing and the boundaries are shifting, because when we make
+progress in particular markets in terms of technology, products and application understanding, the classification
+of these markets changes accordingly. To return to the example of power semiconductors: We are proud to cite
+"Power" as one of our original core competencies. But we are nevertheless continuously developing here, too. We
+are expanding our portfolio in order to offer our customers an increasing degree of intelligence in addition to
+"Power". This means for some time now we have been complementing our range of efficient power transistors with
+additional solutions in order to integrate them in a digital control loop. The products required for intelligent control
+of these switches tend to be more complex and higher-end because they integrate more functionalities. In the
+context of constantly more complex systems and shorter development times, many customers appreciate solutions
+in which we combine "Power" and intelligence.
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Power Semiconductor Annual Market Share Report," September 2018.
+4.7%
+4.9%
+5.1%
+9.0%
+18.6%
+Toshiba
+Mitsubishi
+STMicroelectronics
+ON Semiconductor
+Infineon
+World discrete power semiconductor and modules market share 2017
+Toshiba
+Vivo
+Continental
+Bosch
+Samsung
+Apple
+20
+27.1
+40.9
+Top 20 semiconductor consumer in 2017 calendar year
+Purchasing volume in billion US$
+The 20 largest semiconductor buyers account for 44.3 percent of the entire purchasing volume, or US$191 billion.
+As with the semiconductor manufacturers, a small number of companies clearly leads the ranking list. Here, Apple
+and Samsung are by far the largest purchasers of semiconductors.
+2018 fiscal year | Business focus | Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Application Market Forecast Tool - Q3 2018," September 2018.
+(excluding China, excluding Japan)
+12% Europe, Middle East, Africa
+22% Asia-Pacific
+0
+Lenovo
+Americas 11%
+Japan 8%
+Huawei
+17.5
+Western Digital
+5.1 4.9 4.7 4.1 4.0 3.7 3.4 3.3
+5.9 5.9 5.5
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "OEM Semiconductor Spend Tracker - H1 2018," July 2018.
+Xiaomi
+Oppo
+Sony
+Panasonic
+Cisco
+HP
+G
+7.2 7.1
+8.1
+10.2 9.0
+13.0
+Dell
+39 Human Resources strategy
+Finances and strategy
+40 Automotive
+P see page 66
+P see page 62 ff.
+Psee page 29 f.
+and page 73 f.
+17
+(excluding Japan, Greater China)
+15% Asia-Pacific
+15% Germany
+Middle East, Africa
+17% Europe (excluding Germany),
+1 Greater China includes China and Taiwan.
+Greater China¹ 34%
+Japan 7%
+Americas 12%
+Infineon revenue by region in the 2018 fiscal year
+China has been Infineon's most important sales market for several years now and, with €1,921 million, accounted
+for 25 percent (2017: 25 percent) of Infineon's revenue during the fiscal year under report. This is followed as
+largest single market by Germany with revenue of €1,171 million and a 15 percent share (2017: 15 percent), the
+USA with €719 million and a 9 percent share (2017: 10 percent) and Japan with €534 million and a 7 percent share
+(2017: 7 percent).
+2018 fiscal year
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+This is why innovation and system thinking ideally complement one another. We think about what the key factors
+are and how we can combine several innovative, sometimes at first sight minimal steps to form a larger whole that
+will in turn provide an additional and substantial benefit for the customer. Thus, today our claim to innovation
+covers all areas of our company: logistics, operations, technology, products, system solutions and partnership with
+the customer. Depending on particular market demands, we focus on different aspects. Several units within the
+Company act like start-ups, while others use a comprehensive approach to leverage new areas of differentiation.
+Of course, in doing so we implement the entire spectrum of possibilities and expertise that Infineon has to offer. This
+is all driven by a well-developed culture of collaboration, which is one of our permanent differentiating features.
+Innovation is one of the most fundamental success factors in the semiconductor industry and is for us an important
+basis for differentiating Infineon from competition. Infineon has shown time and again that our technological and
+product innovation lets us grow faster than the market and increase profitability. But challenges are growing as
+well: Competition is intensifying and competitive coverage of the application areas in our markets calls for a wider
+and wider technology portfolio. And development efforts are increasing disproportionally as technologies gradually
+approach physical barriers. This fact underlines the significance of economies of scale and the connection between
+technology leadership and size. Previous concepts for success are too shortsighted under these conditions and
+have to be either expanded or rethought.
+Innovation drives differentiation
+Many years ago we intentionally blazed new trails in the field of sensor technologies, anticipating the drastically
+increasing importance of environmental data in our target markets. Today we have a comprehensive portfolio of
+sensors for a wide variety of systems in the car, for mobile devices, consumer electronics and the Internet of Things.
+The example of the silicon microphone shows that we act flexibly and adapt to market demands: Today we offer
+our leading MEMS technology (Micro-Electro-Mechanical Systems) in our own package and we are working together
+with our partner XMOS to optimize hardware and software for reliable voice control.
+Based on our technology leadership in transistors, we also want to strengthen our position in solutions for power
+control and to expand our product portfolio. As the number one in MOSFETs and IGBTs, we see interesting opportu-
+nities for growing more strongly than before in this area. This approach is exemplary of the strategy outlined above
+for moving from a strong core business to penetrate adjacent markets.
+Furthermore, we make use of our technology leadership to systematically expand our abilities, strengthen our
+core business and grow in scope - for example, whenever the requirements of our markets change or when we see
+long-term growth potential in an adjacent business segment. Thus, as the market leader, we began researching
+new materials for power semiconductors at an early stage. SiC and GaN are particularly well-suited for use in the
+field of power electronics. These components are typically more expensive than silicon-based products, but thanks
+to new system architectures they also open the door to many new types of customer benefit, such as a smaller form
+factor, higher efficiency and lower system costs. The realization of these benefits implies higher research and devel-
+opment efforts on the part of our customers. Therefore, we support the introduction of these new technologies in
+two ways: On the one hand, we work together closely with our highly innovative customers, while on the other
+hand we provide less technology-oriented customers with solutions that are easy to implement. In the context of
+the increasing importance of SiC to certain power semiconductor applications, we concluded a long-term strategic
+wafer supply agreement with Cree, Inc. (USA) in February 2018. This ensures our supply of the most advanced
+150-millimeter diameter SiC wafers and prepares us for further structural growth in power semiconductors for
+automotive and industrial electronics. Now, we have established all the prerequisites for future success in the
+growing SiC market: access to high-quality wafers, leading technologies at the product level (Trench MOSFET) and
+module expertise.
+24
+Business focus Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+P see page 58
+23
+Psee page 58
+P see page 69
+Improvement in key performance indicators
+88 Infineon Technologies AG
+91 Corporate Governance
+91 Information pursuant to section 289a, paragraph 1, and
+section 315a, paragraph 1, of the German Commercial Code (HGB)
+94 Corporate Governance Report
+94 Declaration concerning the management of the company
+95 Compensation report
+12
+18
+20
+22
+25
+271
+in € cents
+Dividend per share for the 2010 to 2018 fiscal years
+Based on the strong performance in the 2018 fiscal year, a proposal will be made to the Annual General Meeting
+(to be held on 21 February 2019) to pay a dividend of €0.27 per share, an increase of 2 cents or 8 percent.
+Our dividend policy is aimed firstly at enabling our shareholders to participate appropriately in the success of the
+business and secondly to at least keep the dividend at a constant level in times of flat or declining earnings.
+Business focus Group strategy
+Planned dividend increase of 8 percent
+The net cash position (see the chapter "Internal management system" for definition) increased by 64 percent to
+stand at €1,011 million at the end of the 2018 fiscal year (30 September 2017: €618 million).
+The gross cash position (see the chapter "Internal management system" for definition) totaled €2,543 million as
+of 30 September 2018, an increase of 4 percent compared to the previous year's figure of €2,452 million. The free
+cash flow from continuing operations of €618 million described above exceeded the combined total of the dividend
+payment for the 2017 fiscal year (€283 million) and long-term debt repayments (€321 million including the repay-
+ment of a €300 million bond relating to the financing of the acquisition of International Rectifier).
+18
+2018 fiscal year
+Finances and strategy
+Combined Management Report | Our Group
+P see page 59
+P see page 59
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Free cash flow from continuing operations (see the chapter "Internal management system" for definition)
+totaled €618 million in the 2018 fiscal year, an increase of €24 million or 4 percent over the previous fiscal year's
+figure of €594 million. Investments in property, plant and equipment and intangible assets of €1,254 million (2017:
+€1,022 million) were lower than net cash provided by operating activities of €1,571 million (2017: €1,728 million).
+The Return on Capital Employed (ROCE) in the 2018 fiscal year amounted to 20.5 percent and therefore improved
+compared to previous year's 14.9 percent. The increase was mainly attributable to the year-on-year increase in
+operating income from continuing operations from €847 million to €1,263 million (for a definition of, and details
+relating to, the calculation of RoCE, see the chapters "Internal management system" and "Review of financial
+condition").
+Net income rose to €1,075 million due to the positive Segment Result contribution and the gain of €270 million from
+the sale of the major part of Infineon's RF power components business to Cree, Inc. on the one hand and higher
+expenses from discontinued operations and for income taxes on the other (see the section "Review of results of
+operations"). Compared to the previous year's figure of €790 million, net income improved by 36 percent.
+Earnings per share for the 2018 fiscal year amounted to €0.95 (basic and diluted), 36 percent up on €0.70 (basic and
+diluted) reported in the previous fiscal year. Adjusted earnings per share (diluted) improved from €0.85 to €0.98
+year-on-year (see the chapter "Review of results of operations" for details of the calculation of adjusted earnings
+per share).
+Infineon has not only grown strongly, it has also become more profitable. The Segment Result for the 2018 fiscal year
+totaled €1,353 million, 12 percent up on the €1,208 million reported one year earlier. The Segment Result margin of
+17.8 percent (2017: 17.1 percent) therefore exceeded the 17 percent forecast at the beginning of the fiscal year for
+the mid-point of the revenue forecast and was in line with our business targets, as revised during the course of the
+2018 fiscal year (see the chapters "Group strategy" and "Outlook").
+87 Overall statement of the Management Board with respect
+to Infineon's financial condition as of the date of this report
+Software
+Hardware
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+15
+Combined Management Report | Our Group
+Finances and strategy
+2018 fiscal year
+Finances and strategy
+16
+2018 fiscal year
+› Revenue and earnings significantly improved for the fifth year in succession
+> Strong performance enables further dividend increase
+P see page 73
+P see page 47
+Revenue up by 8 percent; Segment Result Margin of 17.8 percent achieved
+In the 2018 fiscal year, Infineon generated revenue of €7,599 million, an increase of 8 percent over the previous
+year's figure of €7,063 million, and within the 9 percent plus or minus 2 percentage points forecast at the beginning
+of the fiscal year (see the chapter "Outlook”). With this performance, Infineon recorded significant revenue growth
+for the fifth fiscal year in succession. Revenue growth was driven above all by strong demand for semiconductors
+used in automotive, industrial, power supply, RF and sensor technology applications. Our segment with the highest
+volume, Automotive, contributed 55 percent or more than half of total revenue growth of €536 million. In contrast,
+the Digital Security Solutions segment recorded a 6 percent drop in revenue, mainly due to lower revenue from
+SIM cards for mobile communications (see the chapter "The Segments"). The underlying pace at which our business
+is growing was partly masked by the unfavorable development of the US dollar exchange rate, which averaged
+1.19 for the year. Had it remained at the previous year's level of 1.11, revenue growth in the 2018 fiscal year would
+have been 12 percent.
+Revenue growth of the individual segments in the 2018 fiscal year compared to the previous year
+Automotive
+Industrial Power Control
+Power Management & Multimarket
+Digital Security Solutions
+Revenue by segment in the 2018 fiscal year
+10%
+10%
+8%
+(6%)
+Digital Security Solutions: €664 million 9%
+Power Management & Multimarket:
+€2,318 million 31%
+Industrial Power Control: €1,323 million 17%
+0
+22
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+22
+We supplement our organic growth with targeted acquisitions. These acquisitions have to meet three criteria: They
+must be strategically viable as described above, financially reasonable and culturally fitting. An acquisition thus
+has to strengthen Infineon's market position according to our strategic orientation and has to be a viable addition
+to our range of expertise. The business acquired has to increase our profit, contribute to our margin target of an
+average of at least 17 percent throughout the cycle and must earn a return at least equal to the capital costs. And
+finally the corporate culture of a potential acquisition candidate must be a good fit with Infineon's culture, ideally
+contributing valuable elements to it.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Customers choose Infineon because we stand for competitive cutting edge technology in terms of the highest
+possible quality and reliability. Our engineers anticipate many challenges even before our customers are affected
+by them. We meet the highest quality requirements of the automotive industry, achieve the highest efficiency in
+power switching and deliver solutions for the most challenging security projects in the world. We are also capable
+of applying this specific expertise throughout the entire corporate network. One example: Since 31 March 2018, all
+new passenger car and light utility vehicle models in the EU have been required to feature an automatic emergency
+call function (eCall). This applies to approximately 20 million new cars annually. In case of an accident, eCall can
+autonomously send an emergency call via the cellular network to central emergency responders, providing for
+example location data, the exact time of the accident, the number of occupants in the vehicle and the type of fuel
+the vehicle uses. Normally, a SIM card would be needed in order to identify the vehicle in the cellular network. Now
+a permanently installed eSIM chip from Infineon does the job. In addition to the eCall, the eSIM also supports many
+additional functions that will make driving safer and more comfortable in the future – for example updating soft-
+ware over-the-air (SOTA), vehicle-to-infrastructure communication and on-board multimedia. In developing eSIMs,
+Infineon consolidates expertise from the areas security, telecommunications and automotive. Infineon already
+developed eSIM chips ten years ago and is today the leader in their automotive implementation.
+Technology leadership means added value for customers
+In recent years we have intensified our activities in the area of software, both in strategic partnerships and with our
+own development activities. The progress we have made is becoming increasingly visible, benefitting our customers.
+For example, the second generation of our successful automotive microcontroller family AURIXTM can be used for
+radar signal pre-processing in combination with our radar chips. We have implemented this feature in hardware,
+but we were only able to do so because we understood the underlying algorithms.
+Technology know-how has always been the foundation of our business model, whether in the form of discrete
+components, integrated solutions or mixed-signal components. Our broad portfolio ranges from single compo-
+nents all the way to solutions with hardware-related software. This enables us to provide targeted support to our
+customers while choosing from a variety of approaches. Some customers want to differentiate themselves from
+their competitors by means of their own software and just purchase the necessary hardware from us. We go one
+step further with automotive microcontrollers and security controllers, which we supply with special firmware
+that supports the basic functionality of the hardware and cannot be modified. More extensive functions can then
+be implemented using additional program code. For example, the second generation of our digital motor control
+platform iMOTION™ was developed for use in major home appliances and comes with a development kit that meets
+the priorities of our customers in this market: lower system costs, compact design, reduced development effort,
+shorter development times and high reliability. iMOTION™ already comes with all algorithms required to control
+the electric motor. Only a small number of application-specific parameters need to be defined in order to complete
+programming. Since we think in terms of systems, we can support all of these different approaches. It is not always
+the most sophisticated solution that provides the biggest value added to the customer: Standard components may
+also be just the right fit. Nevertheless, system understanding creates a competitive advantage because it gives us
+the ability to develop better products in cooperation with our customers.
+Discrete components
+Competencies evolve over time
+Integration of analog
+and digital functionality
+Firmware
+System know-how
+Algorithms
+Customer system
+Base technology
+Single function
+Building block
+Partial system
+functionality
+Full system
+functionality
+System know-how is bridging the gap between core technology and target application
+Business focus Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+In order for this to succeed, we have to understand the environment in which our customers' products are used,
+how they are embedded in larger systems, what other devices they interact with, what requirements they have to
+fulfill and what tasks they are intended to perform. And we also have to take into consideration which active and
+passive components they use, which algorithms they use and what capabilities our customers contribute to the
+value creation process. Equipped with this knowledge, we can leverage our competencies even better: We can
+translate what is technologically possible into a commercially viable product, thus providing the greatest possible
+benefit to our customers. Sensor systems not only capture information about the surrounding environment, but
+also interpret and process the data they gather in order to initiate a particular action; digital control loops in power
+supplies enable higher energy efficiency at both high and low load levels; and security controllers are capable of
+distinguishing authorized access from unauthorized access. In addition to the hardware components involved,
+this also requires varying degrees of software support. Thus, to a certain degree, system understanding also means:
+software understanding.
+Our strategic approach "Product to System" goes well beyond thinking in terms of technologies and products.
+We want to understand what markets demand and how they are changing. Only then will we be able to understand
+how we can change the markets ourselves. Thus, we consider more than just the direct sales opportunities for our
+products: We also look at our customers' success factors and the development of end-markets. By doing so, we
+recognize at an early stage when the foundation of our business is changing. This is a prerequisite to act in time,
+guaranteeing sustainable differentiation in growth applications and increasing profit.
+The strategic approach "Product to System" defines our actions
+years, we have built and systematically expanded the technical expertise needed to do so. And since good ideas
+do not become innovations until they have been successful in the market, we have also developed the appropriate
+concepts for turning our strategy into entrepreneurial success and value creation. At the center of all this is our
+strategic approach "Product to System", which we apply along our entire value chain and is oriented towards the
+success of our customers. This approach is supported by additional elements: a strong innovation culture, con-
+tinuous pursuit of technology leadership, well-developed quality consciousness, differentiated manufacturing and
+tailor-made go-to-market strategies fitting the various individual markets. This puts us in a position to offer our
+customers leading products as well as the highest possible quality and supply reliability. In doing so, we achieve
+the objective of growing profitably and faster than the market.
+We have established a stable foundation in recent years in order to be successful in our target markets. We have
+focused on core competencies that are in higher demand today than ever in the face of global megatrends. Over
+the
+Factors for successful implementation
+Strategic fields of action:
+Technological progress also enables completely new application areas in which broad commercialization is still
+pending. Sometimes the impulse for new applications comes from innovations in semiconductor technology
+(for example Time-of-Flight technology for 3D sensing technologies), sometimes groundbreaking concepts on the
+customer side require the development of suitable semiconductor solutions (such as the combination of various
+sensor technologies for easier Human Machine Interaction). We actively address these new business areas in order
+to secure a good starting position in highly promising future markets early on.
+40 The segments
+76 Risk and opportunity report
+73 Report on expected developments, together with
+associated material risks and opportunities
+This report combines the Group Management
+Report of Infineon ("Infineon" or "Group") -
+comprising Infineon Technologies AG (hereafter
+also referred to as "the Company") and its
+consolidated subsidiaries - and the Management
+Report of Infineon Technologies AG.
+60 The Infineon share
+73 Outlook
+56 Internal management system
+54 Operations
+50 Research and development
+45 Power Management & Multimarket
+47 Digital Security Solutions
+59 Sustainability at Infineon
+The Combined Management Report contains
+forward-looking statements about the business,
+financial condition and earnings performance
+of Infineon. These statements are based on
+assumptions and projections based on currently
+available information and present estimates. They
+are subject to a multitude of uncertainties and
+risks. Actual business development may therefore
+differ materially from what has been expected.
+Beyond disclosure requirements stipulated by law,
+Infineon does not undertake any obligation to
+update forward-looking statements.
+Effective 1 October 2018, the "Chip Card & Security"
+segment changed its name to "Digital Security
+Solutions". The change in name has no impact on
+Infineon's organizational structure, strategy or
+scope of business.
+Our 2018 fiscal year
+62 Group performance
+62 Review of results of operations
+67 Review of financial condition
+42 Industrial Power Control
+70 Review of liquidity
+The manufacturers of home appliances are also increasingly relying on variable speed drive motors using inverters.
+These motors are significantly more energy-efficient, emit less noise and have a longer service life than motors
+without speed-control. And: The value of the semiconductors they contain is increasing more than ten-fold. Examples
+are the motors in washing machines and dishwashers, the compressors in refrigerators and the fans in air condi-
+tioning systems. Only about one third of all major home appliances sold in 2017 had a speed-controlled motor. Market
+researchers predict that this ratio will double by 2022: By that time, approximately 65 percent of the machines sold
+will feature a variable speed drive.
+Battery-powered devices
+One important type of electric motor is referred to as brushless direct current (BLDC) motor. In BLDC motors the
+commutation is electronic, depending on rotor position, rotor rotation speed and torque. This calls for the appro-
+priate power semiconductors and, depending on the configuration, also for components for diagnostic and security
+functions. Because of their high level of energy efficiency and their low power-to-weight ratio, BLDC motors are
+particularly well-suited for use in battery-powered systems. Examples here are cordless home appliances such as
+robot vacuum cleaners, cordless drills and electric lawn mowers. In addition to the motors, the storage batteries are
+also becoming lighter and lighter, enabling longer operating times. This makes battery-powered devices increas-
+ingly interesting for professional craftsmen as well.
+The same applies to drones. The popularity of these remote-controlled aircraft has long gone beyond the ranks
+of amateur pilots: Drones are now being used more and more frequently for commercial purposes. Drones require
+a large number of semiconductors to control the direct current motors, from microcontrollers to sensors, drivers
+and MOSFET power transistors, all the way to radio-frequency components for navigation, collision avoidance and
+communication.
+Global population growth and increasing industrialization are driving the demand for all types of transportation.
+From forms of mass transportation such as aircraft and trains to privately used vehicles like cars and pedelecs
+(pedal electric cycles). Cars are considered status symbols and are the key to individual mobility. An annual average
+growth rate of 2 percent is forecast for worldwide automobile production for the years 2017 to 2022.
+Mobility
+Infineon benefits from this trend in two ways: From the increased number of vehicles and, even more so, from the
+corresponding growth in the number of electronic systems per vehicle. Today, approximately 90 percent of innova-
+tions in vehicles are based on electronics. In the opinion of market experts, this share should stay at this level in the
+years to come.
+Major home appliances
+In addition, all the examples cited above also require power semiconductor components for their charging stations.
+33
+Automation
+Finances and strategy
+Combined Management Report | Our Group
+of systems, such as cranes, conveyor belts and robots.
+Electric drives are at the heart of a large number
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Electric drives are at the heart of a large number of systems, for example cranes, conveyor belts and robots. They are
+used wherever something has to be moved or transported. Electric motors account for approximately 28 percent of
+worldwide electric power consumption. The savings potential is correspondingly large when efficiency is increased.
+One possibility for reducing the power consumption of an electric motor is the use of an electronic control unit for
+speed control, adapting the power supplied to the actual performance required. The market penetration of variable
+speed drive motor control units will increase. Their implementation requires a large number of the power semicon-
+ductors. Their quantity and value depend on the motor's performance class. The next level of automation will be
+achieved with Industry 4.0. This will in turn trigger a new investment cycle, including collaborative robots; see below
+in the section "Internet of Things & Big Data".
+Electro-mobility
+(Smart) Motor control and drives
+Intelligent Point-of-Load power management is becoming increasingly important in DC-DC conversion. Servers,
+PCs and communication devices are supplied with higher voltages which are then precisely stepped down to the
+required low voltages directly at the processor. Another growth driver is the digitalization of the control loop. The
+requirements for dynamics, efficiency and standby consumption continue to increase. Analog control loops are
+increasingly reaching their limits and are being replaced by digital systems.
+DC-DC conversion
+AC-DC conversion
+Business focus | Growth drivers
+The automotive industry is continuously working to reduce emissions. A European Commission regulation requires
+the reduction of average fleet emissions to 95 grams of CO2 per kilometer by 2021. More realistic exhaust gas testing
+procedures such as the WLTP cycle (Worldwide Harmonized Light-Duty Vehicles Test Procedure), in effect since 2017,
+mean further, implicit tightening of CO2 abatement rules. This will in turn increase demand for semiconductors. The
+optimization of the combustion engine alone will not be sufficient to fulfill legal requirements and satisfy customer
+demands for sustainable mobility. Instead, systems consuming energy in the vehicle will increasingly have to be made
+more efficient, and hydraulic or mechanical solutions will have to be replaced by more efficient electromechanical
+and thus semiconductor-based systems.
+3.
+Combined Management Report | Our Group
+Vehicles with electric drivetrain have a significantly
+larger semiconductor content than vehicles with
+combustion engines.
+There are also what are referred to as mild-hybrid vehicles, based on 48 volt technology. These vehicles can
+recuperate a certain amount of braking energy, while at the same time emissions can be reduced by more efficient
+systems. Mechanical functions are being increasingly replaced by electric ones. The 48 volt onboard system handles
+the power supply for higher-performance systems such as the electric turbocharger, electric power-steering and
+electronic stability control and enables better braking energy recuperation. Market researchers calculate approxi-
+mately US$75 in additional power semiconductors will be necessary to power these systems as well as for the
+coupling of the two on-board power networks.
+Other features (power and
+non-power semiconductors)
+Source: Strategy Analytics, "Automotive Semiconductor Demand Forecast 2016-2025," May 2018; Infineon
+Semiconductor value
+in FHEV/PHEV
+combustion engine vehicles
+Semiconductor value in internal
+314
+Drivetrain non-power semiconductors
+109
+Drivetrain power semiconductors
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+317
+44
+375
+17
+Increase by a
+factor of ~19
+740
+in US$
+Transition from internal combustion engine vehicles to hybrid electric vehicles increases demand for power semicon-
+ductors in the drivetrain by a factor of ~19
+In order to reduce the fleet average to the mandated target CO2 value, many car manufacturers add hybrid or
+electric vehicles to their product portfolio. These vehicles have a significantly higher semiconductor content than
+conventional cars. Infineon offers a wide range of corresponding power semiconductor components. While the
+current average semiconductor content of a car with a conventional combustion engine is US$375, the amount in
+full or plug-in hybrid vehicles is US$740, and for pure electric vehicles as much as US$750. Here, power semicon-
+ductors make up approximately three quarters of the additional semiconductor content.
+Power supplies
+34
+Business focus | Growth drivers
+Finances and strategy
+314
+32
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Finances and strategy
+100
+110
+120
+19.14
+21.27
+23.40
+25.52
+130
+30 September 2017 = 100
+27.65
+Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia
+Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2018 fiscal year (daily closing prices)
+Infineon share price in €
+Our strategy has paid off: Infineon continues its path of sustainable, profitable growth. Our operating profitability
+and our sound capital structure give us the financial flexibility to invest in future growth. This continuous value
+creation has been manifested in past years in constantly increasing earnings per share as well as dividends. We also
+pursue a dividend policy aimed at letting shareholders adequately participate in Infineon's economic development
+and at paying out at least a constant dividend even in periods of slower growth.
+Sustainable value creation for our shareholders
+The rating agency S&P Global Ratings (S&P) continues to evaluate Infineon's creditworthiness as "BBB" (outlook
+"stable"). At present this gives Infineon the best S&P rating of any European semiconductor manufacturer.
+The upper limit on our gross financial debt is twice Earnings Before Interest, Tax, Depreciation and Amortization
+(EBITDA). Our moderate debt level and the well-balanced maturity profile reaching until 2028 allow us to reliably
+service our debt, independent of the respective capital markets environment.
+Our gross cash target is €1 billion plus 10 to 20 percent of revenue. The fixed basic amount of €1 billion provides a
+solid liquidity reserve for contingent liabilities and retirement fund liabilities, which are independent of revenue.
+Furthermore, 10 to 20 percent of revenue means we always have access to enough cash to be able to finance the
+operating business and development activities for the future during all phases of the business cycle.
+It is important to our customers that Infineon remains a dependable partner that will also be able to supply reliably
+for many years to come, thus enabling their growth. Our debt providers rely on our ability to securely service our debt
+over a long period of time. As an employer, we also want to give this kind of long-term reliability to our employees,
+even well beyond their active working lives in the form of retirement benefits. As a result we give a high priority to
+solid creditworthiness. This is reflected by our conservative capital structure targets.
+Capital structure targets demonstrate our reliability
+The investment-to-sales ratio in the previous fiscal year was 16.5 percent.
+In coming years, we also plan to invest a low triple-digit million amount in order to take advantage of possible addi-
+tional business opportunities and follow structural changes. These investments are not included in the 15 percent
+ratio described above. In addition, we have already announced investments in front-end cleanrooms and large office
+buildings, including the 300-millimeter cleanroom and the research and development building at the Villach site
+(Austria). In the 2019 fiscal year, around €200 million of this will accrue. If these measures are implemented, the
+investment rate will temporarily be significantly higher than the rate provided in the target operating model.
+30
+30
+Business focus Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Our planning is oriented towards providing the necessary manufacturing capacities for the expected growth.
+The accelerated growth is in particular driven by strong demand for power semiconductors, a field in which
+Infineon's in-house manufacturing provides competitive differentiation. As a result, we have adjusted the targeted
+investment-to-sales ratio. Annual investments should be an average of 15 percent (previously 13 percent) of
+revenue. This continues to include approximately 2 percentage points for the capitalization of development
+expenses in accordance with IFRS; the bulk of the remainder is for the most part accounted for by investments
+in manufacturing facilities and IT equipment. The targets for growth and investment are closely intertwined.
+A revenue growth rate increase/reduction from the 9 percent level would entail a slightly less than proportionate
+change in the investment-to-sales ratio.
+80
+Business focus | Growth drivers
+17.02
+01|2018
+Combined Management Report | Our Group
+P see page 37 ff.
+The use of renewable energies entails specific requirements along the entire energy supply chain. Generating
+electricity by wind and sun no longer takes place centrally in a small number of sites, but rather decentrally at many
+different locations. In addition, fluctuations in power generation cannot always be aligned with current power
+demand patterns, making temporary storage necessary. This also makes it possible to reduce costs associated with
+conventional power plants which have in the past been maintained as replacements or reserve capacity to supple-
+ment sustainable energy sources. For the period between 2017 and 2025, market researchers forecast average
+annual growth in storage capacity of 22 percent, to approximately 9,200 megawatts.
+Energy storage
+Infineon enjoys a very broad international presence and has been partnering for years with the world's leading
+manufacturers of solar inverters. Among other things, we benefit from the growth of Chinese inverter manufacturers,
+both with regard to the domestic expansion of solar power in China and to the export to other regions. Further-
+more, we work together closely with leading European manufacturers who are also very successful in the USA.
+Efficient conversion and low system costs contribute to reducing electricity generation costs in solar power plants
+and to achieving grid parity with conventionally generated electricity. This enables continued expansion of solar
+power, even without subsidies.
+Solar power
+Here, two trends in particular drive the demand for semiconductors: First of all older, lower performing wind power
+turbines are being replaced by modern, high-performance ones, a process referred to as "repowering". Secondly,
+ever stronger generators are being used in new installations. While in the past primarily turbines generating up to
+1.5 megawatts were installed, today an increasing majority of turbine generators producing 2 to 3 megawatts is
+being used. Future projects will include turbines with an output of 5 megawatts.
+Wind
+The use of renewable sources is the key to a sustainable energy supply. Infineon benefits from the fact that wind
+power turbines and solar power plants require a multiple of power semiconductors per gigawatt of power gener-
+ated as compared to conventional power plants. In contrast to coal, natural gas or nuclear power plants there is no
+synchronized turbine generating constant 50 hertz alternating current. This means that the generated electricity
+cannot be fed directly into the grid and power-electronic conversion systems are required. Infineon supplies all the
+major manufacturers of wind power turbines and solar inverters.
+Renewable energies
+Energy Efficiency
+31
+There are numerous application areas with strong growth dynamics in each of the four main trends addressed
+by Infineon - Energy Efficiency, Mobility, Security and the Internet of Things together with Big Data. We achieve
+sustainable growth by addressing these applications with our solutions.
+Growth drivers
+Business focus | Growth drivers
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Dow Jones US Semiconductor Index
+■SOX
+DAX
+Infineon
+09|2018
+08 |2018
+07|2018
+03/2018 04|2018 05|2018 06|2018
+02|2018
+10|2017 11|2017 12|2017
+Growth in the area of power supplies depends on the performance and even more on the unit growth of devices.
+We see the highest unit growth in the case of servers; because of the high performance level, a correspondingly
+high number of power semiconductors is required for power supplies. Demand for computing power and storage
+capacity is currently driven by social networks and increasingly by machine learning. The Internet of Things and
+Industry 4.0 will accelerate this trend even more in the future. In addition, we see growth opportunities in business
+with compact chargers and solutions for wireless charging of smartphones, tablets and lightweight notebooks
+(or "portables").
+90
+Target 2: 17 percent Segment Result Margin through the cycle gradually improving (previously 17 percent)
+Growth is only one prerequisite for sustainable success. Another criterion is profitability. When we work profitably on
+a sustainable basis, it means that we steer our developments to the point where they provide the highest benefit
+to our customers who are then willing to pay for them. In addition, we want to continue our development activities
+at unabated speed even in difficult market phases. We want to achieve an average Segment Result Margin of
+17 percent of sales through the cycle and plan to gradually improve it. Here, we are relying among other things on
+economies of scale and on cost advantages from the increasing share of 300-millimeter in our total manufacturing
+volume as well as on a disproportionately lower increase in operational costs. Research and development expenses
+will increase in line with revenue. Selling expenses will increase by 90 percent of revenue growth and general and
+administrative expenses by 60 percent thereof. Also, technology leadership and the strategic approach "Product to
+System" enable us to maintain a higher degree of differentiation. In the 2018 fiscal year we achieved a Segment
+Result Margin of 17.8 percent.
+Psee page 31 ff.
+27
+Business focus Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Digitalization and the Internet of Things will create new business models. From the thermostat all the way to the car,
+today more and more devices are connected with the internet and as a result offer new functionality. The manufac-
+turers usually concentrate on making these devices “smart” with the best possible sensing and data processing
+capability. They are neither able nor interested in dealing with the underlying semiconductor technologies. We
+want to make our products and solutions more easily available to these vendors, for example, through optimized
+product bundles and support in the form of reference designs. Here in particular, our system understanding makes
+the difference. At the same time, we are engaging in networks consisting of distributors, development service
+providers and manufacturing service providers. These networks enable smaller companies and start-ups to jointly
+develop and manufacture electronics for new functions and new devices and thus make the Internet of Things
+a reality. This broad sales strategy lets us maximize revenues with existing technologies while at the same time
+increasing the yield of our investments in research and development.
+Going forward we will address more customers with more flexibility and innovative go-to-market strategies. Histori-
+cally, Infineon has grown through close collaboration with key customers, with whom we have successfully defined
+products that enabled us to penetrate the broad market thereafter. We reach many of our smaller customers through
+distributors. We will increase our leverage of the enormous potential of the distribution channel with standardized
+but configurable standard products for the mass market. Here we have made good progress by emphasizing short-
+term delivery reliability, continuous and tailored adjustment of the product portfolio and close partnership with
+distributors.
+Flexible go-to-market strategies accommodate rapidly changing markets
+In addition to innovation, delivery reliability, quality and cost reduction are essential factors in the orientation of
+our manufacturing landscape. Innovation activities with regard to manufacturing processes are centered in Europe.
+Our Asian sites focus on efficiency and will support further growth. We have increased capacity in our second pro-
+duction module in Kulim (Malaysia) as planned. This helps us ensure our delivery reliability, particularly important
+to our customers in the automotive industry. The strong expansion in the area of electro-mobility results in increased
+demand for power semiconductors. During the previous fiscal year we founded a joint venture with SAIC Motor
+Corporation Limited for the backend manufacturing of power semiconductor modules. The joint venture SIAPM
+(SAIC Infineon Automotive Power Modules (Shanghai) Co, Ltd.) provides power semiconductor solutions for electric
+vehicles in China, the world's largest and fastest-growing market for electro-mobility. Volume production has
+ramped at the Infineon Wuxi site since August 2018. As the largest automobile manufacturer in China, SAIC Motor is
+a very good partner when it comes to further strengthening and expanding Infineon's position. Consolidating our
+strengths lets us significantly increase our manufacturing capacities and supply the growing demands of the overall
+Chinese market. Together we want to expand and strengthen our businesses, with products that are tailored to the
+needs of the Chinese electric vehicle industry.
+Construction of a new 300-millimeter factory at
+the Villach site is underway. It will offer an annual
+potential revenue of approximately €1.8 billion.
+46
+26
+Business focus Group strategy
+Combined Management Report | Our Group
+Finances and strategy
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+In the frontend our 300-millimeter thin-wafer manufacturing for power semiconductors is a sustainable competitive
+advantage. We are successively equipping the available cleanroom space in Dresden (Germany) with additional
+tools, and benefit from the resulting higher productivity and lower capital intensity compared to manufacturing on
+200-millimeter wafers. Furthermore, on 18 May 2018 we announced the construction of a second, fully automated
+300-millimeter factory at the Villach (Austria) site. As the market leader in power semiconductors, we thereby lay
+the foundation for long-term, profitable growth. We will invest approximately €1.6 billion over a six-year period.
+Construction work began in November 2018, manufacturing is planned to start at the beginning of 2021. We expect
+the 300-millimeter manufacturing cleanroom space in Dresden to be fully used by then. The estimated additional
+potential revenue from the new factory is approximately €1.8 billion annually. In Villach we will rely on the auto-
+mation and digitalization concepts from Dresden and will develop them further in parallel in order to increase
+productivity and ensure system and process synergies at both sites. By significantly expanding our manufacturing
+capacities we are also sending a clear signal to our customers: Infineon is the ideal partner for future growth.
+Target 3: Investments amounting to 15 percent of revenue (previously 13 percent)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+In addition to CO2, hazardous substances such as nitrogen oxides (or NOx) are catching more and more attention.
+They are produced when fossil fuels are burned and result in a higher level of particulate matter pollution, in addition
+to a number of other factors. In metropolitan areas, diesel engines account for the largest share of NOx emissions,
+which is why some cities have already banned older diesel vehicles. The prospect of not being able to drive at
+all in such diesel-free urban zones or only with restrictions will influence the customer's purchase decision and
+represents a medium to long-term competitive disadvantage for the diesel compared to other propulsion types.
+Combined Management Report | Our Group
+Finances and strategy
+Business focus Group strategy
+Strategic deployment of the segments
+25
+Here, the digital transformation plays a crucial role, a development from which we benefit in two ways as a globally
+active semiconductor manufacturer: As both a user and provider of digital solutions. We are achieving excellent
+results in our well over one hundred digitalization projects. Thus for example we are connecting our sites and orga-
+nizing our global supply chain to form a virtual factory. In sales and marketing we are using new methods for ana-
+lyzing Big Data to improve our cross-selling and as a result we can provide more targeted solutions for our customers'
+needs. With initiatives like this we are building our digital expertise and are becoming even more competitive. We
+are following an exploratory approach in order to best utilize the potential of the digital transformation. This way
+we gather experience based on specific application cases and work towards solutions in an iterative process.
+Digitalization thus on the one hand provides the opportunity to optimize the value added. On the other hand we
+can see that digitalization creates a significant revenue potential in our markets, for example in the area of auto-
+mated driving and in voice and gesture control for devices and machines. Manufacturers are competing to address
+emerging markets as early as possible and with the most innovative solutions. This generates demand for the
+corresponding semiconductor solutions; we serve this demand with our portfolio of sensors, microcontrollers,
+power semiconductors and security controllers as well as with specific software, differentiating ourselves from
+our competitors.
+At our new development center in Dresden (Germany) we will continue to make our portfolio more attractive in the
+future. Here, the primary focus is on the development of solutions for automotive and power electronics as well
+as for Artificial Intelligence (AI). In light of the increasing degree of connectivity found in traffic systems, algorithms,
+Al and the Internet of Things already play a central role today. In the long-term we will use this know-how to offer
+Al solutions in other target markets as well. Dresden combines development, design and manufacturing. Here we
+are leveraging synergies and are in a position to develop new products and bring them to market faster.
+Digitalization is also changing the way we work together. In this context we have established successful new concepts
+that do not follow a hierarchical principle, but rather are based on the initiative of the individual employee. In the
+long-term, this calls for new processes and methods that can accommodate new working and management styles.
+Strategic advantages through in-house manufacturing
+All our actions are aimed at creating value for the customer and at opening up opportunities for differentiation to
+us. This also applies to manufacturing. We manufacture in-house, provided we can thereby differentiate ourselves
+from the competition in the market through lower cost or higher performance. On the other hand, when it comes to
+standard technologies, usually in the case of highly-integrated products such as microcontrollers and chip card ICs,
+we primarily work with contract manufacturers. We thereby utilize our invested capital in the most efficient way
+possible and optimize our investments in research and development.
+In many application areas, for example, in power electronics and sensor technologies, our manufacturing methods
+and our process expertise give us a strategic advantage because we can offer components that can only be pro-
+duced using leading-edge manufacturing technologies. Several years ago we were the first company in the world
+to develop highly-integrated circuits for the 77 gigahertz frequency range based on innovative silicon germanium
+technology. This cuts the cost of radar systems, which as a result are used more widely in vehicles outside of the
+premium segment, making street traffic safer.
+25
+Infineon is today organized in four segments with their strategic orientation being derived from the Group strategy
+described above. This structure has proven effective over many years. All activities are primarily allocated to one
+of four overarching topics. Automotive is responsible for business with semiconductors for automotive electronics.
+Industrial Power Control concentrates on power semiconductors for industrial applications, while Power Manage-
+ment & Multimarket addresses the more consumer-oriented applications and power supplies in general. Activities
+relating to traditional and new security applications are consolidated in the Digital Security Solutions segment.
+These assignments are not to be understood as rigid organizational boundaries. Since our markets continuously
+converge, we adapt our procedures accordingly and collaborate on an increasingly topic-oriented basis. Further-
+more, the digital transformation also calls for new approaches. Teams from different organizational units work
+together beyond their usual roles of authority by taking on or delegating responsibilities themselves. This also
+means that the trends and growth drivers we describe in this Annual Report (see the chapter "Growth Drivers")
+often affect multiple segments. In such cases, one segment retains global ownership of the overall application, while
+responsibility for the necessary technologies and products remains with the organizational units they originate
+from. For example, electro-mobility affects Automotive the most; thus Automotive also has system responsibility.
+Nevertheless Industrial Power Control and Power Management & Multimarket also benefit from the implementation
+of the necessary charging infrastructure.
+Automotive
+We focus on the core of the car: drivetrain, safety, comfort. We benefit more than other semiconductor manufacturers
+both from the trend towards electro-mobility and the development towards automated driving. Both trends are
+greatly increasing the average semiconductor content per vehicle and are expected to account for approximately
+half of our growth in the Automotive segment over the next five years. In addition, we also continue to benefit from
+new functions in the areas of lighting, comfort and safety as well as from the further electrification of conventional
+car functions.
+We hold leading positions in our core markets and have systematically entered adjacent markets in the past. Our
+four segments are positioned to capitalize on the megatrends mentioned earlier, which are driving a steady and in
+some cases even an accelerating demand momentum for our products. Our strategic approach "Product to System"
+helps us develop better solutions with our broad technology and product expertise and thus to create significant
+added value for our customers who are willing to pay more for solutions that are worth more. Furthermore, we are
+using tailor-made go-to-market strategies to broaden our customer base and generate more business. In the 2018
+fiscal year, revenue increased by 8 percent compared to the previous year. Assuming a constant exchange rate for the
+US dollar, this would have been 12 percent. In the context of the high level of customer demand, we expect revenue
+to increase by 11 percent plus or minus 2 percentage points in the upcoming 2019 fiscal year. Following a period of
+such elevated growth, we expect an average annual revenue growth of 9 percent. Infineon is thus continuing its
+growth path of almost two decades: Since being established as an independent corporation in 1999, our business in
+its current perimeter has grown organically, i.e. without taking the revenue boost resulting from the acquisition of
+International Rectifier into account, with an average annual rate of approximately 9 percent.
+The segment Automotive has more than 40 years of experience in the field of automotive electronics.
+In this context we have adapted our target operating model during the previous fiscal year.
+We assume that, in the upcoming years, several structural trends will continue to drive our growth, in particular
+electro-mobility, renewable energies, manufacturing automation, data centers and an increasing number of
+battery-powered, connected devices (the description of the most important growth drivers follows in the next
+chapter) - in some cases even more so than in the past. Thanks to our leading technologies, our understanding of
+applications and systems and our differentiating expertise in manufacturing, we have achieved an outstanding
+position in these markets. We want to take advantage of the resulting opportunities and to continue to outgrow the
+respective markets. We are making targeted investments for this purpose.
+Financial targets underline our growth ambition
+P see page 31 ff.
+29
+29
+Business focus Group strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+In addition to its role as an independent business unit, the Digital Security Solutions segment has a second important
+function within the Group: Supporting the three other segments - as a kind of competence center - with the integra-
+tion of security as a function in their system solutions and in doing so creating additional potential for differentiation.
+The segment Digital Security Solutions has 30 years of experience in the world's most demanding and largest digital
+security projects. The foundation of our activities is comprehensive expertise in traditional smartcard applications.
+We leverage the core competence for payment cards and government IDs in the high-growth area of embedded
+security applications. This is because digitalization is penetrating more and more areas of everyday life – and secu-
+rity is becoming a crucial aspect for many applications, for example in the areas of computing, automotive security,
+Industry 4.0 and the Smart Home. Unlike in the business with card-based security solutions, our customers here
+tend to have lower security expertise. This makes it particularly important to understand the customers' systems
+and to offer security solutions which are easy to integrate.
+Digital Security Solutions
+Target 1:9 percent average annual growth in revenue (previously 8 percent)
+In addition, Power Management & Multimarket continuously expands its product portfolio for (digital) power
+control and places its focus on technologically adjacent markets, for example Point-of-Load controllers for data
+centers and Class D audio amplifiers. We expanded our Class D audio amplifier portfolio in the previous fiscal 1 year
+with the acquisition of the Danish start-up company Merus Audio.
+Our industry-wide leading portfolio of power semiconductors, sensors and microcontrollers puts us in an excellent
+position on the one hand to address the systems of today and on the other hand to actively shape the transformation
+of the automotive industry. We are the undisputed market leader in silicon-based IGBTs and IGBT modules; our
+expertise pushes the development of silicon carbide-based power semiconductors forward. As the number two in
+the area of sensors, today we already benefit greatly from the continuously increasing number of driver assistance
+systems. As the degree of automation increases, so does the number of sensors per vehicle. In the long-term radar
+systems will be enhanced by including additional sensor technologies, a development we are anticipating for
+example with the development of a Lidar (light detection and ranging) solution. And with the microcontrollers of
+the AURIX™ family we benefit from the trend towards higher levels of automation. These devices control electronic
+systems (for example steering and braking systems) and work as a host controller that ensures the functional safety
+of central computing platforms.
+In radio-frequency and sensor business - the second mainstay of Power Management & Multimarket besides
+power semiconductors - Infineon has a strong technological basis with MEMS (in particular silicon microphones),
+Time-of-Flight for 3D camera applications as well as radar and is today already very successful in the respective
+markets. At the same, time this expertise can be used in an increasing number of application fields that are
+expected to take off in the coming years, for example Human Machine Interaction (HMI) and facial recognition.
+Furthermore, Power Management & Multimarket offers radio-frequency components that can be used for example
+for low noise amplification in mobile telephones and for communication between mobile devices and base stations.
+The segment Industrial Power Control specializes in the efficient conversion of electric energy along the entire supply
+chain (generation, transmission and consumption) with a focus on electric drives. The applications range from the
+wind power turbine to high voltage direct current transmission (HVDC), energy storage systems and all the way to
+the refrigerator.
+Strategically speaking, discrete IGBTs, IGBT bare dies, which the customer develops further himself, IGBT modules
+and the associated drivers form the core business of Industrial Power Control. Infineon is the world market leader
+for IGBT-based power semiconductors (discretes and modules). We want to further expand this position and to take
+advantage of economies of scale in both research and development and in manufacturing. We are strengthening
+this core by pursuing technology leadership in silicon carbide as well and leveraging this to create an attractive
+product portfolio for our customers.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+Industrial Power Control
+28
+Power Management & Multimarket
+In power semiconductors, Power Management & Multimarket has leading technologies for low (up to 40 volts),
+medium (from 40 volts to 500 volts) and higher voltages (over 500 volts). Together with the corresponding drivers,
+the MOSFETs of the CoolMOSTM and OptiMOST families form the primary focus of the Power Management &
+Multimarket power semiconductor business. Applications with the highest growth for these products include
+battery-powered devices (usually in combination with brushless DC motors). In the worldwide MOSFET market,
+Infineon is the clear number one and benefits from economies of scale both in terms of research and development
+and in manufacturing. The portfolio of silicon-based power semiconductors is supplemented by switches based
+on gallium nitride.
+The Power Management & Multimarket segment covers business with power semiconductors for power supplies,
+components for cellular infrastructure and mobile devices as well as with high-reliability components for application
+in harsh environments.
+Business focus Group strategy
+Based on this portfolio, Industrial Power Control addresses especially high-growth application fields such as
+industrial automation, renewable energies and home appliances. At the same time, the portfolio serves emerging
+applications for power semiconductors such as the charging infrastructure for electric vehicles and electrified
+commercial and agricultural vehicles.
+Industrial Power Control uses know-how relating to the application of IGBTs to realize additional growth potentials
+in adjacent product areas. This applies on the one hand to products for digital power control, including the devel-
+opment of driver algorithms, and on the other hand to what are called Intelligent Power Modules (IPM), i.e. the
+combination of controller, driver and switch.
+Market position
+The world market for IGBT-based power semiconductors - discrete IGBT power transistors and IGBT modules -
+reached US$5.255 billion in the 2017 calendar year, an increase of 16.5 percent compared to the previous year value
+of US$4.510 billion (Source: IHS Markit). Infineon was able to further improve its leadership position with a market
+share of 27.1 percent (an increase of 1.2 percentage points). The five largest market players together accounted for
+a market share of 67.5 percent.
+Robotics
+World IGBT-based power semiconductor market share 2017
+16.4%
+Mitsubishi
+Fuji Electric
+ON Semiconductor
+Semikron
+27.1%
+44
+Infineon
+7.7%
+5.6%
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Power Semiconductor Annual Market Share Database 2017," September 2018.
+4.9%
+9.9%
+10.3%
+18.7%
+36.4%
+10.7%
+Semikron
+Infineon
+ON Semiconductor
+Mitsubishi
+World IPM market share 2017
+An important sub-market of IGBT-based power semiconductors covers IPMS (Intelligent Power Modules). In the 2017
+calendar year we were able to increase our revenue in this area by 39.2 percent, approximately twice as much as
+the market growth of 19.9 percent. As a result, we added 1.4 percentage points of market share to reach 10.3 percent.
+For the first time we achieved a double-digit market share and thus entered the top 3 in this area.
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Power Semiconductor Annual Market Share Database 2017," September 2018.
+Fuji
+power supplies
+> Metro trains
+› Trams
+Charging stations
+for electric vehicles
+Applications
+Energy generation
+> Energy storage
+> Photovoltaic systems
+> Wind power turbines
+Energy transmission
+> FACTS (Flexible AC
+Transmission Systems)
+> Offshore wind farm
+HVDC lines
+Energy consumption
+Home appliances
+> Air conditioners
+> Dishwashers
+> Induction cooktops
+> Microwave ovens
+› Refrigerators
+> Vacuum cleaners
+> Washing machines
+Industrial
+Industrial vehicles
+› Construction vehicles
+> Electric delivery vehicles
+> Forklifts
+1 Including motors, compressors, pumps and fans.
+Industrial drives¹
+> Air conditioning
+technology
+> Automation technology
+› Drives
+> Elevator systems
+> Escalators
+> Materials handling
+> Rolling mills
+Traction
+> High-speed trains
+> Locomotives
+> Agricultural vehicles
+> Hybrid busses
+Virtual and Augmented Reality are not only used for games, they are also important in Industry 4.0. For example
+apps for Microsoft's Hololens enable virtual training for technicians. The Fraunhofer Institute for Factory Operation
+and Automation (IFF) rents its mixed-reality laboratory Elbedome out to companies. This laboratory can represent
+machines, factories and complete cities on a 360 degree projection surface using six laser projectors. This gives
+developers and customers the impression of standing in the middle of the planned factory.
+Human Resources strategy
+The continuously rising degree of interconnection between vehicles opens up opportunities for many new services,
+but also increases the danger of unauthorized access to systems by a third party. This means data exchange among
+the various on-board systems as well as with other vehicles and the infrastructure has to be kept secure. Vehicle
+and personal safety on the one hand and data and IT security on the other hand can no longer be considered in
+isolation from one another. The vehicle is becoming a networked computer on four wheels and is also becoming a
+part of the Internet of Things. The demand for data and IT security in the vehicle is rising. We see our opportunity
+here with hardware-based security in the form offered by our security controllers - either as a separate component
+or integrated in our automotive microcontrollers.
+Security for connected vehicles
+Security for industrial applications (Smart Factories)
+The Internet of Things refers to devices and machines connected to the internet, thus enabling data exchange and
+device control (for example, home appliances, electricity meters, sensors, webcams). The trend towards increased
+levels of networking primarily affects the areas automotive, Industry 4.0, Smart Home and information and com-
+munication infrastructures. Here, security plays a decisive role. The rising number of hacking attacks underlines the
+importance of appropriate precautions. In order to secure electronic systems, it is important to only connect autho-
+rized and authenticated devices with one another in order to protect them against cyber-attacks and manipulation
+of data. This means security has to be integrated into as many critical end-points as possible, often referred to in
+this context as the topic of embedded security. With the OPTIGA™ product series Infineon supplies various security
+chips and security solutions for the authentication of electronic systems: From complex IT infrastructure with
+numerous servers and routers all the way down to computers and tablets.
+Secure authentication for the Internet of Things
+Today payment services can be integrated into mobile devices thanks to the development of smartphones and
+wearables, the mobile internet and Near Field Communication (NFC) technologies. However, cash-free payment is
+only one of the many mobile device functions involving the storage and processing of sensitive information. For
+example, people are experiencing new forms of comfort when travelling on public transportation with mobile tickets
+instead of using coins and physical tickets. Infineon supplies the security chip, known as the Secure Element (SE),
+for all these applications. The SE can either be built into the smartphone (referred to as "embedded SE" (eSE)), inte-
+grated in a SIM card or located on a microSD card. Infineon offers the necessary solutions for all three alternatives.
+Security for mobile devices
+Government IDs refer to passports, identity cards, driving licenses and in the broader sense also to health care
+cards. These documents are increasingly being equipped with a security chip. The market penetration of chip-based
+government IDs is constantly increasing. More and more countries are making the transition to chip-based docu-
+ments or increasing the range of such documents in use. Infineon is the leading provider of security solutions for
+ID projects in Europe. Furthermore, according to the US Government Printing Office (US GPO), Infineon is one
+of the main vendors of security technologies in the electronic passports of the USA. Infineon has been supplying
+the US GPO since the project was launched in 2005.
+Government IDs
+36
+Security
+Business focus | Growth drivers
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+China is one of the largest rail vehicle markets in the world. We also see the reinvigoration of the market for traction
+systems in the rest of Asia, where, as a result of industrialization and urbanization, urban rail systems and regional
+trains are in high demand.
+Sustainable and fast mobility within metropolitan areas as well as between big cities is one of the key topics of the
+21st century. Today reliable and rapid public transportation determines more than ever the quality of life and
+competitiveness in many regions and cities worldwide. Our components are used both in local public transportation
+trains, subway trains and trams as well as in high-speed trains.
+Traction systems
+Step by step active safety systems are being enhanced to become driver assistance systems. By supporting the
+driver, they increase both driving comfort and road safety. Among other things they assist in critical situations or
+help correct a driver error when necessary, for example with automatic emergency braking maneuvers. Systems for
+partially and fully automated driving essentially consist of the sensors (for example radar, cameras in the vehicle's
+interior or exterior), together with a central high-performance computer for the evaluation of sensor data as well as
+calculation of the driving strategy (the system's intelligence). The third element is the actuators (steering, brakes,
+engine control and transmission). As a leading provider of system solutions Infineon has a comprehensive product
+portfolio for assistance systems and for automated driving.
+"Vision Zero" describes one of the largest objectives of the automotive industry: Vehicles are to be made so safe
+that no serious or fatal accidents occur anymore; today approximately 90 percent of such accidents are attributable
+to human error. Active safety systems can either completely prevent an accident or at least significantly reduce
+its consequences by directly intervening in the driving process. Examples here are pedestrian detection, adaptive
+cruise control and blind spot detection. These functions are no longer reserved for luxury vehicles, as they are
+becoming commonplace in the mid-range.
+Automated driving
+The steadily increasing number of electric vehicles also requires a corresponding charging infrastructure. A
+well-developed network of charging stations increases the incentive to buy an electric vehicle. In order to promote
+the acceptance level of electro-mobility, China has begun operating charging stations along the country's eight
+most important highways. This also includes the important connection between Beijing and Shanghai. By 2020,
+10,000 charging stations with 120,000 charging points are to be implemented, with an investment volume of
+approximately US$770 million. Also other countries will most likely constantly expand their networks of publicly
+accessible charging stations in the coming years. Depending on the system topology, the charging stations use
+different types of power semiconductors, as offered by our Industrial Power Control and Power Management &
+Multimarket segments.
+Charging infrastructure for electro-mobility
+35
+Business focus Growth drivers
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+In the category of discrete IGBTS we were able to grow our market share by 2.0 percentage points to reach 38.5 percent.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Finances and strategy
+Business focus | Growth drivers
+Radio-frequency technologies are also used in mobile devices. Every new smartphone generation requires support
+for more frequency bands. The transition from one cellular communications standard to the next means an increase
+in the requirements on signal quality. Our components help to separate closely adjacent frequency bands and
+amplify weak signals with low noise levels. The transition to the 5G standard will mean a further increase in com-
+plexity, which presents additional potential for our high-performance components.
+39
+Business focus | Growth drivers | Human Resources strategy
+Finances and strategy
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Mobile data traffic is constantly increasing in volume: While 15 Exabyte (i.e. 15 billion gigabytes) per month were
+transferred via cellular communications in 2017, experts expect a volume of 107 Exabyte per month for the 2023 year.
+In order to be prepared for the exponentially increasing data volumes, to achieve higher data transmission rates
+and to improve network coverage, network providers are turning to a high-performance infrastructure. The migration
+of network architecture to smaller cells enables among other things the use of higher frequency ranges and better
+exploitation of the available frequency spectrum. Radio-frequency (RF) components are required for both the
+communication between mobile devices and the base station and for wireless backhaul from local networks to the
+main network.
+Mobil communications
+"Smartification" is finding its way into the home as well. While in the industrial context the primary issue is
+increasing productivity, applications in the private environment are usually focused on comfort. A Smart Home
+is capable of telling all the machines in it what to do and activating every device at just the right time. In addition
+to increased comfort, the Smart Home's better energy efficiency and higher security are additional important
+aspects. The Infineon portfolio of sensors, power semiconductors and security controllers offers the right solutions
+for a networked home.
+Smart Home
+Virtual and Augmented Reality are also
+used in industry, for example for simulation
+and training purposes.
+Our 3D image sensor chip REAL3™ enables a three-dimensional depiction of the environment at high image quality
+and is used in both smartphones and in driver assistance systems.
+Industrial Power Control
+Virtual Reality/Augmented Reality
+Our Human Resources strategy makes an important contribution to ensuring that Infineon can achieve its growth
+and profitability targets. This includes competitive talent management, an attractive working environment and
+high-performance HR processes.
+Gesture control has several advantages over touchscreens: For example, the user doesn't have to touch the device
+and can thus issue commands from a distance. At the same time, gesture control opens up the third dimension,
+enhancing the traditional two-dimensional user interface. Google and Infineon have developed a new type of gesture
+control called "Soli", using radar technology: The radar chip from Infineon can transmit and receive waves reflected
+from the user's finger. When someone makes a hand gesture, the result is a different reflection pattern. Google
+algorithms recognize the hand or finger gesture based on the change of these reflection patterns over time and thus
+recognize the gesture. This even works in the dark and with dirty fingers in the kitchen, workshop or laboratory.
+38
+Business focus | Growth drivers
+Finances and strategy
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Voice control systems such as Amazon Alexa, Google Assistant, Apple Siri, Samsung Bixby and Microsoft Cortana offer
+a convenient and intuitive way of control to the user. Providing users with even more comfort will mean reducing
+the error rate in voice command processing. We are working on this together with our partner XMOS Ltd. in England.
+Infineon supplies highly sophisticated silicon microphones and XMOS speech processing modules for devices in
+the Internet of Things. As it matures, voice control will become relevant for more and more device classes and will
+become one of the most important control types.
+Voice
+Human Machine Interaction is concerned with how humans and automated systems interact and communicate
+with one another. The focus has long moved past classic industrial machines and now affects computers, digital
+systems and devices for the Internet of Things, i.e. the link between the real and digital world. More and more
+devices are networked and perform their tasks automatically. Operation of all these machines, systems and devices
+has to be as intuitive as possible and must not overwhelm the user. Smooth communication between humans and
+machines requires the right interfaces. A system can for example be controlled using text entry on the keyboard or
+mouse, but touchscreens, voice and gesture control are more natural.
+Human Machine Interaction
+The field of robotics has been attracting special attention for several years now. In addition to the continuing devel-
+opment of conventional industrial robots, more and more industry sectors are implementing collaborative robots,
+known as "cobots". Cobots work together with humans in the manufacturing process and are no longer separated
+from their human colleagues by protective equipment, as the typical industrial robot is; the requirements regarding
+their reliability and safety are therefore very high. Cobots will relieve and support humans in difficult and dangerous
+tasks. Their further development continues the trend towards intuitive robot programming and self-learning robots.
+Infineon offers not only the necessary sensors, microcontrollers and power semiconductors, but also provides
+numerous start-ups in this market with know-how in the area of motor control, sensor systems, communications
+connections and security.
+Collaborative robots
+Internet of Things & Big Data
+Embedded SIM cards meet the special quality
+requirements of the automotive sector:
+They are robust, durable and highly resistant
+to high temperature fluctuations.
+Since March 2018, all new passenger cars and light utility vehicle models in the EU have been required to feature an
+automatic emergency call function (eCall). This requires an embedded SIM card (eSIM). In addition to the eCall, the
+chip also supports several other functions which make driving safer and more comfortable, for example software
+over-the-air updates (SOTA) and vehicle-to-infrastructure communication.
+37
+Gesture
+The segments
+The fourth Industrial Revolution is in full swing. In the era of Industry 4.0 companies are using modern technologies
+to design their manufacturing to be faster and more cost-effective, to reduce scrap rates and to minimize incidents
+and downtimes through predictive maintenance. Networking and digitalization of factories however create points
+of attack for hackers. To protect themselves, companies must therefore take security into account from the very
+beginning of Industry 4.0 projects. A combination of software and hardware-based security solutions can protect
+networked machines and communication nodes. Examples are the OPTIGA™ TPM chips from Infineon, which can be
+integrated in routers, industrial PCs and complex control units and which serve to identify devices to communica-
+tion partners in the network. They thus authenticate themselves in the network and secure data transmission.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The spread of driver assistance systems associated with automated driving led to an increase in the demand for
+our radar sensor ICs as well as for our 32-bit multi-core microcontrollers of the AURIX™ family. In particular the
+AURIX™ microcontrollers benefitted from the design-wins in the previous years in the area of safety systems, for
+example in electric power steering. Infineon traditionally holds a strong position for 32-bit microcontrollers in the
+area of powertrain. Infineon is now specifically addressing the areas of safety systems and driver assistance systems
+by developing corresponding 32-bit microcontroller derivatives, in particular the new, second generation of the
+AURIX™ family. For example, we are adding new functions for radar signal preprocessing to our radar sensor ICs.
+Our customers benefit from components which ideally fit together. We are thus expanding our range of applications
+from the powertrain to the area of safety and in doing so are entering new growth markets.
+The increasing demand for radar sensor ICs came on the one hand from the increasing market penetration of
+radar-based driver assistance systems and on the other hand from the higher number of radar sensors per vehicle.
+In particular our 77 gigahertz radar solutions for driver assistance systems remained in high demand. Infineon is
+one of the leading suppliers to the most important manufacturers of radar systems in all regions.
+The demand for luxury and upper mid-range vehicles - especially for SUVs (Sport Utility Vehicles) - remained on a
+high level worldwide. This vehicle type is typically equipped with significantly more safety and comfort functions.
+Development of the Segment Result
+Segment Result was €466 million and thus slightly lower than the previous year's Segment Result of €474 million.
+As a percent of revenue, the Segment Result margin was 14.2 percent (previous year: 15.9 percent).
+Segment Result was positively impacted by the increased result contribution from the higher revenue as well as by
+advances in productivity. The decline in the Segment Result margin is essentially the result of very strong revenue
+growth of products for electro-mobility. Compared to a share of approximately 7 percent in the previous year, their
+share of segment revenue is in the meantime approximately 10 percent; however, due to the large investments in
+development and manufacturing, the profitability of these products is still not at the average margin level of the
+Automotive segment. In order to be able to drive further growth, during the previous fiscal year we already began
+ramping-up additional backend manufacturing lines for products in the area of electro-mobility, continuing to incur
+temporary ramp-up costs, on the one hand in Warstein (Germany) and on the other hand in the first manufacturing
+building in Wuxi (China). In addition, the positive effects were compensated by higher research and development
+costs, primarily in the area of driver assistance systems.
+Applications
+Assistance systems and
+safety systems
+> Airbag
+> Anti-blocking system
+> Automatic parking
+> Autonomous emergency
+braking system
+> Blind spot detection
+> Cruise control
+41
+> Distance warning systems
+> Electronic power steering
+> Electronic stability control
+> Lane departure warning system
+> Tire pressure monitoring system
+Comfort electronics
+> Air conditioning
+> Door electronics
+> Electronic control units
+> Electronic seat adjustment
+> Hatch door
+> Lighting
+> Power window
+> Steering
+› Sunroof
+> Suspension
+> Windshield wipers
+> Electronic chassis control
+The segments
+Automotive
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+In order to remain innovative, competitive and successful in the future, Infineon constantly searches for the most
+talented individuals. And the further increasing scarcity of experts facing a steadily growing number of vacancies
+makes this no easy task. This is particularly the case in the area of the STEM subjects, Science, Technology, Engineer-
+ing and Mathematics: exactly those fields which are of particular importance to Infineon. We are therefore review-
+ing our recruiting measures on a regular basis and are working on an integrated system for talent management.
+One of our great advantages is Infineon's positive employer image, which helps win over and retain talents. The fact
+that we make future-oriented products and create value for society makes our company very attractive to potential
+employees. We also define ourselves by the way we work together: with a well-developed culture of feedback,
+"Leadership Excellence" applied every day and an international working environment with colleagues from over
+100 nations. We are proud of this diversity. The most recent Great Place to WorkⓇ survey confirmed the satisfaction
+of the workforce - not only in Germany, but also worldwide. More than 80 percent of Infineon employees gave their
+employer an excellent evaluation: "Taking everything into account, I would say this is a great place to work."
+At the same time, we are preparing the company for the working environment of the future - also in order to remain
+attractive to new generations of employees. This entails the flexible design of working conditions (for example
+work hours, mobile working, sabbatical) as well as the ongoing development of workstations in manufacturing
+("industry 4.0"). Here we highly value constructive dialog and trust-based collaboration with Workers' Councils.
+We also orient our learning formats to future working environments, offering for example mobile learning with
+apps as well as virtual learning groups. Our objective in doing so is to continuously support our employees and
+to encourage them to try out new methods, while making use of the opportunities of digitalization.
+Furthermore, we are working on an HR infrastructure that allows the organization to react flexibly to growth and
+changing requirements, without costs increasing as fast as revenue. In order to achieve this, we constantly improve
+core processes in HR, for example performance management, the process of succession planning and organizational
+development. We use the new processes and tools to strengthen the employees in the self-directed performance of
+their responsibilities for their personal development. People are the focus of our actions: The highest level of long-
+term entrepreneurial performance can only be achieved by happy, healthy and successful employees.
+Combined Management Report | Our Group
+You will find further information including detailed statistics in the 2018 sustainability report and in the 2018
+Human Resources report.
+@www.infineon.com/csr_reporting
+@www.infineon.com/hrreport
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+The segments
+Automotive
+The segments
+40
+40
+REVENUE
+€3,284 million
+SEGMENT RESULT
+€466 million
+Automotive
+The Automotive segment in the 2018 fiscal year
+We supply powertrain solutions for all types of electric vehicles: pure electric vehicles as well as hybrid and plug-in
+hybrid vehicles including 48 volt technology. In China, the world's largest market for electro-mobility, the number
+of vehicles manufactured and registered with plug-in hybrid or pure electric drives continued to increase sharply.
+Here the number of units manufactured increased from 517,000 in the 2016 calendar year by 53.6 percent to
+794,000 units in the 2017 calendar year. Sales of electric vehicles increased in the other regions as well, especially
+due to a wider variety of models, making it possible to address a new group of buyers. In addition to the increase
+in units, this year we also saw innovative drive configurations which will further increase demand for power modules.
+For example, in order to increase performance one electric motor is used on each axle. Furthermore, the motors
+are configured for higher performance, which often requires two IGBT modules per motor. As a result of these two
+trends, each vehicle has four IGBT modules instead of one IGBT module.
+As in previous years, the major growth drivers were the megatrends electro-mobility and automated driving. Both
+developments resulted in a particularly strong increase in the semiconductor content per vehicle and are expected to
+ensure over half of our growth in the Automotive segment over the next five years. They are among the structural
+growth factors which fundamentally support Infineon's above-average growth. In addition, we continue to benefit
+from new functions in the areas of lighting, comfort and safety as well as from the continuing electrification of
+previously hydraulic and electro-mechanical subsystems.
+2018
+2017
+Revenue
+Segment Result
+466
+Powertrain
+474
+2,989
+3,284
+€ in millions
+Revenue and Segment Result of the Automotive segment
+In the Automotive segment, Infineon recorded revenue of €3,284 million in the 2018 fiscal year, an increase of
+10 percent compared to the €2,989 million revenue of the previous year. The segment contributed 43 percent
+of the Group revenue.
+Revenue development
+LL
+> Alternator control
+Combined Management Report | Our Group
+› Battery management
+€1,323 million
+Industrial Power Control
+The Industrial Power Control segment in the 2018 fiscal year
+Revenue development
+SEGMENT RESULT
+€256 million
+In the Industrial Power Control segment Infineon recorded revenue of €1,323 million in the 2018 fiscal year, an
+increase of 10 percent compared to the €1,206 million revenue of the previous year. The segment contributed
+17 percent of the Group revenue.
+Revenue and Segment Result of the Industrial Power Control segment
+€ in millions
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+1,323
+1,206
+LI
+183
+2017
+Revenue
+256
+Segment Result
+Segment Result was €256 million, representing an increase of 40 percent compared to the previous year's Segment
+Result of €183 million. Based on revenue, the Segment Result margin was 19.3 percent (previous year: 15.2 percent).
+Development of the Segment Result
+Segment Result was positively impacted mainly by the increased result contribution from revenue growth. Further-
+more productivity improvements, among other things higher capacity utilization levels in the 300-millimeter
+manufacturing line in Dresden and a higher-margin product mix in the individual product categories had a positive
+effect on profitability.
+› Battery charging control
+The other business areas, among others industrial vehicles, only marginally contributed to revenue increase.
+Renewable energy declined slightly. In China, by far the largest country for photovoltaics and responsible for
+approximately half of worldwide new installations, a stagnation resulted from the announcement by the Chinese
+government at the beginning of June that the new installations would be limited to approximately 50 gigawatts in
+the 2018 calendar year and that the feed-in tariff would be reduced. The impact of this effect was mitigated by the
+fact that other regions increased their expansion goals. These include Europe, the Middle East, Africa and Southeast
+Asia. In the area of wind turbines there was a noticeable drop in revenue for us in spite of the stable development.
+Lower demand for power stacks could not be compensated by the significantly higher demand for power modules.
+In energy distribution we are now benefitting from the expansion of our product portfolio over the last years,
+especially in the voltage class of 4,500 volt. The acceptance of our IGBT modules for high-voltage direct current
+transmission (HVDC), in particular for connecting offshore windparks to the power grid on land brought us very
+high growth in this area.
+REVENUE
+Home appliances, accounting for approximately 20 percent of revenue and in the meantime the second-largest
+business, also achieved revenue growth significantly above the segment average. Revenue in this business has
+more than doubled in the last three years. Primarily responsible for this success are both our IPMS (Intelligent
+Power Modules) of the CIPOSTM family and the motion control components of our iMOTION™ family. We supply
+reference designs and ready-to-use solutions for these compact modules. They are used in home appliances of
+all types, from hair dryers to washing machines all the way to air conditioning systems. The market acceptance
+for our products is also evidenced by the increase of our market share for IPMs. With almost 40 percent growth
+compared to 2016, this product category increased in the 2017 calendar year twice as fast as compared to the
+market (see the section "Market position").
+Psee page 44
+43
+Industrial Power Control
+The segments
+Combined Management Report | Our Group
+2018
+In the previous fiscal year, almost all areas contributed to the revenue increase. The growth rates of the businesses
+electric drives, traction systems, industrial power supplies and home appliances were significantly above the
+segment average. The largest absolute revenue increase came from the electric drives business. Electric drives
+is also the largest business in absolute terms accounting for approximately one third of segment revenue. Here,
+the revenue increased in each individual quarter and reached a new all-time high. The reason was essentially an
+increase in demand in the area of factory automation. Demand here came from all power classes.
+While market share only changed by some tenths of a percentage point for the second to fifth largest players, the
+market leader lost 1.5 percentage points, primarily through the sales of essential parts of its power semiconductor
+portfolio. Infineon increased its revenue by 15.8 percent and thus gained 0.1 percentage points of market share to
+10.8 percent. The five largest market players together accounted for a market share of 48.4 percent.
+As in the previous year, traction once again showed approximately 20 percent growth. Demand was at high levels
+in all quarters. Once again, the most important region was China, where there was demand for all types of traction:
+high-speed trains, urban rail systems and electric or half-electric locomotives for freight trains.
+7.1%
+Source: Strategy Analytics, "Automotive Semiconductor Vendor Market Shares," April 2018
+› Generator control
+> Electric motor control
+> Combustion engine control
+› Transmission control
+Security
+› Communication (car-to-car,
+car-to-infrastructure)
+> Digital tachograph
+> Original spare parts
+authentication
+> Protection against
+manipulation (e.g. odometer)
+> Protection against
+software manipulation
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+> Start-stop system
+The segments
+Combined Management Report | Our Group
+10.0%
+10.8%
+STMicroelectronics
+Texas Instruments
+Renesas
+12.5%
+NXP
+Automotive Industrial Power Control
+Infineon
+42
+Market position
+8.0%
+The world market for automotive semiconductors grew by 14.1 percent from US$30.214 billion in the 2016 calendar
+year to US$34.469 billion in the 2017 calendar year (Source: Strategy Analytics). All regions contributed to growth.
+Europe remained by far the largest region. For the first time, China displaced North America as the second largest
+region. In China during the 2017 calendar year, Infineon was able to increase its revenue with automotive semi-
+conductors by 23.6 percent and its market share by 1.1 percentage points to 12.0 percent. Our strong increase of
+18.5 percent in revenue in Japan is positive as well. In this region Infineon is increasingly perceived as a competent
+system partner who can deliver the desired quality and who is winning larger and larger orders. As a result, our
+market share in Japan has almost doubled, from 3.1 percent in 2010 to 6.1 percent in 2017.
+World automotive semiconductor market share 2017
+World smart card and secure ICs market share 2017
+Infineon
+The world market for security ICs had a volume of US$3.260 billion in the 2017 calendar year, a decrease of
+0.2 percent compared to the previous year's value of US$3.266 billion (Source: ABI Research). Infineon's revenue
+increased by 0.6 percent. Infineon won 0.2 percentage points of the market and as new market leader has a small
+lead over its closest competitor. Our gain in market share is essentially due to changes in the two major segments
+government identification documents and payment cards. Infineon was able to expand its sales in both segments
+significantly above the market growth rate, while the previous market leader lost a rather significant share in the
+market. The five largest market players together account for a market share of 73.1 percent.
+Samsung
+STMicroelectronics
+EM Micro
+Source: ABI Research, "Smart Card & Secure ICS," October 2018.
+24.2%
+23.8%
+12.9%
+NXP
+Research and development
+1.8%
+Until the previous year, our source of relevant information was IHS Markit. Since IHS Markit no longer analyzes
+the security IC market, we now refer to information from the market study by ABI Research. In contrast to our
+market observations in the past years, memory-based security ICs as well as various embedded security ICs are
+now included.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+49
+Combined Management Report | Our Group
+Research and development
+50
+50
+Research and development expenses in the 2018 fiscal year amounted to €836 million after €776 million in the
+previous year, representing an increase of €60 million or 8 percent. Research and development expenses thus
+increased proportionally to revenue, which also increased by 8 percent. In the 2018 fiscal year we spent 11 percent
+of revenue on research and development relative to revenue, exactly the same ratio as in the previous year. With
+this ratio we are well within our target range, i.e. a percentage of revenue in the low to mid-teens. In order to retain
+our innovative strength in the future, research and development expenses should increase proportionally to revenue.
+R&D expenses
+Market position
+11.0%
+10.4%
+€ in millions
+> Industrial Internet
+(Industry 4.0)
+> NFC-based contactless
+payment
+776
+> Game consoles
+> Industrial control
+systems
+Automotive
+› Connected vehicles
+(e.g. eCall, car-to-car
+communications,
+car-to-infrastructure
+communications)
+> Electronic toll collection
+> Protection against
+manipulation
+(e.g. odometer,
+digital tachograph)
+Government
+identification documents
+Ticketing, access control
+Trusted Computing
+> Driver's licenses
+Internet of Things
+> Connected driving
+> IT
+> Smart City
+> Smart Home
+Mobile
+communications
+› Conventional
+SIM cards
+> High-end SIM cards
+> Embedded SIM
+(machine-to-machine
+communication)
+Payment systems
+› Credit/debit cards
+> Mobile payment
+> Healthcare cards
+> National identity cards
+> Passports
+836
+Infineon is a pioneer in developing encryption algorithms. We achieved an outstanding success with encryption
+methods that are capable of withstanding the computing power of future quantum computers. In the previous year
+we were the first company in the world to demonstrate the implementation of an algorithm for what is referred to
+as post-quantum cryptography in contactless security chips. The main challenges to overcome were the small
+dimensions of the chips and the limited memory capacities to store and execute such a complex algorithm as well
+as the data transmission bandwidth. In November 2017, Infineon won the renowned industry prize "SESAMES
+Award" in two of six categories, "Cyber Security" and "eGovernment" for this achievement. The "SESAMES Award"
+is presented each year for the best innovations in the area of digital security and is regarded as one of the highest
+honors in the industry.
+2017
+Investigations are to determine how we can develop universal Al functions that can be integrated in a large number
+of chips for various target systems. One major challenge here is the constantly rising chip complexity. Findings on
+costs and the manufacturability of such complex chips or the partitioning of these functions on several chips is crucial.
+This is why the development center is situated at the intersection point between development, design and manu-
+facturing. Synergies are created through feedback from the manufacturing lines, making it possible to develop new
+products faster thereby shortening time-to-market.
+Activities are planned to begin at the end of the 2018 calendar year. Initially, 100 new jobs will be created, rising
+mid-term to approximately 250 jobs.
+Patents
+Another indication of Infineon's innovative power and long-term competitive strength is the number and quality of
+our patents. In the 2018 fiscal year we applied for approximately 1,550 patents worldwide, compared to approxi-
+mately 1,800 patent applications in the previous year. At the end of the 2018 fiscal year, the worldwide patent portfolio
+consisted of approximately 26,850 patents and patent applications (previous year: approximately 27,300).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+54
+Combined Management Report | Our Group
+Operations
+Operations
+In the 2018 fiscal year, our investments amounted to €1,254 million, representing an increase of €232 million or
+23 percent compared to the €1,022 million invested in the previous year. Relative to revenues, the investments
+in the 2018 fiscal year increased to 16.5 percent compared to the previous year's 14.5 percent. €1,090 million of the
+overall investment volume was dedicated to property, plant and equipment (previous year: €874 million) and
+€164 million to intangible assets including capitalized research and development costs (previous year: €148 million).
+Investments
+€ in millions
+1 Property, plant and equipment and intangible assets
+As traffic systems are becoming more and more connected algorithms, Al and the Internet of Things all play a
+central role. Here we expect significant growth impulses in coming years. The development center will be inten-
+sively involved in these topics as well. Advances made initially in the automotive area can also be adopted by
+other applications, for example robotics.
+14.5%
+1,254
+H
+2017
+2018
+16.5%
+Investments
+Percentage of revenue
+By far the largest share of the amount invested in property, plant and equipment is accounted for by investments in
+manufacturing facilities. Approximately two thirds of this amount went to frontend manufacturing facilities, with
+the rest essentially going to backend manufacturing facilities.
+Infineon maintains a total of 17 manufacturing sites in 10 countries: Villach (Austria); Beijing and Wuxi (both China);
+Dresden, Regensburg and Warstein (all Germany); Cegléd (Hungary); Batam (Indonesia); Cheonan (Korea); Melaka
+and Kulim (both Malaysia); Tijuana (Mexico); Singapore; and Leominster, Mesa, San José and Temecula (all USA).
+As of 30 September 2018 there were 28,532 people employed in manufacturing at these sites (previous year:
+27,105 employees).
+Milestones and essential investment focuses in manufacturing during the 2018 fiscal year
+Investments in the 2018 fiscal year focused on the following areas:
+1. Expansion of 300-millimeter fronted manufacturing capacities in Dresden in differentiating manufacturing
+technologies for power semiconductors such as the high-voltage MOSFETs of our CoolMOST family and
+IGBT power switches.
+2. Expansion of 200-millimeter frontend manufacturing capacities in Kulim in differentiating manufacturing
+technologies for sensors as well as discrete and integrated power semiconductors.
+3. Continued ramp of volume production capacity of our SiC MOSFETs and SiC diodes on 150-millimeter wafers.
+Infineon is now one of the first companies worldwide to manufacture its entire SiC portfolio on wafers with a
+150 millimeter diameter.
+1,022
+In May 2018, Infineon announced the establishment of a new development center in Dresden. The development
+center is to drive the development of new products for automotive and power electronics as well as for Artificial
+Intelligence (AI). System integration becomes ever more important for the complex interaction of semiconductors
+in vehicles of continuously increasing technical complexity. In addition to chip design, modeling complex systems
+and developing highly-integrated products will be among the development center's core tasks.
+Founding of a new development center in Dresden
+> Brand protection
+2018
+11.0%
+R&D expenses
+Percentage of revenue
+At the end of the 2018 fiscal year we employed 7,161 people (18 percent of Infineon's total work force) at our
+research and development sites; at the end of the 2017 fiscal year the figure was 6,362 employees (17 percent of the
+total work force). Infineon maintains research and development departments at 35 sites in 15 countries: Graz, Linz
+and Villach (all Austria); Beijing and Xi'an (both China); Herlev (Denmark); Augsburg, Dresden, Duisburg, Erlangen,
+Karlsruhe, Neubiberg near Munich, Regensburg and Warstein (all Germany); Le Puy-Sainte-Réparade (France); Bristol
+and Reigate (both Great Britain); Bangalore (India); Padua and Pavia (both Italy); Seoul (Korea); Ipoh and Melaka
+(both Malaysia); Nijmegen (The Netherlands); Muntinlupa (Philippines); Bucharest (Romania); Singapore; Chandler,
+El Segundo, Leominster, Mesa, Milpitas, San José, Tewksbury and Warwick (all USA).
+In the 2018 fiscal year, the capitalized development costs totaled €143 million (previous year: €129 million). Amorti-
+zation of capitalized development costs in the 2018 fiscal year amounted to €50 million (previous year: €39 million).
+Subsidies and grants for research and development increased from €68 million in the 2017 fiscal year to €86 million
+in the 2018 fiscal year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Research and development
+51
+Principal research and development activities
+Research and development expenses are not only incurred for product development, but also increasingly for
+platform developments, for new technologies and new product families and for new manufacturing technologies.
+This includes, for example, digital power management, technology platforms for low-voltage and high-voltage
+power switches, power semiconductors based on the new materials silicon carbide and gallium nitride and new
+sensor types, in particular those based on our magnetic field, radar, Lidar, infrared and MEMS technologies.
+While in the past both research and development primarily focused on technologies or components, today the
+systems in which the components are used play a decisive role. Innovative system solutions start with the
+optimization of system functionality. If savings and improvements, for example, for passive components, cooling
+systems, packages, weight and reliability create value for the customer, the customer is willing to pay a higher price
+for the semiconductor component providing these advantages. Here, digital microelectronics is often combined
+with RF components, control ICs, drivers, sensors and actuators, resulting in a significant increase in performance.
+Furthermore, hardware is increasingly being complemented by software.
+One focus point of our research is in the area of sensor systems. Sensors capture the real, analog world. The signals
+measured are first digitized. Then, the digital values are processed, transmitted and stored according to the require-
+ments of the target application. Sensors also play an increasingly important role in operating machines and devices,
+referred to as human machine interaction. In this area we are developing our portfolio of MEMS-based silicon
+microphones and pressure sensors as well as 3D ToF sensors and radar sensors. In addition, we are working on new
+sensor types for capturing other physical measurements. Infineon has about 40 years of experience in sensor
+design and sensor manufacturing and offers the most comprehensive portfolio of pressure and magnetic field
+sensors for automotive applications.
+In the area of RF applications we intend to provide radio-frequency solutions for smartphones and cellular
+infrastructure. In addition to today's components - essentially low-noise signal amplifiers, antenna switches and
+antenna tuners - we will introduce further products including frequency filters and 5G antenna modules.
+Manufacturing technologies and transistor architectures for power semiconductor components based on new
+materials are also an important focus area of our research and development activities. In the search for more and
+more efficient power semiconductors for more and more compact power supplies and control units, primarily silicon
+carbide (SiC, a compound of silicon and carbon) and gallium nitride (GaN, a compound of gallium and nitrogen)
+have proven to be the materials of choice. Compared to silicon-based components, these new semiconductor
+materials can switch high voltages and high currents with smaller dimensions and less loss. The material properties
+of SiC and GaN components make them suitable for different voltage classes. While the SiC technology is advan-
+tageous for voltages of over 1,000 volts, GaN technology is well suited for use with 600 volts or less.
+As the market player with one of the most comprehensive portfolios of power semiconductors, Infineon focuses
+on understanding the customer application. The goal is to offer our customers the solution with the best price-
+performance ratio. Such a solution can also be based on a combination of silicon and SiC components. The balance
+between cost and performance advantages of the individual components is essential to a sustainable improvement
+of the customer's system. This may apply to the efficiency, costs, size, weight or time-to-market.
+Today's main applications for SiC are solar inverters, industrial power supplies as well as the charging infrastructure
+for electro-mobility, in particular ultra-fast charging stations. We also regard auxiliary units in trains as a promising
+future application. In the medium-term, control units for variable speed drives for the widest possible range of
+motor types and operating modes (stepping motors, robotics, high RPM, high torque) also represent an interesting
+field of application. On top of that the use of SiC in electric vehicles also represents enormous potential. Possible
+applications here are initially the on-board charger, followed by the main inverter.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Research and development
+52
+52
+The focus of our future development activities in the area of SiC is on the expansion of the product portfolio, both
+in terms of additional form factors (this applies to the package and the topologies in the modules) and to higher
+voltage classes (starting with 1,200 volts up to 1,700 volt and 3,300 volts).
+Compared to silicon transistors, gallium nitride (GaN) transistors also offer new and interesting properties which
+can be used in power supplies, for example. However, only entirely new power supply topologies will take full
+advantage of GaN. Then the maximum efficiency gain can be realized with an especially compact design of the
+overall power conversion system.
+The main applications of these GaN products are power supplies optimized for the highest efficiency for use in
+high-performance servers in data centers and telecommunication equipment. The GaN power supplies, ranging
+up to 3,000 watts, can be designed differently compared with silicon-based power supplies. Depending on the
+configuration, this can also make it possible to realize system-cost advantages. The higher efficiency reduces the
+cooling effort, thus cutting expenses for heat sinks and air conditioning. Highest efficiencies and thus a minimization
+of ongoing operating expenses is key for data center operators - Google, Facebook, Amazon Web Services and
+Microsoft, to cite just a few examples - because the power consumption of such data centers with as many as
+40,000 servers is in the double-digit megawatt range. An improvement in efficiency by 1 percentage point equals
+savings of several hundred kilowatts. In addition the compactness, i.e. the power density, measured in watts
+per cubic centimeter, can also be increased. This is important as every square meter of floor space in the air-
+conditioned server rooms is expensive.
+Power density is not only important for servers but also for extremely thin flat screen monitors and for compact
+chargers and adapters for mobile devices. However, in these very price-sensitive markets it will take quite some
+time before GaN transistors achieve widespread acceptance.
+We have made significant progress in the area of gallium nitride (GaN). The first products of our CoolGaN™ family,
+various 600 volt GaN power transistors based on what is called an enhancement mode (e-Mode) GaN transistor,
+are ready for volume production. The development of the next generation of our GaN transistors has already begun.
+This new architecture allows for smaller and thus more cost-efficient transistors, favoring the introduction of
+GaN technologies also in price-sensitive markets. We are also working on integrated GaN solutions in which either
+several transistors or transistors and drivers are monolithically integrated (also referred as system-on-chip) or
+assembled as system-in-package. These compact solutions can be used for example in motor control units for
+washing machines or air conditioners. In the upcoming months we will announce several of these new products at
+various trade fairs. Volume production of our GaN products takes place in Villach (Austria) in a 150-millimeter wafer
+manufacturing line. The transition to volume production on 200-millimeter wafers is currently being planned.
+In addition to the new materials, another focus area of our research and development activities is the digital
+control of power semiconductors. We are currently witnessing the transition from analog control to digital control
+of power switches. Digital control systems enable much easier adaptation to various operating conditions (for
+example, stand-by, partial load, full load) and also increase the efficiency of increasingly complex power compo-
+nents. Programmability of the control ICs enables customers to adapt the function of the control unit to the
+requirements even with shorter learning cycles. This transition already began several years ago for MOSFET-based
+control loops; the trend has now also started for IGBT-based control loops. Infineon provides components for all
+stages of the digital control loop, namely control ICs, driver ICs and power switches. In particular, the controllers
+of the IMOTION™ family are attracting great interest in the market. We will expand this successful family and will
+develop products with integrated drivers and integrated power switches.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Research and development
+53
+||
+Applications
+The Digital Security Solutions segment in the 2018 fiscal year
+Authentication
+Development of the Segment Result
+Segment Result was €532 million, representing an increase of 25 percent compared to the previous year's
+Segment Result of €427 million. As a percent of revenue, the Segment Result margin was 23.0 percent (previous
+year: 19.9 percent).
+Segment Result was positively impacted by the increased profit contribution from increased revenue. Furthermore,
+a better productivity, among other things higher capacity utilization levels in the 300-millimeter manufacturing line
+in Dresden (Germany), and a higher-margin product mix in the individual product categories had a positive effect
+on profitability.
+Applications
+Battery-powered applications
+> DIY tools
+(cordless screwdrivers,
+drills, etc.)
+> eBikes
+HiRel
+› Commercial aviation
+> Defense technologies
+> Oil and natural gas exploration
+› Space systems
+Power management
+> Consumer electronics
+> Home appliances
+> Mobile devices
+> PCs and notebooks
+Cellular infrastructure
+› Base stations
+Internet of Things
+› Communications
+FEFF
+>
+> eScooter
+Hedge trimmer
+> Lawn mower
+> Multi-copters
+Charging stations
+for electric vehicles
+> Submarine telecommunications
+cables
+LED and conventional
+lighting systems
+› Telecom
+› Sensors
+46
+> Smart Speaker
+46
+The segments
+Combined Management Report | Our Group
+The segments
+Power Management & Multimarket
+45
+45
+Power Management
+& Multimarket
+REVENUE
+€2,318 million
+SEGMENT RESULT
+€532 million
+The Power Management & Multimarket segment in the 2018 fiscal year
+Revenue development
+In the Power Management & Multimarket segment Infineon recorded revenue of €2,318 million in the 2018 fiscal
+year, an increase of 8 percent compared to the €2,148 million revenue of the previous year. The segment contributed
+31 percent of the Group revenue.
+Revenue and Segment Result of the Power Management & Multimarket segment
+€ in millions
+2,318
+2,148
+LL
+427
+532
+Revenue
+Segment Result
+2017
+2018
+The revenue increase was essentially driven by power semiconductors. This includes AC-DC power supplies and
+DC-DC power management. Both business areas recorded strong growth and combined accounted for approxi-
+mately two-thirds of the segment revenue. Revenue was reduced by the effects of the 6 March 2018 sale of the
+largest part of our RF power component business to the US company Cree, Inc. The revenue target stated at the
+beginning of the fiscal year for the segment was nevertheless retained and achieved.
+Demand in DC-DC power management mainly came from two application areas: battery-powered applications
+and data centers. Our OptiMOS™ power transistors of the low-voltage and mid-voltage classes benefitted from the
+increase in the number of applications using DC motors, in particular with brushless DC motors. Examples of such
+applications are drills, screwdrivers, lawn mowers, hedge trimmers, power saws as well as multi-copters for trans-
+port, agriculture and recreation. Furthermore, we saw an increase in demand for electric two-wheelers such as
+eBikes, pedelecs (pedal electric cycles) and eScooters.
+In the data centers we are present with DC-DC power management as well as with AC-DC power supplies. In DC-DC
+power management, in addition to our OptiMOSTM low-voltage power transistors, our control and driver ICs and
+thus complete solutions for digital control contributed to revenue. In the 2018 fiscal year, AC-DC power supplies in
+data centers generated the highest demand for the high-voltage power transistors of our CoolMOST family. On the one
+hand classic data centers are being expanded; on the other hand there was high demand for servers optimized for
+machine learning. These special servers often have greater computing power and as a result require stronger
+power supplies. The revenue boost in AC-DC power supplies was also rooted in a positive economic environment
+across all application areas as well as in an expansion in the model range of the CoolMOST family. The technological
+competitive edge of these products was evident among other things in the major market success for equipping
+charging stations for electric vehicles in China as well as the worldwide use of onboard chargers in electric vehicles
+and plug-in hybrid vehicles.
+The RF and sensors business also recorded high growth. While in the first half-year of the 2017 fiscal year weak
+performance was evident in the area of smartphones, demand in the 2018 fiscal year came back. In particular, our
+silicon microphones as well as various radio-frequency components such as low-noise amplifiers, antenna switches
+and antenna tuners benefitted from this development.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Power Management & Multimarket
+› Accessories
+> Voice control
+> Activity trackers
+Revenue and Segment Result of the Digital Security Solutions segment
+€ in millions
+708
+664
+Revenue
+124
+105
+Segment Result
+2017
+2018
+The decline in revenue is primarily attributable to the area SIM cards for mobile communication. For strategic
+reasons we have only been participating selectively in invitations for project proposals for several years now.
+As a result, the revenue in this area has been continuously dropping and in the meantime accounts for only a low
+single-digit percentage of revenue. The two largest areas, government ID and payment, account combined for
+approximately two-thirds of segment revenue and were not been able to compensate for this development. For
+project-related reasons there was a decline in revenue in the area of government ID: A major project for the replace-
+ment of conventional passports with digital passports peaked during the 2017 fiscal year and has been progressing
+at a lower level since then. The payment business on the other hand recorded an increase in revenue. This was
+mainly driven by the transition from purely contact-based cards to dual-interface cards which can be used as both,
+contact-based or contactless cards. We benefit especially from this trend due to our core competence in the area
+of contactless technologies.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+The segments
+Digital Security Solutions
+48
+After almost doubling in the 2017 fiscal year, revenue from embedded SIM (eSIM) once again increased slightly in
+the 2018 fiscal year. eSIMs are assembled in the customer device as a replacement for classic SIM cards and ensure
+identification with the network provider. eSIMs are also used in cars: Our certified eSIM security controllers are
+used for the emergency call (eCall) function which has been mandatory in the EU since 31 March 2018 for all of the
+approximately 17 million new cars sold. In addition to many other automobile manufacturers, Daimler also relies
+on our eSIMs. The Mercedes-Benz system "MercedesMe connect" also offers fundamental supplementary services
+such as accident management, break-down and maintenance management and remote vehicle diagnostics, in
+addition to the legally mandated emergency call function.
+In the area of transport and ticketing we have seen increasing acceptance of the ticketing standard CIPURSE™ among
+the operators of public transportation networks, for example in Barcelona. CIPURSE™ is an open standard of OSPT
+(Open Standard for Public Transportation). Infineon has provided decisive support for the development and intro-
+duction of CIPURSE™. In the 2018 fiscal year, revenues were generated for the first time, based on several design-wins
+in recent years.
+We achieved another success with our Trusted Platform Module (TPM) family. Juniper, the leading provider in the
+area of automated, scalable and secure networks, now integrates our OPTIGAT TPM security solutions in its routers,
+firewalls and other devices.
+Revenue also increased in the area of authentication. Our customers rely on our security competence in order to
+protect their products, their business models and ultimately their customers. We have won designs and established
+further strategic partnerships in the areas Internet of Things, Industry 4.0 (Industrial Internet), Smart Home, Smart
+City as well as connected vehicles. Several of these projects are part of field tests or have prototype character.
+Consequently, revenue is still low during this phase. However, the potential revenue will be significant once these
+applications achieve the necessary degree of maturity. It is part of our strategic orientation to be the leading provider
+of security solutions, consisting of security chip and software. This type of security solution is the decisive success
+factor in particular for the applications mentioned above.
+In this context we are very pleased that in the meantime we achieve approximately one quarter of our revenue
+with software-related projects. Our software (for example firmware, driver software, hardware-related application
+software) and system competence puts us in a position to provide reference designs and security modules which
+are ready-to-use. We also offer support in the certification of security solutions. With these services we reduce our
+customers' development expenses and accelerate the time-to-market of their products. The investments made in
+these areas in previous years are now beginning to pay off. One example here is our SECORATM Pay security solutions
+which make it particularly easy for card manufactures to integrate dual-interface chip technologies in their product
+portfolios; they are thus able to react flexibly to regional market requirements. The high level of acceptance of the
+SECORA™ Pay brand is evident in the many projects we have already won in the 2018 fiscal year, with SECORA™ Pay
+just launched in November 2017.
+Development of the Segment Result
+Segment Result was €105 million, representing a decrease of 15 percent compared to the previous year's Segment
+Result of €124 million. As a percent of revenue, the Segment Result margin was 15.8 percent (previous year:
+17.5 percent). Segment Result was negatively impacted mainly by a lower profit contribution from the declining
+revenue. Furthermore, operating costs increased on the one hand due to the strategically planned long-term
+expansion of headcount in the areas research and development, administration and sales and on the other hand
+due to higher development costs resulting from a larger number of customer projects and the expansion of the
+product portfolio. By doing this, we intend to further expand our software and system competence in particular.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+The segments
+Digital Security Solutions
+In the Digital Security Solutions segment Infineon recorded revenue of €664 million in the 2018 fiscal year, a decrease
+of 6 percent compared to the €708 million revenue of the previous year. The segment contributed 9 percent of the
+Group revenue.
+Mobile devices
+Revenue development
+47
+> Navigation devices
+> Smartphones
+> Tablets
+Market position
+The world market for standard MOSFET power transistors reached US$6.650 billion in the 2017 calendar year, an
+increase of 13.7 percent compared to the previous year value of US$5.851 billion (Source: IHS Markit). Infineon's
+revenue increased by 15.1 percent. Because of our expanded capacities – in particular the expansion of the
+300-millimeter manufacturing capacities in Dresden (Germany) as well as the expansion of 200-millimeter manu-
+facturing capacities in Kulim (Malaysia) - we could better cover high market demands than all our competitors
+and achieved the largest gain in market share with 0.3 percentage points.
+World standard power MOSFET market share 2017
+Infineon
+ON Semiconductor
+Renesas
+Toshiba
+STMicroelectronics
+26.3%
+12.8%
+9.2%
+7.4%
+6.8%
+Source: Based on or includes content supplied by IHS Markit, Technology Group, "Power Semiconductor Annual Market Share Database 2017," September 2018.
+With a market share of 26.3 percent, Infineon continues to be the clear market leader (previous year: 26.0 percent).
+The distance to the number two competitor was 13.5 percentage points (previous year: 13.0 percentage points).
+The five largest market players together accounted for a market share of 62.5 percent.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+The segments
+Digital Security Solutions
+Digital Security Solutions
+(previously Chip Card & Security)
+REVENUE
+€664 million
+SEGMENT RESULT
+€105 million
+As of 1 October 2018 we changed the name of the segment "Chip Card & Security" to "Digital Security Solutions".
+The previous name is associated too strongly with the form factor chip card and hardware. However, for several
+years now our embedded security solutions have been aimed at entirely new customers with a significantly larger
+overall number of applications. The new name reflects the growing importance of security solutions in an increas-
+ingly connected world, with a chip as the highly reliable anchor for security. The name change has no effect on the
+organizational structure, the strategy or the business scope.
+> Servers
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our Group
+Operations
+1,323
+2,989
+3,284
+€ in millions
+Revenue by segment
+Review of results of operations
+Group performance
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Revenue grew by €536 million to €7,599 million in the 2018 fiscal year (2017: €7,063 million). The segment with
+the highest volume, Automotive, contributed more than one half (55 percent) of total revenue growth, which was
+driven above all by strong demand for semiconductors used in automotive, industrial, power supply, RF and sensor
+technology applications. In contrast, the Digital Security Solutions segment recorded a 6 percent drop in revenue,
+mainly due to lower volumes of SIM cards for mobile communications. See the chapter "The Segments" for details.
+Revenue growth reflects positive sales volume trends
+Adjusted earnings per share (diluted) improved further from €0.85 to €0.98 per share (see "Further improvement in
+adjusted earnings per share" in this chapter for details of the calculation).
+Earnings per share (basic and diluted) amounted to €0.95 per share and were therefore higher than one year earlier
+(2017: €0.70).
+Net income improved by €285 million to €1,075 million year-on-year. Despite the unfavorable development of the
+US dollar exchange rate, revenue grew by 8 percent to €7,599 million thanks to the positive development of business
+volumes. Operating income jumped by 49 percent, or €486 million, to €1,469 million, partly on the back of revenue
+growth and partly boosted by the gain from the sale of the major part of the RF power components business to
+Cree, Inc. Higher research and development expenses as well as higher selling, general and administrative expenses
+had a dampening effect on the increase in operating income. Operating income includes acquisition-related
+depreciation, amortization and other expenses totaling €118 million (2017: €153 million), mainly for International
+Rectifier (predominantly expenses recognized in conjunction with the purchase price allocation). In addition,
+income tax (see note 5 to the Consolidated Financial Statements) and the loss from discontinued operations
+(see note 6 to the Consolidated Financial Statements) were up, also lessening the increase in net income.
+Net income significantly improved
+P see page 40 ff.
+P see page 66
+P see page 129 ff.
+P see page 131 f.
+0.85
+0.98
+0.70
+1,206
+0.95
+2,318
+Automotive
+2018
+€ in millions, except percentages
+Significance of Greater China remains strong; China ahead of Germany as most important sales market
+The majority of revenue was generated in foreign currencies in the 2018 fiscal year, with revenue denominated in
+US dollars accounting for the largest share. The average euro/US dollar exchange rate changed from around 1.11
+in the previous fiscal year to 1.19 in the 2018 fiscal year. Mainly due to the unfavorable development of the US dollar
+exchange rate, currency effects across all currencies and over the fiscal year as a whole curbed revenue growth by
+approximately 4 percentage points. The year-on-year currency impact is measured by applying the previous fiscal
+year's relevant average exchange rates to 2018 fiscal year revenue.
+Negative impact of currency effects on revenue growth
+63
+2017
+2018
+0% Other Operating Segments,
+Corporate and Elimininations
+43% Automotive
+Solutions
+Digital Security Other Operating Corporate and
+Segments Elimininations
+0 3
+10 9
+664 708
+Industrial Power Control 17%
+Power Management & Multimarket 31%
+Digital Security Solutions 9%
+Share of Group Revenue 2018
+Power
+Management &
+Multimarket
+Industrial
+Power Control
+2,148
+0.70
+0.95
+790
+62
+Adjusted earnings per share (in euro) – diluted
+Diluted earnings per share (in euro)
+Basic earnings per share (in euro)
+Net income
+Loss from discontinued operations, net of income taxes
+Income from continuing operations
+Income tax
+Income from investments accounted for using the equity method
+Net financial result (financial income and expenses, net)
+Operating income
+Other operating income and expenses, net
+Selling, general and administrative expenses
+Research and development expenses
+Gross profit
+Revenue
+€ in millions, except earnings per share
+The consolidated statement of operations
+Review of results of operations
+Group performance
+Review of results of operations
+62
+2018
+2017
+7,599
+1,075
+(1)
+(143)
+791
+1,218
+(142)
+(193)
+3
+(5)
+(53)
+2017
+(53)
+1,469
+(43)
+270
+(819)
+(850)
+(776)
+(836)
+2,621
+2,885
+7,063
+983
+Europe, Middle East, Africa
+2,443
+32%
+Operating expenses (research and development expenses and selling, general and administrative expenses)
+increased by €91 million to €1,686 million year-on-year (2017: €1,595 million), corresponding to 22.2 percent of
+revenue (2017: 22.6 percent).
+Research and development expenses (R&D expenses)
+Grants received in conjunction with R&D projects, and capitalized development costs reduce the amount of
+R&D expenses recognized.
+€ in millions, except percentages
+Research and development expenses, gross
+Minus:
+grants received
+capitalized development costs
+Research and development expenses
+Change year-on-year
+Percentage of revenue
+2018
+2017
+1,065
+973
+(86)
+(68)
+(143)
+(129)
+836
+776
+Operating expenses as percentage of revenue continue to fall
+37.1%
+38.0%
+2,621
+Group performance
+Review of results of operations
+64
+The regional distribution of revenue is unchanged compared to the previous fiscal year. As in the previous year,
+Greater China is the largest region in revenue terms, once again accounting for 34 percent of total revenue, followed
+by the Europe, Middle East and Africa region with 32 percent.
+China accounted for €1,921 million or 25 percent of Infineon's worldwide revenue and therefore for the largest
+share at individual country level, followed by Germany at €1,171 million or 15 percent.
+Increase in gross margin
+The gross margin increased from 37.1 percent to 38.0 percent year-on-year, mainly reflecting the impact of revenue
+growth and lower ramp-up costs. Rising prices for wafer substrates and other materials such as copper had an
+offsetting effect. The line item “Cost of goods sold" still includes the earnings impact arising in conjunction with
+the purchase price allocation and acquisition-related expenses for International Rectifier (in particular higher
+depreciation/amortization of intangible assets and property, plant and equipment, which were revalued to their
+fair value as part of the purchase price allocation) amounting to €67 million (2017: €89 million).
+€ in millions, except percentages
+Cost of goods sold
+Change year-on-year
+8%
+Percentage of revenue
+Percentage of revenue (gross margin)
+2018
+2017
+4,714
+4,442
+6%
+7%
+62.0%
+62.9%
+2,885
+Gross profit
+Group performance
+1%
+11.0%
+1,735
+25%
+1,921
+therein: China
+34%
+2,376
+34%
+2,599
+Greater China
+15%
+1,071
+15%
+1,129
+Asia-Pacific (excluding Japan, Greater China)
+15%
+1,094
+15%
+1,171
+therein: Germany
+32%
+2,272
+25%
+Japan
+534
+7%
+P see page 50 ff.
+R&D expenses amounted to €836 million in the 2018 fiscal year, an increase of €60 million or 8 percent compared
+to the previous year's figure of €776 million. The percentage increase in R&D expenses in the 2018 fiscal year was
+in line with revenue growth. Their share as a percentage of revenue remained unchanged at 11.0 percent. Research
+and development activities were intensified, additional staff recruited, and other measures taken in order to
+broaden the basis for further growth. A total of 7,161 employees worked in research and development functions at
+the end of the reporting period (30 September 2017: 6,362 employees).
+The main R&D activities undertaken during the 2018 fiscal year are described in more detail in the chapter
+"Research and development".
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+With an increase of €223 million (42 percent), the Greater China region accounted for the largest portion of revenue
+growth by far followed by the Europe, Middle East and Africa region with a €171 million increase (32 percent of total
+revenue growth), Japan with a €71 million increase (13 percent of total revenue growth) and the Asia-Pacific region
+(excluding Japan, Greater China) with a €58 million increase (11 percent of total revenue growth). In terms of
+percentage, the highest revenue growth was achieved with 15 percent in Japan.
+100%
+7,063
+100%
+7,599
+Total
+11.0%
+10%
+9%
+719
+therein: USA
+12%
+881
+12%
+894
+Americas
+7%
+463
+714
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+12
+59
+58
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Revenue growth is compared continuously with the rate of growth of relevant target markets. This ties in directly
+with our strategic target of profiting continuously from the growth of our target markets. A further indicator for
+future revenue growth is the number of design wins, whereby we regularly measure actual outcomes against targets.
+As part of the process of analyzing operating profitability in detail, Infineon considers earnings and costs above the
+Segment Result line. This involves a review of gross profit, research and development expenses, selling, general
+administrative expenses and the ratio of these items to revenue. These performance indicators are used to manage
+the business at both Group and segment levels (for an analysis of changes in the fiscal year under report, see the
+chapter "Review of results of operations").
+Growth and profitability performance indicators
+The principal performance indicators described above are supplemented by others that provide information about
+growth potential, cost efficiency by functional area and liquidity.
+Other performance indicators
+Apart from profitability, ROCE is also influenced by asset intensity, of both non-current assets and net working capital.
+Asset intensity describes the amount of assets necessary to generate a certain level of revenue (for an analysis of
+the derivation of and the change in ROCE in the 2018 fiscal year, see the chapter "Review of financial condition").
+This key performance indicator describes how efficiently a company manages its resources. ROCE is also analyzed
+by Infineon at Group level only and not at segment level. A comparison of a company's ROCE and its weighted
+cost of capital provides information on the extent to which returns have been generated in excess of shareholders'
+and debt holders' expectations. Thus RoCE serves as a tool for value-based management.
+Psee page 62 ff.
+P see page 69
+Operating result after tax from continuing operations
+Capital employed
+ROCE =
+The performance indicator RoCE measures the ability of capital to provide a return and is defined as the operating
+result after tax from continuing operations divided by capital employed. Capital employed consists of non-current
+assets and net working capital. RoCE shows the correlation between profitability and the capital resources required
+to run the business.
+Return on Capital Employed (ROCE)
+Effective investment management plays a key role with regard to managing free cash flow. Our stated strategy
+of managing investments systematically should be seen in this context. Free cash flow is considered by Infineon at
+Group level only and not at segment level.
+Infineon manages net working capital levels by focusing continuously on optimizing levels of inventories, trade
+receivables and trade payables.
+The main levers for generating free cash flow are profitability, the ability to manage working capital efficiently and
+the levels of investments.
+An important key performance indicator for Infineon is the free cash flow figure, defined as net cash provided by
+or used in operating activities and net cash provided by or used in investing activities, both from continuing
+operations, after adjusting for cash flows related to the purchase and sale of financial investments. Free cash flow
+measures the ability to generate sufficient cash flows to finance day-to-day operations and fund required invest-
+ments out of the ongoing business. It is Infineon's stated target to sustainably generate positive free cash flow
+(see the chapter "Review of liquidity" for an analysis of free cash flow in the 2018 fiscal year).
+Free cash flow
+P see page 71
+Combined Management Report | Our Group
+Internal management system
+Internal management system | Sustainability at Infineon
+P see page 73
+60
+60
+The Infineon share
+The Infineon share
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The separate report "Sustainability at Infineon" including the summarized Non-Financial Report is available on
+Infineon's website. @www.infineon.com/csr_reporting
+In accordance with the stipulations of the German CSR Directive Implementation Act, Infineon Technologies AG
+is required to publish a non-financial report at both Company and Group level for the first time for the 2018 fiscal
+year. This report is published jointly for Infineon Technologies AG and the Infineon Group as a summarized separate
+non-financial report within the sustainability report. The information required by law is marked accordingly to
+distinguish it from the voluntary reporting according to the GRI standards. The entire report "Sustainability at
+Infineon" including the chapters of the Non-Financial Report have been subjected to a limited assurance audit by
+KPMG AG Wirtschaftsprüfungsgesellschaft, Munich (Germany).
+Sustainability activities are described in the separate report "Sustainability at Infineon".
+59
+Sustainability at Infineon
+The chapter "Outlook" contains a table showing the actual values achieved in the 2018 fiscal year for the key
+performance indicators, along with expectations for the 2018 fiscal year and the 2019 fiscal year.
+Actual and target values for performance indicators
+Moreover, in order to avoid costs resulting from overcapacity and/or capacity bottlenecks, the key operational
+figures for capacity utilization and forecast capacity requirements are analyzed. The results of this analysis are
+used in determining investment requirements.
+For an analysis of changes in these key performance indicators during the 2018 fiscal year, see the chapter
+"Review of liquidity".
+> Investments: The total amount invested in property, plant and equipment and intangible assets, including
+capitalized development costs.
+> Net working capital: Current assets less cash and cash equivalents, less financial investments, less assets
+classified as held for sale, less current liabilities excluding short-term debt, and current maturities of long-term
+debt, excluding liabilities classified as held for sale.
+> Net cash position: Gross cash position less short-term and long-term debt.
+› Gross cash position: Cash and cash equivalents plus financial investments.
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity at its disposal and an
+optimal capital structure. Liquidity is managed at Group level, not at segment level, and uses the following key
+performance indicators:
+Liquidity performance indicators
+P see page 70 ff.
+Combined Management Report | Our Group
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Segment Result is defined as operating income (loss) excluding the following: the net amount of asset impairments
+and reversals thereof (excluding capitalized development costs); the impact on earnings of restructuring and
+closures; share-based compensation expense; acquisition-related depreciation/amortization and other expenses;
+gains (losses) on sales of assets, businesses, or interests in subsidiaries as well as other income (expense), including
+litigation costs (see note 24 to the Consolidated Financial Statements for a computation of the relevant figures).
+Court and legal fees arising in conjunction with licensing Infineon's patents are included in Segment Result, as is
+any related income. Segment Result is the indicator that Infineon uses to evaluate the operating performance of its
+segments (for an analysis of Group and individual segment performance in the 2018 fiscal year, see the chapter
+"The segments" and the section "2018 fiscal year").
+P see page 39
+P see page 73 ff.
+P see page 20 ff.
+56
+Internal management system
+Combined Management Report | Our Group
+Internal management system
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+The expansion of silicon manufacturing capacities will also ultimately facilitate the expansion of manufacturing
+capacities for silicon carbide and gallium nitride. Existing buildings and manufacturing lines can be reused for these
+compound semiconductors. This results in capex-efficient expansion of capacities.
+The new factory can be completed significantly faster at the Villach site than would be the case for a factory at a new
+site, since Villach on the one hand already has a 300-millimeter thin wafer pilot line and on the other hand has the
+know-how needed for the various manufacturing technologies. The expansion will bring us significant economies
+of scale and will thus also let us improve our efficiency.
+By significantly expanding our manufacturing capacity we are also increasing our competitive strength. Here, our
+strategy is long-term and independent of possible short-term downturns in the cycle. We want to rigorously take
+advantage of the opportunities presented to us by the forecast strong market growth.
+We will build a fully automated facility for the manufacture of 300-millimeter thin wafers at the Villach (Austria) site,
+which has been for many years our competence center for power electronics. Construction started in November 2018.
+Volume manufacturing is planned to begin in early 2021, with maximum manufacturing capacity achieved as early
+as 2026. Total investments will reach approximately €1.6 billion. When operating at full capacity, the estimated
+additional revenue resulting from the fab will be approximately €1.8 billion annually.
+We have for some time now seen a rapid increase in the demand for power electronics. In order to be able to
+accommodate our customers' increasing requirements in the coming years, we decided in May 2018 to build a
+second 300-millimeter fab.
+Infineon writes the next chapter in its growth strategy: Decision in favor of the second
+300-millimeter fab
+> Equipment for innovative technologies and further improvements in quality.
+› Adaptation and retooling of manufacturing lines to accommodate the modified product portfolio, in particular
+due to the beginning of volume production for new technologies and products.
+> Further increases in the level of automation at our frontend and backend sites, for example, improvement of
+the wafer transport system.
+Furthermore, during the previous fiscal year investments were made in frontend and backend sites primarily in
+the following areas:
+5. Because of its cost position, operation of the Temecula (USA) site is planned to continue until 2021 only, and
+either to sell it before this date or close it. The products manufactured in Temecula will be transferred to other
+Infineon sites or will be outsourced to external manufacturing partners.
+4. Expansion of backend manufacturing capacities for IGBT modules for industrial and automotive applications.
+Backend manufacturing capacities were expanded to accommodate the strong demand for IGBT modules for the
+drivetrain for hybrid and pure electric vehicles. This expansion took place in Warstein for IGBT modules of the
+HybridPACK™ family as well as in Wuxi at the new joint venture with the Chinese automobile manufacturer SAIC
+Motor Corporation Ltd. The joint venture, named SIAPM (SAIC Infineon Automotive Power Modules (Shanghai)
+Co., Ltd.), was formed on 7 February 2018 and has been manufacturing since August 2018.
+55
+55
+P see page 91 ff.
+The internal management system at Infineon is designed to assist in implementing the Group strategy described in
+the chapter "Group strategy". Accordingly, performance indicators are used, which enable profitable growth and
+efficient employment of capital to be measured.
+Over the economic cycle, Infineon has set itself the targets of:
+> achieving a compound annual revenue growth rate of 9 percent
+Segment Result
+Since all three performance indicators and especially Segment Result strongly correlate with revenue growth, the
+latter is not used as a key performance indicator in its own right, but is covered by the key indicators indirectly.
+The three performance indicators described above are also the cornerstones of the system for variable compensation
+within Infineon. Most variable salary components for employees and management are directly linked to these
+performance indicators.
+Infineon also compares the actual as well as the planned Return on Capital Employed (ROCE) against the cost of
+capital, in order to ensure value creation.
+Segment Result is the key figure of the Group for measuring operating performance. Expressed as a percentage of
+revenue (Segment Result Margin), it measures profitability of revenue and shows how well operations are being
+managed. The activities of Infineon's segments are managed on the basis of Segment Result. Responsibility for
+optimizing Segment Result within the framework of Group strategy (as approved by the Management Board) rests
+with the management teams of the relevant segments, acting, however, in coordination with the Management Board.
+Free cash flow from continuing operations enables us to measure how well operating profitability is being converted
+into cash inflows. This key figure also provides information on the efficient use of working capital and property,
+plant and equipment.
+> Return on Capital Employed (ROCE) to measure capital efficiency.
+> Free cash flow from continuing operations to measure the amount of cash generated or used excluding
+financing activities,
+› Segment Result and Segment Result Margin to measure the operating profitability of its various businesses and
+of the portfolio as a whole,
+In order to measure its success in implementing its strategies, Infineon uses the following three overarching
+performance indicators:
+Principal performance indicators
+@It is possible to
+participate in the
+Performance indicators
+P see page 159 ff.
+57
+Combined Management Report | Our Group
+Internal management system
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Infineon deploys a comprehensive controlling system to manage its business with respect to the strategic targets
+it has set itself. The system involves the use of financial and operating key performance indicators. Information
+for controlling purposes is derived from annual long-term planning, quarterly outlooks, orders received per week
+and actual monthly data. This knowledge enables management to base its decisions on sound information with
+respect to the current situation and future expected financial and operational developments. Sustainable business
+practices and the consideration of forward-thinking qualitative factors are important for Infineon's long-term
+success. As an enterprise very much aware of its responsibilities towards society, Infineon also takes account of
+non-financial factors, mainly in the fields of sustainability (see report "Sustainability at Infineon" on our website
+@www.infineon.com/csr_reporting) and human resources (see the chapter "Human resources strategy"). Although these
+factors are not used to manage business performance, they nevertheless help Infineon achieve its financial targets.
+As part of the process of managing business performance, management also attaches great importance to ensuring
+that Infineon acts in strict compliance with all relevant legal requirements and, of equal importance, that its internal
+Corporate Governance Standards are complied with (see the chapter "Corporate Governance").
+In this context, growth, profitability and investments are all interdependent. Profitability is the prerequisite for
+being able to finance operations internally, which, put another way, means opening up potential opportunities for
+growth. Growth, in turn, requires continual investment in research and development as well as in manufacturing
+capacities. Growing at a commensurate rate allows Infineon to achieve leading market positions and to generate
+economies of scale that contribute to greater profitability. Employing financial resources efficiently is a critical factor
+in achieving these goals.
+Overall, reaching these financial targets gives rise to a sustainable increase in the value of the business, brought
+about by achieving a premium on the cost of capital in the long term.
+In the coming years, we also plan to invest a low triple-digit million amount in total in order to take advantage of
+possible additional business opportunities and follow structural changes. These are not included in the 15 percent
+ratio described above. In addition, there are already announced investments in front-end cleanrooms and large
+office buildings, including the 300-millimeter cleanroom and the research and development building at the Villach
+site (Austria). In the 2019 fiscal year, around €200 million of this will accrue. If these measures are implemented, the
+investment rate will temporarily be significantly higher than the rate envisaged in the target operating model. In
+view of strong customer demand, Infineon expects revenue to increase by 11 percent plus or minus 2 percentage
+points in the 2019 fiscal year. The Segment Result Margin is expected to come in at 18 percent at the mid-point of
+the range for revenue growth (see the chapter "Outlook").
+> realizing the above-mentioned revenue growth with an investment ratio of 15 percent relative to revenue.
+> thereby achieving an average Segment Result Margin of minimum 17 percent, and
+P see page 40 ff.
+and page 16 ff.
+telephone confer-
+ences via the internet
+as a webcast on
+our Investor
+06|2018
+03/2018 04|2018 05|2018
+02|2018
+01|2018
+10|2017 11|2017 12|2017
+80
+17.02
+90
+100
+110
+120
+19.14
+21.27
+23.40
+25.52
+130
+30 September 2017 = 100
+27.65
+Development of the Infineon Technologies AG share compared to Germany's DAX Index, the Philadelphia
+Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2018 fiscal year (daily closing prices)
+Infineon share price in €
+Share price development
+due on 10 March 2022, ISIN: XS1191116174
+since February 2016: "BBB" (outlook "stable")
+07|2018
+08 |2018
+09|2018
+Infineon
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+In recent years Infineon has continuously increased its dividend payment. The dividend payment for the 2017 fiscal
+year was €0.25 per share. On 27 February 2018, the third business day after the Annual General Meeting, a total
+amount of €283 million was paid out to shareholders. At that point in time the number of shares entitled to a dividend
+was 1,130,200,929. As of 30 September 2018 the number of shares issued was 1,136,995,834. This figure includes
+the unchanged amount of 6 million shares owned by the Company, which are not entitled to a dividend. Based on
+Infineon's positive business development, a proposal is to be made to shareholders at the 2019 Annual General
+Meeting to increase the dividend for the 2018 fiscal year by 2 cents from €0.25 to €0.27 per share. For more information
+on Infineon's dividend policy, see "Sustainable value creation for our shareholders" in the chapter "Group strategy".
+Dividend
+P see page 30
+3.00% State of Norway
+9.81% Retail investors
+5.26% BlackRock Inc.
+Other 76.19%
+Allianz Global Investors GmbH 5.74%
+Shareholder structure
+As of 30 September 2018, three shareholders each held 3 percent or more than 3 percent of the Infineon shares
+issued. At the end of the 2017 fiscal year, the same three shareholders held more than 3 percent of shares each.
+The share capital held by retail investors increased slightly from 9.52 percent at the end of the 2017 fiscal year to
+9.81 percent at the end of the 2018 fiscal year.
+Rating of S&P Global Ratings
+Shareholder structure
+In the USA, the Infineon share is traded in the form of American Depositary Shares ("ADS") on the OTCQX Interna-
+tional over-the-counter market under the ticker symbol "IFNNY". The average daily ADS trading volume also rose in
+the 2018 fiscal year. The average daily number of ADS traded in the 2018 fiscal year increased to 165 thousand,
+compared to 98 thousand ADS per day in the previous year. The number of ADS outstanding rose from 21.8 million
+ADS as of 30 September 2017 to 31.7 million ADS at the end of the previous fiscal year.
+The average volume of Infineon shares traded in the Xetra system, measured in units, increased by 32 percent in the
+2018 fiscal year compared to the previous fiscal year. 5.4 million shares were traded daily in the 2018 fiscal year,
+compared to an average of 4.1 million shares traded daily in the previous fiscal year. Measured in euros the average
+daily trading volume even rose by 65 percent: In the 2017 fiscal year it was €74.3 million per day, while in the 2018
+fiscal year Infineon shares worth €122.6 million were traded daily.
+Trading volumes and stock indices
+The value development of comparable benchmark indices was highly varied. While the DAX also experienced a
+decline of minus 5 percent during the same period, the comparable industry benchmark indices rose considerably
+at the same time. The Philadelphia Semiconductor Index (SOX) increased by 17 percent and the Dow Jones US
+Semiconductor Index rose by 19 percent while US peers benefited from the strength of the euro. In US dollar terms,
+Infineon's performance was negatively impacted by the devaluation of the US dollar.
+The Infineon share finished the 2018 fiscal year at a closing price of €19.57, a decline of 8 percent compared to the
+closing price of €21.27 at the end of the 2017 fiscal year. In general, the share's price developed positively during the
+first nine months of the previous fiscal year. The share value fluctuated between prices of approximately €21 and
+€25 and reached its highest value for the year in mid-June at €25.49. After this point a stronger share price decline
+began, with the lowest price in the previous fiscal year of €18.71 recorded in mid-September.
+Combined Management Report | Our Group
+The Infineon share
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Dow Jones US Semiconductor Index
+-SOX
+DAX
+In the DAX ranking, Infineon improved by one place in terms of market capitalization, moving from 16th place at the
+end of the 2017 fiscal year to 15th place at the end of the 2018 fiscal year. In terms of the volume traded in euros in
+Xetra and on the Frankfurt trading floor during the last twelve months, Infineon moved up seven places: After ranking
+19th in the previous year, at the end of the 2018 fiscal year Infineon was ranked 12th. The Infineon share has been
+a part of the TecDAX since 25 September 2018 and as of 30 September 2018 was ranked 3rd, both in terms of market
+capitalization und trading volume, respectively.
+61
+1.5% Infineon Bond from 10 March 2015
+2 Own shares were not taken into consideration for calculation of market capitalization.
+Trading in the USA
+Daily average shares traded on Xetra
+Market capitalization²
+(+49 89 234-26655).
+Listings
+Reuters
+Bloomberg
+Ticker symbol
+and by telephone
+our private share-
+holders by email
+(investor.relations
+@infineon.com)
+We are available to
+WKN
+ISIN
+Own shares
+Shares issued¹
+Share capital
+Share types
+Basic information on shares
+investor).
+(www.infineon.com/
+Relations pages
+Market capitalization²
+Daily average ADS traded
+Index membership (selected)
+@A full overview of other major indices in which the Infineon
+share is represented can be found on Infineon's website at
+www.infineon.com/cms/en/about-infineon/investor/
+1 The number of shares issued includes own shares.
+Dow Jones Sustainability World Index
+Dow Jones Sustainability Europe Index
+S&P-Europe-350
+MSCI Germany
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+Dow Jones Germany Titans 30
+Dow Jones STOXX Europe 600
+TecDAX
+DAX 30
+165,496 (in the 2018 fiscal year)
+Bond information
+US$25,696 million (as of 30 September 2018)
+5,437,588 (in the 2018 fiscal year)
+€22,134 million (as of 30 September 2018)
+Shares: Frankfurt Stock Exchange (FSE)
+IFX GY (Xetra trading system), IFNNY US
+IFX-XE, IFNNY-XE
+IFX (share), IFNNY (ADS)
+623100
+€2,273,991,668 (as of 30 September 2018),
+€2,272,401,858 (as of 30 September 2017)
+1,136,995,834 (as of 30 September 2018),
+1,136,200,929 (as of 30 September 2017)
+6 million shares (as of 30 September 2018)
+DE0006231004
+of €2 each (ADS: shares = 1:1)
+Ordinary registered shares in the form of shares or
+American Depositary Shares (ADS) with a notional value
+infineon-share/index-membership/
+ADS, over-the-counter trading on the OTC market (OTCQX)
+Combined Management Report | Our 2018 fiscal year
+Moderate decrease
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Assets
+9,945
+10,879
+25%
+23%
+9%
+9%
+12%
+14%
+27%
+28%
+16%
+15%
+Non-current assets increased by €382 million from €5,074 million to €5,456 million over the course of fiscal year under
+report. Investments in property, plant and equipment totaling €1,090 million were higher than the depreciation and
+amortization expense of €702 million. Investments related primarily to the manufacturing sites in Dresden, Regensburg
+(both Germany), Kulim, Melaka (both Malaysia) and Villach (Austria). Investments in intangible assets (€164 million)
+were slightly higher than the corresponding amortization expense (€159 million).
+6%
+5%
+5%
+2017
+2018
+Liabilities and equity
+9,945
+10,879
+10%
+11%
+18%
+14%
+5%
+5%
+6%
+6%
+Increase in non-current assets due to higher level of investments
+Review of financial condition
+4%
+2,251
+2,211
+2%
+4,433
+4,309
+3%
+6,446
+5,636
+14%
+9.9%
+7.9%
+59.3%
+68
+56.7%
+14.0%
+23.8%
+32.5%
+13.6%
+12.5%
+20.5%
+14.9%
+P see page 71 f.
+Current assets influenced by increase in inventories and trade receivables
+Current assets increased by 11 percent from €4,871 million at the end of the previous fiscal year to €5,423 million as
+of 30 September 2018. Contributing to this development, inventories and trade receivables went up by €360 million
+in total, reflecting revenue growth across the segments. In addition, Infineon's gross cash position (sum total of cash
+and cash equivalents and financial investments) increased by €91 million (see "Gross cash position and net cash
+position" in the chapter "Review of liquidity" for further information).
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Group performance
+16.7%
+5%
+5%
+5%
+1,020
+1,181
+1,834
+1,532
+503
+552
+489
+636
+463
+532
+5,636 6,446
+9,945 10,879
+P see page 137
+2017 2018
+P see page 138 ff.
+Increase in trade payables and provisions more than offset decrease in debt
+Total liabilities stood at €4,433 million as of 30 September 2018 and were therefore €124 million (3 percent) higher
+than one year earlier (€4,309 million). Trade payables increased by €161 million, mainly as a consequence of the
+revenue growth recorded by the segments and high levels of investment. Current and non-current provisions went
+up o in total by €147 million (see note 13 to the Consolidated Financial Statements for details), while pensions plans
+and similar commitments increased by €49 million (see note 14 to the Consolidated Financial Statements for details).
+By contrast, debt decreased overall by €302 million. This figure includes the repayment of a €300 million bond relating
+to refinancing for the acquisition of International Rectifier. Information on debt maturities is provided in note 12 to
+the Consolidated Financial Statements.
+Debt by currencies
+2018
+53%
+2017
+43%
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+1,532
+€ in millions
+2017
+2018
+P see page 136 f.
+9,945 10,879
+Equity
+603
+57%
+59%
+2017
+2018
+€ in millions
+2017
+2018
+€ in millions
+Gross cash position
+Trade and other receivables
+2,452
+851
+971
+Trade and other payables
+Debt
+Inventories
+1,240 1,480
+Pension plans and
+Property, plant and equipment
+2,659 3,038
+Intangible assets
+1,586 1,596
+similar commitments
+Provisions
+Deferred tax assets
+612
+648
+Other liabilities
+Other assets
+545
+2,098
+2,182
+9%
+9,945
+99
+P see page 132
+Combined Management Report | Our 2018 fiscal year
+Group performance
+Review of results of operations
+Further improvement in adjusted earnings per share
+Earnings per share in accordance with IFRS are influenced by amounts relating to purchase price allocations
+for acquisitions (in particular International Rectifier) as well as by other exceptional items. To enable better
+comparability of operating performance over time, Infineon computes adjusted earnings per share (diluted)
+as follows:
+€ in millions (unless otherwise stated)
+Net income from continuing operations attributable to
+shareholders of Infineon Technologies AG - diluted
+Plus/minus:
+Impairments on assets (excluding capitalized development costs) including assets classified
+as held for sale, net of reversals'
+Impact on earnings of restructuring and closures, net
+65
+Share-based compensation expense
+(Gains)/losses on sales of assets, businesses,
+or interests in subsidiaries, net
+Other income and expense, net
+Tax effects on adjustments
+Revaluation of deferred tax assets resulting from
+the annually updated earnings forecast
+2018
+2017
+1,218
+791
+7
+-
+13
+Acquisition-related depreciation/amortization and other expenses
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Psee page 148 ff.
+P see page 129 ff.
+The markets served by Infineon continue to benefit from the solid growth rates still being predicted for the global
+economy. The global semiconductor market relevant for Infineon (i.e. excluding memory ICs and microprocessors)
+grew by 9.7 percent in the 2017 calendar year on a US dollar basis. The market research company IHS Markit predicts
+that this market will grow by 8.6 percent in the 2018 calendar year and then by a further 6.1 percent in the 2019
+calendar year. In other words, the pace of growth of the global world semiconductor market relevant for Infineon
+is forecast to slow down, while still remaining faster than that predicted for the global semiconductor market as a
+whole (i.e. including memory ICs and microprocessors). The actual growth of this market in the 2017 calendar year
+was 21.9 percent. An increase of 15.8 percent and a decrease of 4.3 percent are predicted for the 2018 and 2019
+calendar year, respectively. These predictions mainly reflect how the market for memory ICs is expected to develop.
+After an actual growth rate of 60.7 percent in the 2017 calendar year, the market for memory ICs is predicted to
+grow by 31.8 percent and 2.4 percent in the calendar years 2018 and 2019 respectively. All growth figures are based
+on market sizes measured in US dollars.
+P see page 131
+Combined Management Report | Our 2018 fiscal year
+Group performance
+Review of results of operations
+Selling, general and administrative expenses
+€ in millions, except percentages
+Selling, general and administrative expenses
+Change year-on-year
+Percentage of revenue
+2018
+2017
+850
+819
+4%
+4%
+11.2%
+11.6%
+At 11.2 percent of revenue selling, general and administrative expenses were lower in percentage terms than in
+the previous fiscal year (11.6 percent). In absolute terms, they went up by €31 million or 4 percent to €850 million,
+and therefore at a less pronounced rate than revenue growth.
+Other operating income increased
+The net amount from other operating income and expenses developed positively compared to the previous fiscal
+year, turning from negative €43 million to positive €270 million. The net amount reported for the 2018 fiscal year
+includes, in particular, the gain of €270 million which arose on the sale of the major part of the RF power components
+business to Cree, Inc. (see note 6 to the Consolidated Financial Statements).
+Effective tax rate of 13.7 percent
+Based on pre-tax income of €1,411 million and an income tax expense of €193 million, the effective tax rate for
+the 2018 fiscal year amounted to 13.7 percent. The equivalent figures for the 2017 fiscal year were an income tax
+expense of €142 million (15.2 percent) on pre-tax income of €933 million.
+As in the previous fiscal year, income tax expense for the 2018 fiscal year was affected by foreign tax rates,
+non-deductible expenses, tax credits and changes in valuation allowances on deferred tax assets.
+Further details regarding income tax expense are provided in note 5 to the Consolidated Financial Statements.
+Loss from discontinued operations
+The loss from discontinued operations, net of income taxes, for the 2018 fiscal year amounted to €143 million
+(2017: €1 million). The deterioration was mainly attributable to the increase in provisions for Qimonda in connection
+with pending legal proceedings. For further information on risks relating to the Qimonda insolvency see note 19
+to the Consolidated Financial Statements.
+Sharp improvement in earnings per share
+The improvement in net income resulted in a corresponding increase in earnings per share. Compared to earnings
+per share of €0.70 (basic and diluted) in the previous fiscal year, the corresponding figures for the 2018 fiscal year
+both amounted to €0.95.
+118
+47%
+153
+13
+Total equity
+Statement of Financial Position ratios:
+Return on assets 1
+Equity ratio 2
+Return on equity 3
+Debt-to-equity ratio 4
+Inventory intensity 5
+ROCE 6
+1 Return on assets = Net income/Total assets
+2 Equity ratio = Total equity/Total assets
+3 Return on equity = Net income/Total equity
+4 Debt-to-equity ratio = (Long-term and short-term debt)/Total equity
+5 Inventory intensity = Inventories (net)/Total assets
+Total liabilities
+P see page 69
+67
+30 Septem-
+30 Septem-
+ber 2018
+ber 2017
+Change
+year-on-year
+5,423
+4,871
+11%
+5,456
+5,074
+8%
+10,879
+6 Calculation see following section about ROCE in this chapter
+Non-current liabilities
+Current liabilities
+Total assets
+(272)
+15
+18
+36
+5
+9
+(49)
+shareholders of Infineon Technologies AG - diluted
+Adjusted net income from continuing operations attributable to
+Weighted-average number of shares outstanding (in million) - diluted
+Adjusted earnings per share (in euro) - diluted²
+1,116
+967
+1,134
+1,134
+0.98
+0.85
+1 Without impairments/reversals of impairments on capitalized development costs since 1 October 2017, but impairments in connection with the sale
+of the largest part of the Radio Frequency Power Components business to Cree, Inc. are included here. Previous periods figures were not adjusted.
+2 The calculation of the adjusted earnings per share is based on unrounded figures.
+Adjusted net income and adjusted earnings per share (diluted) should not be seen as a replacement or superior
+performance indicator, but rather as additional information to net income and earnings per share (diluted)
+determined in accordance with IFRS. The calculation of earnings per share in accordance with IFRS is presented
+in detail in note 7 to the Consolidated Financial Statements.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+66
+99
+Combined Management Report | Our 2018 fiscal year
+Group performance
+Review of financial condition
+Review of financial condition
+€ in millions, except percentages
+Current assets
+Non-current assets
+5325
+1,834
+2,543
+1,044
+The Infineon treasury's stated objective is to ensure financial flexibility based on a solid capital structure. It is of
+prime importance for all companies in the semiconductor industry to ensure that sufficient cash funds are available
+to finance operating activities and planned investments throughout all phases of the business cycle. Debt should
+only constitute a modest proportion of the financing mix, so that headroom is available at all times.
+Group-wide treasury principles are in place regarding all issues relating to liquidity and financing, such as banking
+policies and strategies, execution of financing agreements, liquidity and investment management worldwide,
+currency and interest rate risk management and the handling of external and intragroup cash flows.
+Treasury at Infineon is based on a centralized approach in which the Group Finance & Treasury department is
+responsible for all major tasks and processes worldwide relating to financing and treasury matters.
+In the context of centralized liquidity management and where permitted by law and economically feasible, cash
+pooling structures are in place for liquidity management purposes in order to ensure the best possible allocation
+of liquidity within the Group and reduce external financing requirements. Liquidity accumulated at Group level is
+invested centrally by the Group Finance & Treasury department, based on a conservative approach to investments,
+in which preservation of capital is prioritized over return maximization. The Group Finance & Treasury department
+is also responsible for managing currency and interest rate risks. We employ the following derivative financial
+instruments for hedging purposes: forward foreign currency contracts to reduce exchange rate exposures (to the
+extent foreign currency cash flows are not offset within the Group) and commodity swaps to reduce price risks
+for expected purchases of gold. Derivative financial instruments are not used for trading or speculative purposes.
+Further information regarding derivative financial instruments and the management of financial risks is provided
+in notes 22 and 23 to the Consolidated Financial Statements.
+Furthermore, to the extent permitted by law, all financing activities and credit lines worldwide are arranged,
+structured and managed either directly or indirectly by the Group Finance & Treasury department in accordance
+with stipulated treasury principles.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+Report on expected
+developments, together
+with associated material
+risks and opportunities
+Outlook
+Actual and target values for performance indicators
+The following table and subsequent comments compare the actual and forecast values of Infineon's key
+performance indicators for the 2018 fiscal year and show the outlook for the 2019 fiscal year.
+€ in millions, except percentages
+Principles and structure of Infineon's treasury
+Principal performance indicators
+FY 2017
+Segment Result Margin
+Euro
+US dollar
+Free cash flow from
+continuing operations
+ROCE
+14.9%
+Supplementary
+performance indicators
+Growth and profitability
+Original Outlook
+FY 2018
+Actuals
+FY 2018
+Actuals
+Taking into account the financial resources available to Infineon - including internal liquidity on hand, net cash
+that can be generated, and available credit facilities (€72 million; 2017: €72 million; see note 12 to the Consolidated
+Financial Statements for further information) - we assume that we will be able to cover our planned capital require-
+ments for the 2019 fiscal year. This includes fixed contractual obligations, such as investments, leasing arrangements,
+fixed service and supply agreements for commodities, input materials, electricity, gas and other similar items
+(see note 18 to the Consolidated Financial Statements for further information). Planned investments are discussed
+in the chapter "Outlook".
+Psee page 152 ff.
+Psee page 73 ff.
+Minus:
+Short-term debt and current maturities of long-term debt
+Long-term debt
+Total debt
+Net cash position
+30 Septem-
+ber 2018
+30 Septem-
+ber 2017
+732
+860
+1,811
+1,592
+2,543
+2,452
+25
+323
+1,507
+1,511
+1,532
+1,834
+1,011
+618
+The gross cash position as of 30 September 2018 increased by €91 million. Free cash flow totaling €618 million
+exceeded the sum of the dividend payment (€283 million) and the repayment of debt (€321 million). The release
+of €75 million of restricted cash also had a positive effect.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Group performance
+Review of liquidity
+72
+Psee page 136
+P see page 147
+73
+Gross cash position
+Outlook
+FY 2019
+About 17% (at the mid-point of the
+planned range for revenue growth)
+Between €500 million and €600 million
+4%
+In the range of €1.8 billion to €2.6 billion
+and therefore within the target range
+of €1 billion + 10% to 20% of revenue
+Net cash position
+(gross cash position higher than debt)
+Between €650 million and €850 million
+Between €1.1 billion and 1.2 billion
+2,543
+€1 billion
++20%
+1,011
+712
+1,254
+Slight increase
+Increase in line
+with revenue growth
+Increase below
+revenue growth
+In the range of €1.9 billion to €2.7 billion
+and therefore within the target range
+of €1 billion + 10% to 20% of revenue
+Net cash position
+(gross cash position higher than debt)
+Between €1.0 billion and €1.2 billion
+Between €1.6 billion and 1.7 billion
+Net cash position
+Working capital
+Investments
+621
+850
+1,022
+Revenue growth of 9 percent plus or minus 2 percentage points was forecast for the 2018 fiscal year. The actual
+growth figure of 8 percent was therefore within the expected range. Year-on-year growth was negatively impacted
+by the weaker US dollar. A Segment Result Margin of 17 percent was forecast at the mid-point of the planned range
+for revenue growth. Although revenue growth was slightly below the mid-point of the planned range, the Segment
+Result Margin came in at 17.8 percent.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+74
+Free cash flow totaled €618 million in the 2018 fiscal year and was therefore slightly above the expected range of
+between €500 million and €600 million. This outcome includes the proceeds from the sale of the major part of the
+RF power components business to Cree, Inc., offset in part by higher-than-expected investments and cash outflows
+in connection with the establishment of a joint venture with SAIC Motor Corporation Limited (China) and the
+acquisition of the start-up company Merus Audio (Denmark).
+The forecast for Return on Capital Employed (ROCE) had been for a level slightly higher than the previous year's
+figure of 14.9 percent. Thanks to the strong operating performance and the gain from the sale of the major part of
+the RF power components business, ROCE increased to a better-than-expected 20.5 percent.
+The gross margin improved from 37.1 percent in the 2017 fiscal year to 38.0 percent in 2018 fiscal year, in line
+with expectations. Operating expenses developed in line with or slightly better than expected. The prediction for
+research and development expenses was an increase slightly above revenue growth. The actual increase was
+limited to 8 percent, in line with revenue growth. Selling, general and administrative expenses were forecast to
+increase at a rate below revenue growth. The actual increase of 4 percent in the 2018 fiscal year was therefore in
+line with the forecast.
+Explanatory comments to the outlook for the 2019 fiscal
+Assumed euro/US dollar exchange rate
+year
+As a globally operating organization, Infineon generates revenue not only in euros, but also in foreign currencies,
+predominantly US dollars. It also incurs expenses in US dollars and, to some extent, in currencies correlated to the
+US dollar, such as the Singapore dollar, the Malaysian ringgit and the Chinese renminbi. The impact of non-euro
+denominated revenue and expenses does not always balance out. For this reason, fluctuations in exchange rates,
+particularly between the euro and the US dollar, influence the amounts reported for revenue and earnings. A rising
+US dollar has a positive impact, whereas a falling US dollar has an adverse impact on revenue and earnings. Excluding
+the effect of currency hedging instruments, the impact of a deviation of 1 cent in the actual exchange rate of the
+US dollar against the euro compared to the forecast rate would amount to a change in Segment Result of approxi-
+mately €3 million per quarter or approximately €12 million per fiscal year compared to the forecast value. These
+figures assume, however, that the exchange rates of currencies correlated with the US dollar - in which expenses
+arise for Infineon - change in line with the euro/US dollar exchange rate. In terms of revenue, the impact of
+exchange rates is limited primarily to the euro/US dollar rate, where a deviation of 1 cent in the actual exchange
+rate compared to the forecast rate would continue to have an impact on revenue of approximately €9 million per
+quarter or approximately €36 million per fiscal year. Planning for the 2019 fiscal year is based on an assumed
+average exchange rate of US$ 1.15 against the euro.
+Growth prospects for the global economy and the semiconductor market
+The world economy grew by 3.2 percent in the 2017 calendar year. In the spring of 2018, experts at the International
+Monetary Fund (IMF) initially predicted a slight increase in the global growth rate for the 2018 calendar year to
+3.4 percent. Over the summer and fall of 2018, these expectations were corrected downwards gradually, so that the
+IMF's latest prediction for economic growth in the 2018 calendar year now also stands at 3.2 percent. For the 2019
+calendar year, the experts are currently predicting global economic growth of 3.1 percent. However, the simmering
+trade dispute with the USA, increasing protectionist tendencies as well as rising interest rates and oil prices are
+seen as potential risks for future growth.
+Comparison of original outlook and actual figures for the 2018 fiscal year
+8%
+38.0%
+836
+plus/minus 2 percentage points
+17.8%
+618
+About 18% (at the mid-point of the
+planned range for revenue growth)
+Slightly positive up to €200 million
+Slight increase
+20.5%
+performance indicators
+Change in revenue
+compared to previous year
+Gross margin
+37.1%
+Research and
+776
+development expenses
+1%
+Selling, general and
+819
+administrative expenses
+4%
+Liquidity performance indicators
+Gross cash position
+2,452
+€1 billion
++21%
+618
+9%
+Increase by 9%
+8%
+Increase by 11%
+plus/minus 2 percentage points
+Slight increase
+Increase slightly
+above revenue growth
+Increase below
+revenue growth
+594
+Financial investments
+17.1%
+€ in millions
+847
+Assets
+Plus/minus:
+Cash and cash equivalents
+Financial investments
+Assets classified as held for sale
+Total current liabilities
+10,879
+9,945
+(732)
+(860)
+(1,811)
+(1,592)
+1,263
+(11)
+(2,182)
+(2,098)
+Short-term debt and current maturities of long-term debt
+25
+323
+Capital employed ②
+6,168
+5,695
+ROCE 1/②
+20.5%
+14.9%
+1 The financial result for both the 2018 and 2017 fiscal year amounted to negative €53 million, and included negative €45 million and negative
+€56 million, respectively, of net interest result.
+The reported ROCE was calculated using actual capital employed, without adjustment for exceptional factors such
+as provisions recorded in connection with the Qimonda insolvency, purchase price allocations for acquisitions as
+well as changes in deferred tax assets and liabilities, each of which influences the level of capital employed.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+(23)
+69
+(142)
+3
+726
+790
+806
+1,834
+1,532
+57%
+Combined Management Report | Our 2018 fiscal year
+Group performance
+Review of financial condition
+Equity up mainly due to net income for the year
+Cash and cash equivalents
+The equity ratio improved to 59.3 percent as of the end of the reporting period (30 September 2017: 56.7 percent).
+ROCE of 20.5 percent generated
+(193)
+Operating income from continuing operations after tax rose by 49 percent from €847 million to €1,263 million
+year-on-year. Capital employed, however, increased by only 8 percent from €5,695 million as of 30 September 2017
+to €6,168 million as of 30 September 2018. As a result, the Return on Capital Employed (ROCE) rose sharply from
+14.9 percent to 20.5 percent. The performance again enabled Infineon to more than cover its cost of capital in the
+2018 fiscal year.
+€ in millions
+Operating income
+Plus/minus:
+Financial result excluding interest result¹
+Gain from investments accounted for using the equity method
+Income tax
+Operating income from continuing operations after tax ①
+2018
+2017
+1,469
+983
+(8)
+3
+(5)
+ROCE for the 2018 and 2017 fiscal years is calculated as follows:
+69
+Equity increased by €810 million (14 percent) to stand at €6,446 million at the end of the reporting period (30 Sep-
+tember 2017: €5,636 million). The increase was mainly attributable to net income for the 2018 fiscal year amounting
+to €1,075 million. The payment of the dividend for the 2017 fiscal year reduced equity by €283 million.
+Group performance
+Debt repayments and dividend payment result in net cash used in financing activities
+from continuing operations
+Net cash used in financing activities from continuing operations in the 2018 fiscal year totaled €542 million and
+was mainly impacted by repayments of long-term debt amounting to €321 million (see note 12 to the Consolidated
+Financial Statements). In addition, the dividend for the 2017 fiscal year amounting to €283 million was paid.
+Net cash used in financing activities from continuing operations in the 2017 fiscal year amounted to €340 million,
+comprising mainly a cash outflow of €248 million for the dividend payment for the 2016 fiscal year.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Group performance
+Review of liquidity
+71
+Free cash flow
+Infineon reports the free cash flow figure, defined as net cash provided by and/or used in operating activities and
+net cash provided by and/or used in investing activities, both from continuing operations, after adjusting for cash
+flows related to the purchase and sale of financial investments. Free cash flow serves as an additional performance
+indicator, since Infineon holds part of its liquidity in the form of financial investments. This does not mean that
+the free cash flow calculated in this way is available to cover other disbursements, since dividend, debt-servicing
+obligations and other fixed disbursements are not deducted. Free cash flow should not be seen as a replacement
+or superior performance indicator, but rather as an additional useful item of information over and above the
+disclosure of the cash flow reported in the Consolidated Statement of Cash Flows, and as a supplementary
+disclosure to other liquidity performance indicators and other performance indicators derived from the IFRS
+figures. Free cash flow only includes amounts from continuing operations, and is derived as follows from the
+Consolidated Statement of Cash Flows:
+€ in millions
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Purchases of (proceeds from sales of) financial investments, net
+Free cash flow
+2018
+2017
+1,571
+1,728
+(1,163)
+(1,131)
+210
+(3)
+618
+594
+Net cash provided by operating activities exceeds investments
+Free cash flow in the 2018 fiscal year amounted to €618 million. Net cash provided by operating activities from
+continuing operations amounting to €1,571 million exceeded cash outflows of €1,254 million used for investments
+in property, plant and equipment, intangible and other assets. The free cash flow includes the cash received in con-
+nection with the sale of the major part of the RF components business to Cree, Inc. (see note 6 to the Consolidated
+Financial Statements).
+Free cash flow in the previous fiscal year amounted to €594 million. Net cash provided by operating activities
+from continuing operations amounting to €1,728 million easily exceeded total cash outflows of €1,134 million
+used for investments in property, plant and equipment, intangible and other assets as well as for the acquisition
+of the shares of MoTo Objekt Campeon GmbH & Co. KG.
+Gross cash position and net cash position
+The following table reconciles the gross cash position and the net cash position (i.e. after deduction of debt). Since
+some liquid funds are held in the form of financial investments, which, for IFRS purposes, are not considered to be
+"cash and cash equivalents", Infineon reports on its gross and net cash positions in order to provide investors with
+a better understanding of its overall liquidity. The gross and net cash positions are determined as follows from the
+Consolidated Statement of Financial Position:
+Combined Management Report | Our 2018 fiscal year
+Net cash used in investing activities from continuing operations in the previous fiscal year totaled €1,131 million.
+Investments in property, plant and equipment and in intangible assets amounted to €1,022 million.
+Net cash used in investing activities from continuing operations totaled €1,163 million in the 2018 fiscal year,
+including investments in property, plant and equipment (€1,090 million) and in intangible and other assets
+(€164 million). Net purchases of financial investments amounted to €210 million. These outflows were partly
+offset by cash received in connection with the sale of the major part of the RF components business to Cree, Inc.
+(see note 6 to the Consolidated Financial Statements) amounting to €323 million.
+P see page 131
+Net cash provided by operating activities from continuing operations down year-on-year
+Net cash provided by operating activities from continuing operations in the 2018 fiscal year amounted to
+€1,571 million, down by €157 million compared to the previous fiscal year's figure of €1,728 million. Taking income
+from continuing operations before depreciation, amortization, impairment losses, interest, income taxes and the
+gain from the sale of the major part of the RF power components business to Cree, Inc., amounting to €2,054 million
+(2017: €1,806 million) as the starting point, changes in inventories, trade receivables and trade payables totaling
+€209 million reduced net cash provided by operating activities from continuing operations (2017: increased by
+€13 million). Cash outflows for interest and income taxes totaled €262 million (2017: €191 million).
+Review of liquidity
+Net cash used in investing activities from continuing operations influenced by investments
+in property, plant and equipment
+Review of liquidity
+Cash flow
+70
+€ in millions
+2018
+2017
+Net cash provided by operating activities from continuing operations
+1,571
+1,728
+Net cash used in investing activities from continuing operations
+Net cash used in financing activities from continuing operations
+(1,163)
+(1,131)
+70
+(340)
+(542)
+235
+(17)
+2
+Psee page 136
+Effect of foreign exchange rate changes on cash and cash equivalents
+Change in cash and cash equivalents
+(128)
+(130)
+Net change in cash and cash equivalents from discontinued operations
+Cash-relevant change in cash and cash equivalents
+252
+P see page 131
+4
+(5)
+Low Risk
+4 > €100 million Significant
+2 >€20 million Minor
+<€20 million Marginal
+on Segment Result
+Degree of Impact
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+High Risk
+Medium Risk
+3 >€60 million Moderate
+1
+1
+4
+3
+2
+1
+2
+3
+4
+5
+5 >€250 million Major
+Degree of Impact
+Risk assessment matrix
+5
+Likelihood of Occurrence
+Internal Control System with respect to the financial reporting process
+1 <10% Unlikely
+Risk and opportunity report
+The scales used to measure these two factors (degree of impact and likelihood of occurrence) and the resulting risk
+assessment matrix are depicted in the following graph.
+Report on expected developments, together with associated material risks and opportunities
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+> Processes are in place for the segregation of duties and for the dual control principle in the context of preparing
+financial statements, as well as for authorization and access rules for relevant IT accounting systems.
+> Processes and controls are in place to explicitly guarantee the completeness and correctness of the year-end
+financial statements and financial reporting;
+> Issues relevant for financial reporting and disclosures in connection with agreements entered into are recognized
+and appropriately presented;
+> Intragroup transactions are fully accounted for and properly eliminated;
+> Group-wide financial reporting, valuation and accounting guidelines are continually updated and adhered to;
+The ICS is an integral part of the accounting process in all relevant legal entities and corporate functions. The
+system monitors compliance with stated principles and stipulated procedures based on preventive and detective
+controls. Among other things, we regularly check that:
+The principal focus of the Internal Control System (ICS) is on the financial reporting process, with the aim of
+monitoring the proper maintenance and effectiveness of accounting systems and financial reporting. The primary
+objective of the ICS is to minimize the risk of misstatement in Infineon's internal and external reporting and to
+ensure with a reasonable amount of certainty that the Consolidated Financial Statements comply with all relevant
+regulations. Appropriate controls must therefore be in place throughout the organization to ensure such compliance.
+Clear lines of responsibility are assigned to each of the processes.
+The Supervisory Board's Investment, Finance and Audit Committee oversees the effectiveness of the Risk Manage-
+ment System. As part of the statutory audit, the external Group auditor also examines our early warning system
+pursuant to section 91, paragraph 2, of the German Stock Corporation Act to ascertain its suitability to detect risks
+that could pose a threat to Infineon's going-concern status and reports annually thereon to the Chief Financial
+Officer (CFO) and the Investment, Finance and Audit Committee of the Supervisory Board.
+Compliance with the ERM approach is monitored by the corporate Risk Management and ICS departments using
+procedures incorporated in business processes. Group Internal Audit also tests compliance with legal requirements
+and Infineon guidelines and, where appropriate, rules relating to Risk and Opportunity Management and initiates
+corrective measures.
+All reported risks and opportunities in their entirety are reviewed for Infineon for possible correlation and overlap
+factors, and are analyzed using an Infineon-specific categorization model. Risks and opportunities analysis and new
+developments in risk management culture are supplemented by interdisciplinary workshops held at segment, cor-
+porate and regional levels. Important information relevant for Infineon's Risk and Opportunity Management System
+is available to all employees via our intranet system, including access to ERM tools and ERM guidelines, containing
+job descriptions for all functions involved in the process as well as all information necessary for reporting purposes.
+Risk and Opportunity Managers are designated at appropriate hierarchical levels to manage and monitor identified
+risks and opportunities, and are responsible for formally determining a set of appropriate strategies (avoidance,
+mitigation, transfer to other parties, acceptance). Working closely with corporate functions and individual managers,
+the Risk and Opportunity Manager is also responsible for defining and monitoring measures aimed at implementing
+the adopted management strategy. For our system to be successful, it is essential that risks and opportunities are
+managed and monitored pro-actively and with a great deal of commitment.
+Based on the potential degree of impact on operations, liquidity, earnings, cash flows and reputation as well as
+the estimated probability of occurrence, a risk is classified as “high”, “medium” or “low”.
+78
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Combined Management Report | Our 2018 fiscal year
+5 90% Certain
+4 <90% Probable
+3 <60% Likely
+2 <40% Possible
+Likelihood of Occurrence
+All relevant risks and opportunities are assessed uniformly across the Group in quantitative and/or qualitative terms,
+based on the dimensions degree of impact on operations, liquidity, earnings, cash flows and reputation on the one
+hand and likelihood of occurrence on the other.
+Investments (defined by Infineon as the sum of purchases of property, plant and equipment, purchases of intangible
+assets and capitalized development costs) are expected to rise in a range between €1.6 billion and €1.7 billion in the
+2019 fiscal year. In the 2018 fiscal year, this figure amounted to €1,254 million, comprising investments in property,
+plant and equipment of €1,090 million and in capitalized development costs and other intangible assets of €164 million.
+Investments in capitalized development costs and other intangible assets in the 2019 fiscal year should reach a slightly
+lower level than one year earlier.
+In organizational terms, the Risk and Opportunity Management System is structured in a closed-loop, multiple-
+stage process, which stipulates the manner and criteria to be applied to identify, measure, manage and report on
+risks and opportunities and defines how the system is to be monitored as a whole. Major components of the system
+are a quarterly analysis of risks and opportunities, reporting by all consolidated entities, an analysis of the overall
+situation at segment, regional and Group level, reporting to the Management Board on the risks and opportunities
+situation as well as major management measures undertaken. The Management Board, in turn, reports regularly
+to the Supervisory Board's Investment, Finance and Audit Committee. Where necessary, standard processes are
+supplemented by the ad-hoc reporting of any major risks identified between regular reporting dates.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Investments and depreciation/amortization
+Working capital is forecast to finish the 2019 fiscal year at between €1.0 billion and €1.2 billion.
+Working capital
+In Germany, Infineon's current tax expense is based on the applicable "minimum taxation" rules, under which
+only 40 percent of taxable profits arising in Germany are subject to current tax due to the utilization of tax loss
+carry-forwards. This results in a current tax rate of approximately 12 percent in Germany. As of 30 September 2018,
+tax loss carry-forwards for German income tax and trade tax purposes amounted to €1.6 billion and €2.6 billion
+respectively.
+The effective current tax rate for the Group in the 2019 fiscal year is forecast to be about 15 percent. This tax rate is
+influenced in particular by tax losses available for carry-forward in Germany.
+Income taxes
+The financial result (financial income less financial expense) for the 2018 fiscal year was a net expense of €53 million.
+The €300 million bond, with a coupon of 1.0 percent, was repaid as due in mid-September. The negative financial
+result is expected to improve slightly in the 2019 fiscal year.
+Financial result
+Infineon expects the non-segment result for the 2019 fiscal year to be a loss of between €100 million and €150 million
+(2018 fiscal year: loss of €116 million) mainly due to acquisition related expenses. Approximately €90 million of the
+forecasted amount relates to non-cash-relevant depreciation and amortization arising in conjunction with purchase
+price allocation.
+Non-segment result
+Based on the forecast changes in revenue and expenses described above, in the 2019 fiscal year the Segment Result
+Margin is expected to amount to 18 percent if revenue growth were to reach the mid-point of the planned range.
+Segment Result Margin of approximately 18 percent expected
+Infineon expects operating expenses to increase in absolute terms as a result of revenue growth. Research and
+development expenses are likely to rise in line with revenue growth. Selling, general and administrative expenses
+are expected to increase at a lower rate than revenue. Acquisition-related expenses included in operating expenses
+are predicted to be slightly below the previous fiscal year's level.
+Operating expenses predicted to increase
+If revenue growth were to reach the mid-point of the planned range, the gross margin for the 2019 fiscal year is
+expected to rise slightly compared to the previous year. The gross margin will continue to be negatively influenced
+by acquisition-related expenses.
+Slight upward trend in gross margin expected
+Based on the expectations for the global economy and for the semiconductor market segments relevant for
+Infineon as described above and an assumed average exchange rate of US$1.15 against the euro, Infineon forecasts
+revenue growth of 11 percent, plus or minus 2 percentage points, for the 2019 fiscal year. Revenue growth in the
+Automotive segment is expected to be well above the Group average. The Power Management & Multimarket segment
+is predicted to grow about in line with the Group average while the Industrial Power Control segment is likely to
+report growth slightly below the Group average. Due to adverse market conditions, revenue for the Digital Security
+Solutions segment is expected to be down by a mid-single digit percentage year-on-year.
+Revenue growth of 11 percent expected, plus or minus 2 percentage points, compared to
+the previous fiscal year
+75
+Report on expected developments, together with associated material risks and opportunities
+Outlook
+Combined Management Report | Our 2018 fiscal year
+79
+Combined Management Report | Our 2018 fiscal year
+Risks and opportunities are measured on a net basis, i.e. after factoring in any risk mitigation or hedging measures,
+but without offsetting any provisions recognized. The time periods and the measurement categories used are closely
+linked to our short- and medium-term business planning and entrepreneurial targets.
+Report on expected developments, together with associated material risks and opportunities
+Outlook | Risk and opportunity report
+P see page 30
+Responsibility for processes and systems relating to Risk and Opportunity Management rests with the Risk Management
+and Internal Control System (ICS) function within the corporate finance department and with designated Risk
+Officers working at segment, corporate function and regional levels. Responsibility for the identification, measure-
+ment, management and reporting of risks and opportunities lies with the management of the organizational unit
+concerned.
+Infineon's centralized risk management system is based on a Group-wide, management-oriented Enterprise Risk
+Management (ERM) approach, which aims to cover all relevant risks and opportunities. The approach is based on
+the "Enterprise Risk Management - Integrated Framework" developed by the Committee of Sponsoring Organiza-
+tions of the Treadway Commission (COSO). The objective of the system is the early identification, assessment and
+management of risks that could have a significant influence on Infineon's ability to achieve its strategic, operational,
+financial, legal and compliance targets. We therefore define risk/opportunity as the occurrence of future uncertainties
+that could result in a negative or positive variance from plan. We incorporate all relevant organizational units within
+the Group in this analysis, thus covering all segments, significant centralized functions and regions.
+Risk and Opportunity Management System
+Coordinated risk management and control system elements are in place that enable us to pursue our stated risk
+policy in practice. Alongside the "Risk and Opportunity Management System" and the "Internal Control System
+with respect to Financial Reporting Processes” described below, it also includes the related planning, management
+and internal reporting processes as well as the Compliance Management System.
+77
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+-
+Effective risk and opportunity management is central to all of our business activities and plays an important role
+in implementing the strategic targets described in the chapter "Group strategy" - namely achieving sustainable,
+profitable growth and preserving our financial resources through efficient employment of capital. Infineon's risk
+and opportunity profile is characterized by periods of rapid growth, followed by periods of significant market
+decline, a substantial need for capital investment in order to achieve and sustain our market position and
+an extraordinarily rapid pace of technological change. Gaining a leading edge through technological innovation
+also has a legal dimension. Against this background, Infineon's risk policy is aimed firstly at taking advantage of
+identified opportunities as quickly as possible in a way most appropriate to increasing the value of the business,
+and secondly at pro-actively mitigating risks – particularly those capable of posing a threat to Infineon's going-
+concern status - by adopting appropriate countermeasures. Risk management at Infineon is therefore closely
+linked to forecasting and the implementation of our business strategies. Ultimate responsibility for risk manage-
+ment lies with the Infineon Management Board.
+Risk policy: Underlying principles of our risk and opportunity management
+P see page 20 ff.
+Risk and opportunity report
+Based on forecasts for the global economy and the semiconductor market in the 2019 calendar year, Infineon
+expects revenue growth of 11 percent year-on-year, plus or minus 2 percentage points. On this basis, the gross
+margin should increase slightly. At the mid-point of the planned range of revenue growth, the Segment Result
+Margin is expected to be in the region of about 18 percent. Investments will rise to a range between €1.6 billion and
+€1.7 billion. Depreciation and amortization are expected to be in the region of €1,000 million. Free cash flow from
+continuing operations is expected to be slightly positive and up to €200 million. The Return on Capital Employed
+(ROCE) is predicted to decrease moderately.
+Overall statement on the expected development of the Group
+The Return on Capital Employed (ROCE) is expected to moderately decrease in the 2019 fiscal year. The ROCE of
+20.5 percent for the 2018 fiscal year included, among other things, the gain from the sale of the major part of the
+RF power components business to Cree, Inc. Net income is expected to decline, while capital employed will
+increase in the 2019 fiscal year.
+ROCE
+The gross cash position is expected to finish the 2019 fiscal year at a level between €1.9 billion and €2.7 billion.
+Hence, Infineon again expects to meet its capital structure targets in the 2019 fiscal year. See "Capital structure tar-
+gets demonstrate our reliability” in the chapter "Group strategy" for more information on capital structure targets.
+Gross cash position
+Free cash flow in the 2019 fiscal year is forecast to be slightly positive and up to €200 million.
+Free cash flow from continuing operations
+Depreciation and amortization are expected to be in the region of €1,000 million. Thereof about € 90 million of that
+amount are related to depreciation and amortization resulting from purchase price allocations, mainly in connec-
+tion with the acquisition of International Rectifier.
+Planned investments in manufacturing facilities during the 2019 fiscal year will focus on expanding frontend
+capacities, including further expansion of Infineon's 300-millimeter as well as its 200-millimeter manufacturing
+capacities in Dresden (Germany) and Kulim (Malaysia), respectively. Considerable funds will also be invested in the
+upgrade of existing frontend manufacturing facilities, ensuring that they remain state-of-the-art in terms of automa-
+tion, quality, innovation and infrastructure. A significant amount is also earmarked to upgrade backend facilities
+and capacities. In addition, as already announced, a low triple-digit million amount will be invested in new build-
+ings, mainly in the new 300-millimeter facility in Villach (Austria).
+76
+Assessment of effectiveness
+84
+Furthermore, in a Representation Letter, all legal entities, segments and relevant corporate functions confirm that
+all business transactions, all assets and liabilities and all income and expense items have been recognized in the
+financial statements.
+83
+Risk and opportunity report
+Report on expected developments, together with associated material risks and opportunities
+Combined Management Report | Our 2018 fiscal year
+88
+82
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Further information in regards to litigation and government inquiries are provided in note 19 to the Consolidated
+Financial Statements.
+Whilst we often benefit from cross-licensing arrangements with major competitors, no such opportunities exist
+to safeguard against risks of this nature in the case of companies specializing in the exploitation of patent rights.
+We cannot rule out that patent infringement claims will be upheld in a court of law, thus resulting in significant
+claims for damages or restrictions in selling the products concerned. Any such outcome could in turn have an
+adverse impact on our earnings performance.
+As with many other companies in the semiconductor industry, allegations are made against us from time to
+time that we have infringed other parties' protected rights. Regardless of the prospects of success of such claims,
+substantial legal defense costs can arise.
+Intellectual property rights and patents (RC: medium)
+Provisions are recognized in connection with these matters as of 30 September 2018. The provisions reflect the
+amount of those liabilities that management believes are probable and can be estimated with reasonable accuracy
+at that time. There can be no assurance that these provisions will be sufficient to cover all liabilities that may be
+incurred in conjunction with the insolvency proceedings relating to Qimonda.
+Due to the insolvency proceedings of Qimonda and the related action of the insolvency administrator, we are
+exposed to substantial risks, which are described in detail in note 19 to the Consolidated Financial Statements.
+Qimonda insolvency (RC: high)
+Legal and compliance risks
+Further information regarding the management of financial risks is provided in note 23 to the Consolidated
+Financial Statements.
+The relatively high level of our holdings of liquid funds (gross cash position) exposes us to the potential risk of a
+default by one or more of the banking partners with whom we do business. We mitigate this risk - which could still
+arise despite various state-insured deposit protection mechanisms - by a combination of risk avoidance analyses
+and risk-spreading measures. The failure of these measures could have a materially adverse impact on Infineon's
+financial condition and liquidity situation.
+Risk of default of banking partners (RC: medium)
+Specified currency risks are hedged Group-wide by means of derivative financial instruments. These hedges are
+based on forecasts of future cash flows, the occurrence of which is uncertain. Under these circumstances, exchange
+rate fluctuations could - despite hedging measures - also have an adverse impact on earnings.
+Our involvement and participation in various regional markets around the world creates cash flows in a number
+of currencies other than the euro - primarily in US dollars. A significant share of revenue on the one hand and of
+operating costs and investments on the other is denominated in US dollars and correlated currencies. For the most
+part, Infineon generates a US dollar surplus from these transactions.
+Currency risks (RC: medium)
+Financial risks
+One of our key success factors is the availability of sufficient qualified employees at all times. There is, however, a
+general risk of losing qualified staff or not being able to recruit, train and retain adequately qualified staff within
+the business. A lack of technical or management staff could, among other things, restrict future growth and hence
+adversely impact our earnings performance.
+Impact of our global operations (RC: medium)
+Need for qualified staff (RC: medium)
+Our global business strategy requires the maintenance of R&D locations and manufacturing sites throughout the
+world. The location of such facilities is determined by market entry hurdles, technology and cost factors. Risks
+could, therefore, arise if adverse economic and geopolitical crises were to affect our regional markets and if country-
+specific legislation and regulations were to influence our investment activities and the ability to trade freely. Differing
+practices in the way tax, judicial and administrative regulations are interpreted could therefore also have a negative
+impact on operations. We could also be exposed to fines, sanctions and damage to reputation.
+Acquisitions and cooperation arrangements (RC: medium)
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+We systematically assess the effectiveness of the ICS with regard to the corporate accounting process. An annual
+risk analysis is initially performed and the defined controls are revised, as and when required. The assessment
+involves identifying and updating significant risks relating to accounting and financial reporting in the relevant
+legal entities and corporate functions. The controls defined for identifying risks are documented in accordance with
+Group-wide guidelines. Regular random tests are performed to assess the effectiveness of the controls. These tests
+constitute the basis for an assessment of the appropriate extent and effectiveness of the controls. The results are
+documented and reported in a global IT system. Any deficiencies identified are remedied with due consideration
+given to their potential impact.
+With the "Product to System" strategic approach, we seek to identify additional benefits on a system level for our
+customers from within our broad portfolio of technologies and products. The strategy enables us to exploit further
+revenue potential and thereby achieve our growth and margin targets. This approach also enables us to reduce
+customers' development costs and shorten lead times required to bring their products to market.
+Strategic approach "Product to System" (OC: medium)
+We are constantly striving to develop new technologies, products and solutions and to improve on existing ones,
+both separately and in collaboration with customers. We therefore continually invest in research and development
+relating to the use of new technologies and materials. Technologies and materials in current use may well lose their
+predominance in the foreseeable future, such as silicon, which is reaching its physical limits in some applications.
+We see numerous opportunities for working with new materials, such as those associated with silicon carbide or
+gallium nitride, to develop more powerful and/or lower-cost products. These materials could well have a positive
+influence on our ability to attain our strategic growth and profitability targets.
+New technologies and materials (OC: medium)
+The principal opportunities are described in the following section. The list is not exhaustive and represents only
+a cross-section of the opportunities available. Our assessment of these opportunities is subject to continuous
+change, reflecting the fact that our business, our markets and the technologies we deploy are continuously subject
+to new developments, bringing with them fresh opportunities, causing others to become less relevant or otherwise
+changing the significance of an opportunity from our perspective. Depending on the potential degree of impact
+and the estimated probability of occurrence, each of these opportunities is assigned to an "opportunity class” (OC)
+in the same way that risks are allocated to a risk class. These classifications are shown in parentheses (e.g. "OC:
+medium").
+Opportunities
+The overall risk assessment is based on a consolidated view of all significant individual risks. We are not currently
+aware of any substantial risks capable of jeopardizing Infineon's going-concern status.
+Overall statement by Group Management on risk situation
+In certain cases, insurance policies have been taken out to protect against potential claims and liability risks, with
+the aim of avoiding or at least minimizing any adverse impact on Infineon's financial condition and liquidity.
+We minimize legal risks relating to intellectual property rights and patents by pursuing a well-defined patent strategy,
+including thorough patent research and selective development and registration of Infineon patents as well as pre-
+cautionary protective measures in the form of agreements with major competitors. However, no such opportunities
+exist to safeguard against risks of this nature in the case of companies specializing in exploiting patent rights.
+We have established a Group-wide compliance management system with the aim of managing compliance-related
+risks on a systematic, comprehensive and sustainable basis. Under this system, major preventive procedures
+are continuously developed, other elements of the system revamped or strengthened, and appropriate responses
+established for possible or actual incidences of non-compliance with internal or external regulations. The Compliance
+Officer reports on a quarterly basis to the Chief Financial Officer and bi-annually to the Investment, Finance and
+Audit Committee of the Supervisory Board.
+In response to the general increase in threats to data security and the high degree of professionalism meanwhile
+applied in the area of cybercrime, we have initiated an information security program to further improve protection
+against hacking attacks and related risks to our IT systems, networks, products, solutions and services. Information
+security is achieved primarily with the aid of Infineon's systematically applied and global Information Security
+Management System (ISMS), the prime objectives of which are to identify and measure all potential IT risks and
+to ensure that effective processes and tools are in place to minimize and avoid risk. The ISMS covers all areas
+of Infineon's business and is certified to the globally recognized ISO/IEC 27001 norm. All relevant risk areas are
+continuously monitored and optimized in conjunction with regular internal and external audits.
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+We seek to minimize procurement-related risks through appropriate purchasing strategies and techniques, including
+constant product and cost analysis ("Best Cost Country Sourcing" and "Focus-on-Value”). These programs include
+cross-functional teams of experts who are responsible for the standardization of purchasing processes with respect
+to material and technical equipment.
+A structured project management system is in place to handle development projects, including customer-specific
+projects. Clear project milestones and verification procedures required to be carried out during a project as well as
+clearly defined limits of authority help us identify potential project risks at an early stage and counter these risks
+with specific measures.
+At an operational level, we have adopted various quality management strategies aimed at avoiding quality risks
+(such as "Zero Defects" and "Six Sigma"), to prevent or solve problems and to improve our business processes. Our
+Company-wide quality management system has been certified on a worldwide basis in accordance with ISO 9001
+and ISO/TS 16949 for a number of years and also encompasses supplier development. Our processes and initiatives
+to ensure continuous quality improvement in corporate procedures are aimed at identifying and eliminating the
+reasons for quality-related problems at an early stage.
+At a strategic risk level, we endeavor to mitigate the typical risks that arise in the semiconductor sector from
+economic and demand fluctuations and the risks related to Infineon's operations, financial condition, liquidity
+and earnings by closely monitoring changes in early warning indicators as well as by developing specific response
+strategies appropriate to the current position within the economic cycle. This can be done, for instance, by
+rigorously adjusting capacities and inventory levels at an early stage, initiating cost-saving measures and making
+flexible use of external manufacturing capacities, both at frontend and backend facilities.
+Measures to implement our risk management strategy
+Tax, fair trade and capital market regulations can all entail additional risks. In order to mitigate these risks, we rely
+upon the advice of both in-house and external experts and provide suitable training to our employees.
+In the case of smaller acquisitions or portfolio decisions, there is always a risk of non-compliance with anti-trust
+regulations due to lack of knowledge or failure to make the people involved in such transactions adequately aware
+of the issues. This can result in high levels of cost (e.g. significant time spent by management, assignment of
+attorneys) and fines. Infineon's reputation may also suffer under these circumstances.
+In order to develop or expand our business, we may seek to acquire other businesses or enter into various forms
+of cooperation arrangements. In the case of acquisitions, there is a risk that these activities prove to be unsuccessful,
+particularly regarding the integration of people and products in existing business structures. These issues could
+adversely impact our financial condition and earnings performance.
+Asian markets are particularly important to our long-term growth strategy. Our operations in China are influenced
+by a legal system that may be subject to change. One example is the fact that local regulations could make it
+mandatory to enter into partnerships with local companies. These circumstances could lead on the one hand to
+Infineon's intellectual property no longer being sufficiently protected and on the other to intellectual property
+developed by Infineon in China not being freely transferable to other countries and locations, thus impairing
+revenue and profitability.
+We cooperate with numerous suppliers who provide us with materials and services, or who manage parts of our
+supply chain. We do not always have alternative sources for some of these suppliers and therefore depend on their
+ability to deliver products of the required quality. Failure of one or more of these suppliers to meet their obligations
+to Infineon could have an adverse impact on our earnings performance.
+Report on expected developments, together with associated material risks and opportunities
+Risk and opportunity report
+P see page 148 ff.
+The reliability and security of Infineon's information technology systems are of crucial importance. At the same
+time, the world has seen a general rise in the level of threats to data security. This applies to the deployment of
+IT systems to support business processes on the one hand and internal and external communications on the other.
+Despite the array of precautionary measures put in place, any major disruption to these systems could result
+in risks relating to the confidentiality, availability and reliability of data and systems used in development, manu-
+facturing, selling or administration functions, which, in turn, could have an adverse impact on our reputation,
+competitiveness and operations.
+Data and IT systems security (RC: high)
+Operational risks
+The rapid pace of technological change in the market also results in a greater replaceability of products. Due to the
+resulting aggressive pricing policies, we may be unable to achieve our long-term strategic goals of gaining and/or
+maintaining market share and of product pricing. Moreover, accelerating M&A (Merger and Acquisition) activity
+within the semiconductor industry could result in even tougher competition. Potential benefits for competitors
+in this market include improved cost structures and stronger sales channels. Overall, this situation could have an
+adverse impact on Infineon's earnings.
+Increased market competition and commoditization of products (RC: high)
+The worldwide semiconductor market is dependent on global economic growth and hence subject to fluctuations.
+Our target markets continue to be exposed to the risk of short-term market fluctuations. As a result, our own fore-
+casts of future business developments are subject to a high degree of uncertainty. It is possible, for instance, that
+future market downturns will follow another pattern, for example, an L shape. The absence of market growth or
+its decline would make it considerably more difficult to attain our own growth target. In the event that we are
+unprepared for market fluctuations, or our response to such fluctuations turns out to be inappropriate, this could
+have a sustained materially adverse impact on Infineon's operations, financial condition, liquidity, cash flows and
+earnings.
+Cyclical market and sector development (RC: high)
+60
+80
+Risk and opportunity report
+Report on expected developments, together with associated material risks and opportunities
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+We have once again achieved above-average revenue growth in China and the share of Group revenue generated
+in this region in the 2018 fiscal year remained at 25 percent like in the previous year. Our dependence on the
+Chinese market therefore remains. This risk includes the possibility of lower external demand and hence a decline
+in manufacturing capacity utilization levels. There is also a risk that an increased volume of previously imported
+semiconductors will be manufactured in China and that a greater volume of semiconductors manufactured in
+China will be exported. Regardless of our assessment of potential scenarios and outcomes within this complex set
+of risks, these developments could have an adverse impact on Infineon's operations, financial condition, liquidity,
+cash flows and earnings.
+Trade and customs disputes could constrain global trade thereby dampening global economic growth, triggered by
+political tensions and/or trade conflicts between individual countries or regions, which - as a result of short-term or
+unforeseeable decisions - could have a significant impact on Infineon's revenue and earnings performance.
+As a globally operating company, our business is highly dependent on global economic developments. A worldwide
+economic downturn – particularly in the markets we serve - may result in us not achieving our forecasted revenue.
+Risks can also arise due to political and social changes, particularly in countries in which we manufacture and/or
+sell our products.
+Unsettled political and economic climate (RC: high)
+Strategic risks
+In the following section, we describe risks that could have a significant or materially adverse impact on Infineon's
+operations, liquidity, earnings, cash flows and reputation and which have therefore been allocated to the risk
+classes "high" or "medium". Depending on the potential degree of impact and the estimated likelihood of occurrence,
+the risk class is shown in parentheses for each risk (e.g. “RC: high”).
+Significant risks
+Dependence on individual suppliers (RC: medium)
+At the end of the annual cycle, the material legal entities review and confirm the effectiveness of the ICS with
+regard to the accounting and financial reporting process. The Management Board and the Investment, Finance and
+Audit Committee of the Supervisory Board are regularly informed about any significant control deficiencies and the
+effectiveness of the internal controls.
+The Risk and Opportunities Management System as well as the Internal Control System are continuously reviewed
+to ensure compliance with internal and external requirements. Regular improvements made to the system contribute
+to the continuous monitoring of the relevant risk areas including the responsible organizational units.
+Potential virus attacks, in particular on IT systems used in manufacturing processes, present additional risks that
+could result in loss of manufacturing and supply bottlenecks.
+Increasingly dynamic markets (RC: high)
+Ten years after the onset of the global financial and economic crisis following the collapse of Lehman Brothers
+Holding Inc., the debt situation in a number of European countries remains very tense. The terms of the United
+Kingdom's exit from the European Union (Brexit) also remain unclear.
+Thus, despite the fact that manufacturing processes and sites have become even more flexible, fluctuations in
+capacity utilization levels and purchase commitments, coupled with idle costs at manufacturing sites, nevertheless
+pose risks related to our cost position. These risks could possibly jeopardize our ability to attain growth and profit-
+ability targets that are based on cycle averages.
+Risk and opportunity report
+The accelerating pace of events in the markets in which we operate, increased demands for flexibility by our
+customers and short-term changes in order volumes could result in rising costs due to the under-utilization of
+manufacturing capacities, higher inventory levels and unfulfilled commitments to suppliers.
+P see page 148 ff.
+Report on expected developments, together with associated material risks and opportunities
+Combined Management Report | Our 2018 fiscal year
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Dependence on individual manufacturing sites (RC: medium)
+One risk that semiconductor companies operating in-house manufacturing facilities typically face is that of delays
+in the ramping-up of production volumes at new manufacturing sites, or in case of transfers of technologies. One
+good example is in the Automotive segment, where customers' product approval and testing processes can take
+place over an extended period of time, thus influencing our global manufacturing strategy as well as short- and
+medium-term capacity utilization. Failure to anticipate these changes in the manufacturing process in good time
+could result in capacity shortages and hence lower revenue on the one hand as well as costs incurred due to
+under-utilization on the other.
+Frontend and backend manufacturing need to be optimally synchronized to enable Infineon to develop competi-
+tive and high-quality products designed to provide customized technological solutions. In view of the rapid pace of
+technological change and increasingly stringent customer requirements, coordination processes need to become
+increasingly sophisticated. Failure to continue making progress in this area could result in quality problems,
+product development or market maturity delays as well as higher R&D expenses and hence adversely impact our
+earnings performance.
+Determining and adjusting manufacturing volumes (RC: medium)
+Manufacturing cost trends - raw material prices, cost of materials and process costs (RC: medium)
+Our medium- and long-term forecasts are based on expected manufacturing cost trends. In this context, measures
+aimed at optimizing manufacturing costs for raw materials and supplies, energy, labor and automation, as well as
+for bought-in services from external business partners, may not be feasible to the extent envisaged.
+Moreover, our dependence on various materials (such as wafer substrates) and raw materials (such as gold and
+copper) used in manufacturing, as well as our energy requirements expose us to substantial price risks. We are also
+dependent on supplies of the so-called rare earths required for selected manufacturing processes in conjunction
+with process integration. At the time of writing, financial instruments are in place to hedge our price risk exposure
+for gold wire during the 2019 fiscal year, based on planned volume requirements. The prices of raw materials and
+energy have recently been subject to significant fluctuation, and there is no reason to assume the situation will
+change in the near future. If we are unable to offset cost rises or pass them on to customers via price adjustments,
+it could have an adverse impact on earnings.
+The ever-increasing complexity of technologies and products, shorter development cycles and higher customer
+expectations can cause a great deal of tension in the field of product development. Buffer times built into processes
+to compensate for potential delays are reduced accordingly. In the event of being unable to execute our development
+plans at the desired quality levels, the outcome could be development delays and increased development costs,
+which could have an adverse impact on our financial condition, liquidity, cash flows and earnings.
+Our South East Asian manufacturing sites are of critical importance for our production. If, for example, political
+upheavals or natural disasters in the region were to impede our ability to manufacture at these sites on the planned
+scale or to export products manufactured at those sites, it would have an adverse impact on our financial condition,
+liquidity and earnings. Our current manufacturing capacities in this region are, to a large extent, not insured against
+political risks such as expropriation of assets. The transfer of manufacturing capacities from these sites would,
+therefore, not only involve a great deal of time and technical effort, Infineon would also be required to bear the
+necessary cost of investment.
+Psee page 155 ff.
+INFINEON TECHNOLOGIES | ANNUAL REPORT 2018
+Combined Management Report | Our 2018 fiscal year
+Dependence on the success of specific customers may also grow if they account for an above-average share of
+Infineon's revenue and earnings. This situation could be driven by an exceptionally strong performance by the
+relevant customer, resulting, for instance, from exceptional demand for its products or from consolidation trends,
+in particular those affecting our first- and second-tier customers.
+Risk and opportunity report
+The situation is exacerbated by the fact that our products are highly dependent on the degree of success achieved
+by individual customers in their own markets. Furthermore, there is a risk of losing future business and design
+wins if we are unable to deliver volumes over and above our contractual obligations if called upon by the customer
+to do so. In the case of unexpectedly high demand, we therefore face the challenge of having to deliver increased
+volumes that require an appropriate level of upfront investment. This could have an adverse impact on our planned
+investment ratio and, ultimately, on earnings.
+Report on expected developments, together with associated material risks and opportunities
+Product quality trends (RC: medium)
+Product quality assurance is a key success factor for the business. Potential quality risks – for example, due to
+the high utilization levels - can affect yield fluctuations and hence our ability to supply customers. Shortfalls
+in product quality can lead to product recalls and potential costs related to liability claims. In addition, quality
+risks could also damage Infineon's reputation and thus have a significant adverse impact on future earnings.
+Product development delays (RC: medium)
+81
+(Chart overview on p. 244)
+Reference
+(List of references on p. 151)
+Reference to external document
+This interactive pdf is optimized for use
+with Adobe Acrobat.
+Further information
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+2021/2020
+Consolidated Financial Statements
+2020
+← Q = < 2 >
+Infineon key data¹
+Fiscal year from 1 October to 30 September
+Chart reference
+2021
+Combined Management Report
+Further information
+232 Further information
+247 Imprint
+99 Group performance
+109
+Fiscal year from 1 October to 30 September
+Report on outlook, risk
+and opportunity
+124 Overall statement on Infineon's
+financial condition
+125 Infineon Technologies AG
+Corporate Governance
+151 List of references
+Page reference
+of Financial Position
+155 Consolidated Statement
+of Cash Flows
+156 Consolidated Statement
+232 Responsibility Statement by the
+Management Board
+233 Independent Auditor's Report
+240 Applications and product range
+244 Chart overview
+245
+246
+List of abbreviations
+Financial calendar 2022
+of Changes in Equity
+158 Notes to the Consolidated
+Financial Statements
+€ in
+25
+millions
+2,773
+2,322
+27
+19
+from continuing operations
+3,063
+1,817
+69
+therein: Germany
+Net cash used in investing activities
+1,278
+12
+1,056
+12
+21
+from continuing operations
+128
+Europe, Middle East, Africa
+in % of
+Net cash provided by operating activities
+8,567
+revenue
+€ in
+millions
+in % of
+Change
+revenue
+in %
+2021
+2020
+2021/2020
+€ in
+€ in
+Change
+millions
+millions
+in %
+Revenue by region
+11,060
+29
+47 Human Resources strategy
+Infineon Technologies AG
+22 Growth drivers
+Profit (loss) for the period
+1 Columns may not add due to rounding.
+(50)
+(4)
+(6)
+net of income taxes
+Profit (loss) from discontinued operations,
+1,169
+Annual Report 2021
+www
+SITE
+Infineon
+Contents
+= < 1 >
+2 Infineon key data
+3 Infineon at a glance
+(2,284)
+368
+218
+2 The business with the XMC™ family of industrial microcontrollers was transferred from the Automotive segment to the Connected Secure
+Systems segment with effect from 1 October 2020. The previous year's figures have been adjusted accordingly.
+6
+21,999
+23,334
+Total assets
+5 A dividend per share of €0.27 for the 2021 fiscal year will be proposed to the Annual General Meeting on 21 February 2022.
+6 See the chapter "Review of financial condition" for definition, p. 103.
+8
+4,110
+4,443
+Property, plant and equipment
+4 See the chapter "Review of results of operations" for definition, p. 103.
+77
+13.7
+1,170
+18.7
+2,072
+Segment Result/Segment Result Margin
+3 See the chapter "Internal management system" for definition, p. 93 f.
+49 Combined
+152 Consolidated
+Navigation in the report per mouse click
+Management Report
+80
+Research and development
+of Comprehensive Income
+154 Consolidated Statement
+>
+Next page
+6 Letter to shareholders
+88 Manufacturing
+10
+The Management Board
+92
+Internal management system
+12 Report of the Supervisory Board
+to the Annual General Meeting
+20 Business focus and strategy
+95 Sustainability at Infineon
+96
+The Infineon share
+20 Business focus
+Supervisory Board
+35 Group strategy
+The segments
+6 Management Board and
+4 The segments
+50 Business model
+153
+5 Our year at a glance
+52
+Review of the semiconductor industry
+Financial Statements
+Consolidated Statement
+of Profit or Loss
+Last page viewed
+Q
+Search
+=
+Main table of contents
+55
+2021 fiscal year
+153 Consolidated Statement
+<
+Previous page
+58
+(7,172)
+845
+Asia-Pacific (excluding Japan, Greater China)
+48.9%
+46.5%
+Other Operating Segments
+12
+0
+16
+0
+Equity ratio
+(25)
+10.3%
+3.6%
+Corporate and Eliminations
+Gross profit/Gross margin
+4,260
+38.5
+2,776
+Return on equity
+43
+11
+974
+Adjusted earnings per share in € - diluted 4
+1.20
+0.64
+88
+Power & Sensor Systems
+3,268
+29
+2,650
+31
+23
+Dividend per share in €5
+0.27
+0.22
+23
+Connected Secure Systems²
+1,397
+13
+32.4
+10
+53
+(1,448)
+12.2
+30
+Return on Capital Employed (ROCE)³
+8.4%
+3.0%
+Operating profit
+1,470
+(1,042)
+581
+Profit (loss) from continuing operations
+1,175
+372
+216
+Infineon employees as of 30 September
+50,288
+7 Debt-to-total-capital ratio = long-term and short-term financial debt divided by total assets.
+153
+12.2
+(1,354)
+Selling, general and administrative expenses
+13.1
+(1,113)
+13.0
+30
+Return on assets6
+Inventory intensity
+Debt-to-equity ratio
+6
+Debt-to-total-capital ratio?
+5.0%
+1.7%
+9.3%
+9.3%
+57.8%
+68.8%
+28.2%
+32.0%
+Research and development expenses
+17
+1,406
+14
+29
+Free Cash Flow³
+1,574
+(6,727)
+123
+Japan
+1,094
+29
+10
+9
+43
+Depreciation and amortization
+1,513
+1,260
+20
+Americas
+765
+2,472
+29
+3,178
+1,744
+16
+1,291
+15
+35
+Net cash provided by (used in) financing activities
+Greater China
+4,195
+38
+3,174
+37
+32
+from continuing operations
+(885)
+6,274
+(114)
+therein: Mainland China, Hong Kong
+1,254
+11
+1,015
+12
+29
+Basic earnings per share in €
+0.87
+0.26
+235
+Automotive²
+4,841
+44
+3,521
+41
+37
+Diluted earnings per share in €
+0.87
+0.26
+235
+Industrial Power Control
+1,542
+8,567
+68
+11,060
+30
+24
+Investments 3
+1,497
+1,099
+36
+therein: USA
+1,027
+9
+10
+22
+Gross cash position³
+3,922
+3,227
+22
+Net cash position³
+(2,663)
+(3,806)
+Revenue by segment
+Total equity
+8
+10,219
+Letter to shareholders
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Sustainability plays a key role for Infineon. At the
+beginning of 2020, we had already set ourselves
+the goal of becoming carbon-neutral by 2030.
+Our high sustainability ratings and our inclusion
+in sustainability indices are both our reward and
+our motivation.
+The integration of Cypress and the refinancing of
+this acquisition are proceeding on schedule. In
+March 2021, capital market confidence in Infineon's
+economic prospects resulted in the inclusion of our
+shares in Europe's most prestigious stock market
+index, the EURO STOXX 50®.
+We are continuing to focus on the structurally fast-
+growing themes of electrification and digitalization.
+With Cypress, we have significantly increased our
+expertise in system solutions, especially with regard
+to the loT.
+Business focus and strategy
+The coronavirus pandemic continued to have an
+impact in the 2021 fiscal year. The unexpectedly
+strong recovery of the global economy by the end
+of the 2020 calendar year led to a boom in demand
+in many sectors and a resultant shortage of semi-
+conductor components.
+SEGMENT RESULT
+AND MARGIN
+EURO
+STOXX 50Ⓡ
+INCLUSION IN THE
+€11.060 bn
++29%
+REVENUE
+Our year at a glance
+€2.072 bn
+± 18.7%
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Letter to shareholders
+Management Board and
+Supervisory Board
+Our portfolio is firmly focused on the two major trends of the coming decade: electri-
+fication and digitalization. Both trends and the interplay between them will accelerate
+structural semiconductor growth. Tomorrow's energy-efficient, connected world is
+built on semiconductors. In the Internet of Things (IoT), our products and solutions
+enable new functions and services. IoT devices capture their surroundings and process
+the data and, in doing so, they interact with the cloud and perform actions. A good
+example is the fully automatic vacuum cleaner, which also works in a very energy-
+efficient way. Key elements in IoT are sensors, microcontrollers and power semicon-
+ductors, as well as connectivity and security solutions, supplemented by software.
+Infineon offers all of these elements and makes leading-edge applications possible -
+from electric cars that drive autonomously to home solar systems with buffer batteries,
+and much more. Thus, we are able to live up to our claim that we make life easier, safer
+and greener. Our contribution to climate protection is not limited to the contribution
+made by our products: As a company, we want to become carbon-neutral by 2030.
+Strategic focus on electrification and digitalization trends
+Many of you have been following Infineon's progress for a number of years. You know
+that one really important factor in the success of the Company is our deep conviction
+that we can use innovative technology to contribute towards solving major challenges.
+Whether we are talking about the climate crisis, dwindling resources or population
+growth, the urgent issues of our time require intelligent concepts and solutions that
+enable us to lead a sustainable and secure life. Infineon, which acts as a link between
+the real world and the digital world, is more in demand than ever, and we have never
+been in a better position than we are today.
+Dear readers,
+Neubiberg, November 2021
+Chief Executive Officer
+Dr. Reinhard Ploss
+Letter to shareholders
+← Q = < 6 >
+Q = < 5 >
+← Q = < 7 >
+Further information
+Combined Management Report
+#1 with a market share of 36.5%
+for IGBT modules, R03
+Market position²
+ABB / Alstom / CRRC / Danfoss / Goldwind/
+Inovance / LG Electronics / Midea / Rockwell /
+Schneider Electric / Semikron / Siemens/
+SMA/Sungrow/Vestas / Yaskawa
+Key customers¹
+Aptiv / BorgWarner / Bosch / BYD /
+Continental/Denso / Hella / Hitachi /
+Hyundai / Lear/ Mando / Mitsubishi Electric /
+Nidec / Preh/Valeo / Veoneer / Vitesco/ZF
+Market position²
+Key customers¹
+#1 with a market share of 13.2%
+for automotive semiconductors,
+#4 with a market share of 15.1%
+for NOR Flash memory ICs, R01
+p. 75
+p. 70
+p. 65
+Connected Secure Systems
+Power & Sensor Systems
+□ p. 60
+11,401
+☐
+R023
+#3 with a market share of 11.6%
+for IPMS, R03
+Key customers¹
+Airbus Alibaba / Amazon / Baidu / Boeing/
+Cisco/Dell/Delta / Ericsson / Goertek /
+Google/Lenovo/ Lite-On / Makita / Nokia /
+Osram / Quanta / Samsung / SolarEdge / ZTE
+Market position²
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+3 A list of references can be found on p. 151.
+2 All figures for the 2020 calendar year. The market share of the five largest competitors is shown in the "Market position" section of the relevant segment. The figures provided in those sections with respect to changes in market share
+relate to the 2020 and 2019 market share figures as calculated in 2021. Due to changes in the way the market is analyzed, these figures may differ from the 2019 market share figures reported in 2020.
+1 In alphabetical order.
+Please find a detailed presentation of the segments' target applications and product range in the chapter “Applications and product range", p. 240 ff.
+Arrow / Avnet / Future / Hakuto / Intron / Jingchuan / Macnica / Nexty / Rutronik / Weikeng / WPG Holding (SAC)
+Major distributions customers¹
+#1 with a market share of 24.6%
+for secure ICs (excluding NFC), R05
+#3 with a market share of 14.7%
+for microcontrollers, R01
+CPI Card Group / Fitbit / Giesecke & Devrient /
+Harman/HP/Idemia / Lenovo / Microsoft/
+Nintendo / Perfect Plastic / Seiko Epson / Sony/
+Thales / US Government Publishing Office
+Market position²
+Key customers¹
+for MEMS microphones, R04
+#1 with a market share of 44.2%
+#1 with a market share of 24.4%
+for power MOSFETs, R03
+Consolidated Financial Statements
+A key aspect of our strategy is P2S: from product thinking to system understanding.
+We adopted this approach years ago, laying the foundations for our present success.
+Thanks to P2S, we are able today to provide our customers in many areas with com-
+plete system solutions, including the related software. Why is that so important?
+Many of our target applications are becoming increasingly complex - the best example
+of this is the car: digitalization and electrification are shaping the vehicles of tomorrow.
+The number of electronic systems due to driver assistance, infotainment and comfort
+applications is constantly rising. Battery-powered electric motors are increasingly
+used in power trains. We understand the car as a system and can offer solutions that
+contribute towards enabling transformation and mastering ever greater complexity.
+Understanding the target application also means developing components that solve
+the problem most effectively. P2S is one of our great strengths and has brought us
+success in the market.
+Industrial Power Control
+-
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+in microcontrollers R01
+< 4 >
+Automotive
+46,665
+Infineon Technologies | Annual Report 2021
+Dr. Reinhard Ploss
+Chief Executive Officer
+D
+Suricenty
+Reitrad
+The segments
+#3
+in the entire semiconductor market R01
+#9
+12
+In the area of digitalization, we are benefiting more and more from the synergies
+arising from the combined portfolio of Infineon and Cypress. Integration is progressing
+well, and we can see that the acquisition is delivering on its promises. We provided
+detailed explanations of the resulting growth opportunities for Infineon at our Investor
+Day (IFX Day 2021) in October. In particular, we described how we have acquired
+leading positions in markets of the future by investing early and consistently strength-
+ening our success factors.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← Q = < 3 >
+Infineon Technologies | Annual Report 2021
+Infineon
+at a glance
+Infineon Technologies AG is a world leader in semicon-
+ductor solutions that make life easier, safer and greener.
+Microelectronics from Infineon is the key to a better
+future. In the 2021 fiscal year (ending 30 September), the
+Company reported sales of approximately €11.1 billion
+with some 50,280 employees worldwide. Infineon is listed
+on the Frankfurt Stock Exchange (ticker symbol: IFX)
+and in the USA on the over-the-counter market OTCQX
+International Premier (ticker symbol: IFNNY).
+Part of your life.
+Part of tomorrow.
+50,280
+employees
+Stay healthy and look to the future with confidence.
+I would also like to thank you, our shareholders, because your continuing confidence
+has given us the space to concentrate on the important issues relating to the future.
+At our forthcoming Annual General Meeting, we will propose the payment of a divi-
+dend of €0.27 per share. Thus, we want to ensure appropriate participation for you in
+our success as well as giving us financial room for maneuver to respond to future
+opportunities, for which Infineon is superbly positioned.
+Infineon Technologies | Annual Report 2021
+On 22 March 2021, Infineon moved up into the EURO STOXX 50. We are proud of this
+achievement, which reflects the success of the whole Infineon team. We have made it
+into the Champions League of stock markets - and now that we are there, we intend
+to stay.
+It is important now to draw the correct conclusions from the tense supply situation,
+and to do so across all industry sectors. More complex technologies, applications and
+supply chains are becoming part of the new normal. As a company, we need to adapt.
+Today, even isolated events that are primarily regional can rapidly have an impact on
+global supply chains. The just-in-time model needs updating. There is the need for an
+approach that encompasses available capacity, inventories and supply management
+and that is proactive, changing the focus according to each situation and across
+individual company boundaries. The first step in such an approach is intelligent
+inventory management. Moreover, all partners along the value chain need to under-
+stand the new dynamic in the market and provide appropriate flexibility.
+Q = < 8 >
+Further information
+Consolidated Financial Statements
+Dear readers, the variety and nature of the developments I have outlined above
+make it clear that the fiscal year just ended was neither normal nor easy. So I would
+like to thank our employees all around the world most warmly on behalf of the
+entire Management Board. You have shown great commitment in conditions that
+were sometimes very difficult, you have supported each other, and you have been
+tireless in your efforts to help our customers. Thank you so much!
+Business focus and strategy
+The serious consequences of the chip shortage have demonstrated the relevance
+of the semiconductor industry to almost all other industry sectors. The industry is
+increasingly becoming the focus of economic and geopolitical competition in all
+regions of the world. Turning the clock back on globalization is not a viable solution.
+However, Europe must decide in which areas and to what extent it is prepared to
+accept technological dependence on other continents – as well as the areas and
+extent to which such dependence is not acceptable.
+Letter to shareholders
+Infineon Technologies | Annual Report 2021
+Current issues with allocation have only strengthened our view that we also need to
+champion our own manufacturing. The most critical bottlenecks arose for products
+that come from foundries - in some product categories, we are dependent on their
+supplies, as well. However, we are less dependent on foundries than competitors
+with fabless business models and, if we look across our entire portfolio, we are more
+resistant to supply problems. We have continued to develop our collaboration with
+contract manufacturers and have broadened our supplier base, so that in the future
+we will be even better equipped to deal with fluctuations in the supply situation.
+Without such constraints, we would have generated significantly higher revenue
+in the previous fiscal year, because demand in almost all our markets has been and
+remains very high. Even though we are currently still not able to fully satisfy the
+high levels of demand, our customers have expressed their great appreciation of our
+efforts. They realize and acknowledge that we do everything in our power to meet
+their needs. The feedback we have from our customers, especially those in the auto-
+motive sector, is that our reliability and commitment set us apart, when compared
+with other experiences they have had in the market.
+slashed its forecasts and cut back its orders, with the overall result being weak
+revenue for Infineon. Our experience from the last crisis prompted us to scale back
+our manufacturing to a significant extent, but to make only moderate reductions in
+our inventory and investment. Some industry observers and investors were skeptical
+of this approach, but it turned out to be the right one. Already in the second half of
+the 2020 calendar year, some severely affected economic sectors picked up speed
+again. In the automotive market, a catch-up effect started to be seen, while at the
+same time, the trend towards electromobility continued to accelerate. The result was
+a chip shortage that persists to this day, caused in part by the shifting of production
+capacity at our contract chip manufacturers towards supplies for use in laptops,
+tablets and servers. The situation was exacerbated by production stoppages due to
+pandemic-related lockdowns, especially in Asia, and by environmental disasters
+and accidents affecting several semiconductor manufacturers' plants.
+At the beginning of the pandemic, it still looked as if large sections of the global
+economy would grind to a halt, whereas manufacturers in the area of IoT and digital
+interaction and infrastructure saw a strong upturn. The auto industry in particular
+The effects of the coronavirus pandemic and the lessons learned
+Both trends - electrification and digitalization – have been reinforced still further by
+the coronavirus pandemic in the past eighteen months. There was a veritable boom
+in some industry sectors, such as hardware for remote working, home schooling and
+games consoles, and battery-powered DIY tools.
+Management Board and
+Supervisory Board
+Looking back, we can say that, as a company, we have dealt well with the pandemic
+to date. This is thanks to the great commitment of our employees. Infineon has
+performed well due to their exceptional dedication and has at the same time been
+pressing ahead with the evolution and implementation of its long-term strategy.
+Combined Management Report
+A significant element of our strategic evolution is the expansion of our own manufac-
+turing landscape. Without a doubt, the most important milestone was the opening
+of our new 300-millimeter semiconductor manufacturing facility in Villach (Austria)
+on 17 September. We will operate the new factory, together with our factory in
+Dresden (Germany), as one unit based on the One Virtual Fab concept, which gives
+us more flexibility and greater economies of scale. As a result, we are strengthening
+With a US$1.3 billion private placement of bonds, we successfully pressed ahead
+with the refinancing of the acquisition of Cypress. In September, thanks to the positive
+trend in our Free Cash Flow, we were also able to repay early US$365 million of the
+term loans raised to acquire Cypress. Here, too, what counts for us is long-term plan-
+ning security, stability and reliability. In this context, the rating agency S&P Global
+assigned a positive outlook to our "BBB-” rating this spring.
+Success factors and evolution of our company
+Capital market successes and outlook
+The Management Board was expanded in April in order to coordinate these activities
+across the whole company and a post was created for the transformation of Infineon
+in the digital context. Innovative strength, our focus on applications and our global
+presence in growth markets are the basis of our success. We need to strengthen the
+digital links between the major organizational units such as Technology Development
+and Manufacturing or Sales and Marketing and to make knowledge available across
+the whole company in order to continue our dynamic evolution in these areas, despite
+our increasing size and complexity. The Management Board and the Supervisory
+Board have together devised a structure that highlights Infineon's current strengths
+and enables targeted further development of our digital expertise. We are delighted
+that Constanze Hufenbecher has strengthened our Management Board team and will
+address these topics on behalf of our company. With her wealth and breadth of expe-
+rience, she is the ideal manager for this role.
+← Q = < 9 >
+Further information
+Consolidated Financial Statements
+As we look back at the 2021 fiscal year, the mentioned challenges we faced and the
+major milestones we achieved stand out in particular. In addition, there were a number
+of other important events and developments that I would like to touch on briefly here.
+Business focus and strategy
+Letter to shareholders
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+As I explained at the beginning, digitalization is a key growth driver for our business.
+It also offers huge opportunities for the evolution of our company. Growth, global-
+ization, the focus on system solutions - we will be able to deal better with all these
+issues by applying digital solutions. In terms of our offering, this means, for example,
+that we are working increasingly on delivering our solutions inclusive of software and
+on expanding our solutions to include services. In our interaction with customers, we
+can also, in many cases, become faster and more efficient by using digital channels
+and platforms. The digital transformation also offers great opportunities for enhancing
+our internal processes and working practices.
+We differentiate ourselves clearly from our competitors not only because we have
+our own manufacturing facilities, but also because of our technological expertise,
+for example, in the area of compound semiconductors based on silicon carbide (SiC)
+and gallium nitride (GaN). In many applications, silicon-based power semiconductors
+are the optimal solution in technical and economic terms, especially for low switching
+frequencies. Power semiconductors based on SiC and GaN, on the other hand, enable
+faster switching speeds and significantly higher power density. We see rapidly growing
+demand for SiC-based power semiconductors above all in the automotive market
+but also in industrial applications and are therefore expanding our CoolSiC™ portfolio
+in particular, both in the area of discrete components and that of modules. We are
+also expanding our GaN product range. In addition, we are investing increasingly in
+the expansion of our manufacturing capacity for SiC and GaN to maintain our leading
+role across the entire range of power semiconductors, paving the way for further
+enhancements in energy efficiency. This is significant, as the world of the future is
+electric.
+our undisputed leading position in power semiconductors, in light of the trend
+towards electrification. Our concept for expanding manufacturing capacity involves
+initially preparing the clean room and then ramping this up over time in response
+to demand. Production at the new Villach factory will be increased gradually based
+on this principle.
+Combined Management Report
+■SOX
+DAX
+■Infineon
+10|2020 11|2020 12|2020 01|2021 02|2021 03|2021 04|2021 05|2021 06|2021 07|2021 08|2021 09|2021
+19.46
+In the USA, the Infineon share is traded in the form of American Depositary Shares
+("ADS") on the OTCQX International over-the-counter market under the ticker symbol
+"IFNNY". About 180,000 ADS were traded daily on this market in the 2021 fiscal year
+(previous year: approximately 235,000 daily). The number of ADS outstanding
+decreased from 39.2 million as of 30 September 2020 to 33.0 million at the end of
+the 2021 fiscal year.
+The low for the 2021 fiscal year was recorded right away at the end of October 2020.
+At €23.69, the share price at that stage was only marginally lower than the €24.12
+quoted at the beginning of the fiscal year. The high for the fiscal year of €37.92 was
+recorded in mid-September 2021, shortly before the end of the fiscal year. With a
+price increase of 47 percent, the Infineon share significantly outperformed the DAX,
+which improved by 20 percent over the same period. The US benchmark indices were
+also unable to match Infineon's performance. The Dow Jones US Semiconductor Index
+rose by 39 percent over the twelve-month period and the Philadelphia Semiconductor
+Index (SOX) was up by 45 percent.
+Trading volumes and stock indices
+Driven by the share's strong performance, Infineon's market capitalization grew
+from €31,366 million at 30 September 2020 to €46,231 million at the end of the 2021
+fiscal year.
+90
+100
+110
+Measured in units, the average daily trading volume of the Infineon share on Xetra
+during the 2021 fiscal year was 4.9 million shares. Compared with the previous year's
+figure of 7.7 million shares, the figure represents a decrease of 36 percent. On the
+other hand, due to the significant rise in the Infineon share price, the average daily
+trading volume measured in euros increased by 11 percent from €143.5 million in
+the previous year to €158.0 million in the 2021 fiscal year.
+Dow Jones US Semiconductor Index
+6.82% BlackRock Inc.
+80
+4.85% Kingdom of Norway
+Infineon Technologies | Annual Report 2021
+Our dividend policy is aimed at letting shareholders adequately participate in Infineon's
+economic development and, in general, at paying out at least an unchanged dividend
+even in the event of stagnating or declining earnings. However, due to the negative
+economic impact of the coronavirus pandemic, the risks that existed at the time of
+the payout, and in order to maintain sufficient financial flexibility, a dividend of €0.22
+was paid for the 2020 fiscal year, i.e., €0.05 lower than the amount distributed for the
+2019 fiscal year. Due to Infineon's good economic performance in the 2022 fiscal year
+and the positive outlook for the current fiscal year, the dividend is now to be increased
+again by €0.05. Accordingly, a proposal is planned to be put forward at the Annual
+General Meeting in February 2022 to distribute a dividend of €0.27 per share for the
+2021 fiscal year. The number of shares issued totaled 1,305,921,137 as of 30 Septem-
+ber 2021. The figure includes 4,545,602 shares owned by the Company that are
+not entitled to a dividend. The total dividend amount would therefore increase to
+€351 million, compared with €286 million one year earlier.
+Dividend
+C36 Shareholder structure as of the end of the 2021 fiscal year
+As of 30 September 2021, similar to the previous year, four shareholders each held
+more than three percent of the Infineon shares issued. The share capital held by retail
+shareholders amounted to 8.54 percent at the end of the 2021 fiscal year, compared
+with 8.82 percent one year earlier.
+Infineon Technologies | Annual Report 2021
+Shareholder structure
+Q = < 98 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The Infineon share
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon has been listed in the EURO STOXX 50 index since 22 March 2021. On 20 Sep-
+tember 2021, the size of the German stock exchange index (DAX) was increased from
+30 to 40 stocks. At the same time, the rules determining the DAX ranking list were also
+changed. With effect from September 2021, only market capitalization is taken into
+account for these purposes, whereas trading volume no longer plays a role. Measured
+by market capitalization, Infineon ranked 11th in September 2021, moving up two
+places year-on-year. As in the previous year, Infineon achieved the 3rd position in the
+TecDAX at the end of the 2021 fiscal year in terms of market capitalization.
+120
+The coronavirus pandemic caused a sharp decline in share prices on global stock
+markets at the beginning of the 2020 calendar year. The share price then began to
+recover in mid-March 2020 and continued to increase during the 2021 fiscal year. Thus
+the share price rose more or less steadily between October 2020 and September 2021.
+140
+Combined Management Report
+The Infineon share
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+A full overview of other major indices in which the Infineon share is represented can be found on Infineon's website at
+www.infineon.com/cms/en/about-infineon/investor/infineon-share/#5].
+2 Own shares were not taken into consideration for calculation of market capitalization.
+Consolidated Financial Statements
+1 The number of shares issued includes own shares.
+due on 5 April 2028
+due on 16 June 2027
+due on 16 June 2029
+due on 16 June 2031
+due on 16 June 2033
+due on 3 June 2024
+due on 15 January 2022,
+ISIN: US232806AM17
+due on 5 April 2026
+US$350 million
+US$235 million
+US$350 million
+US$350 million
+US$350 million
+US$250 million
+US$1,110 million
+US$216 million
+due on 5 April 2024
+4.82% Allianz Global Investors GmbH
+US$350 million
+since 11 February 2021:
+"BBB-" Outlook: "positive"
+Further information
+Q = < 97 >
+Share price development
+150
+160
+170
+30 September 2020=100
+21.81
+24.11
+26.42
+28.72
+31.03
+33.34
+35.64
+37.95
+40.25
+C35 Development of the Infineon Technologies AG share compared to Germany's DAX Index,
+the Philadelphia Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index
+for the 2021 fiscal year (daily closing prices)
+Infineon share price in €
+The Infineon share finished the 2021 fiscal year at a closing price of €35.53, up
+47 percent on the €24.12 recorded one year earlier.
+130
+3.01% DWS Investment GmbH
+(160)
+Interested parties may participate in telephone conferences via a webcast broadcast in the Investor Relations section of the Infineon website.
+www.infineon.com/investor|
+0.87
+Basic earnings per share (in euro)
+368
+1,169
+Profit (loss) for the period
+(4)
+0.26
+(6)
+372
+1,175
+Profit (loss) from continuing operations
+(52)
+(144)
+Income tax
+Profit (loss) from discontinued operations, net of income taxes
+(9)
+Diluted earnings per share (in euro)
+0.26
+ISIN: XS2056730679
+Infineon Technologies | Annual Report 2021
+Further details on the performance of the segments can be found in the chapter
+"The segments". p. 58 ff.
+The Connected Secure Systems segment recorded revenue of €1,397 million in the
+2021 fiscal year (2020: €974 million), with the twelve-month Cypress revenue figure
+making a substantial contribution to the year-on-year growth of 43 percent besides
+an improved product mix. The segment contributed 13 percent to Group revenue.
+The Power & Sensor Systems segment recorded revenue of €3,268 million (2020:
+€2,650 million), corresponding to a 23 percent growth rate and a 29 percent contribu-
+tion to Group revenue. The main reason for the sharp rise was the ever-increasing
+demand for semiconductors in a wide range of applications. Growth was also driven by
+the first-time consolidation of Cypress' USB components business for a full fiscal year.
+Revenue generated by the Industrial Power Control segment totaled €1,542 million
+and was therefore 10 percent above the previous year's figure of €1,406 million.
+The segment contributed 14 percent to Group revenue.
+0.87
+Automotive remained Infineon's highest-selling segment. Based on segment revenue
+of €4,841 million (2020: €3,521 million), it contributed 44 percent of Infineon's total
+revenue. The 37 percent year-on-year increase in revenue was primarily due to
+the recovery in the automotive sector and the twelve-month revenue contribution
+from Cypress.
+Revenue grew by €2,493 million or 29 percent to €11,060 million in the 2021 fiscal year
+(2020: €8,567 million). The increase was mainly attributable to favorable volume and
+pricing factors in light of continued high demand for semiconductors in conjunction
+Strong business performance and first full-year inclusion
+of Cypress drive revenue growth
+accounted for using the equity method
+0.64
+1.20
+Adjusted earnings per share (in euro) - diluted
+with the related expansion of manufacturing capacities. On the other hand, Cypress
+contributed to Group revenue for a full fiscal year for the first time, whereas in the
+previous fiscal year Cypress' revenue was only included for the period from April to
+September. Pandemic-related constraints, for example, on manufacturing capacity
+in Melaka (Malaysia) and on contract manufacturers, and the aftermath of the winter
+storm in Austin (Texas, USA) had an offsetting effect.
+8.54% Retail investors
+71.96% Other
+9
+(148)
+Gross profit
+Revenue
+€ in millions, except earnings per share
+The consolidated statement of profit or loss
+Review of results of operations
+Group performance
+Research and development expenses
+Review of results of operations
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Group performance
+Management Board and
+Supervisory Board
+and by telephone (+49 89 234-26655).
+Retail investors can contact us by email (investor.relations@infineon.com)
+Q = < 99 >
+Share of profit (loss) of associates and joint ventures
+Selling, general and administrative expenses
+2020
+Net financial result (financial income and expenses, net)
+581
+1,470
+Operating profit
+(40)
+12
+2021
+Other operating income and expenses, net
+(1,354)
+(1,448)
+2,776
+4,260
+8,567
+11,060
+(1,113)
+(1,042)
+first reset date 1 January 2028,
+Business focus and strategy
+3.625% Hybrid Bond from
+Regional headquarters
+> Tokyo
+Japan
+Backend manufacturing
+> Wuxi
+Regional headquarters
+> Shanghai
+Greater China
+Backend manufacturing
+› Bangkok
+Thailand
+Backend manufacturing
+› Cavite
+Infineon Technologies | Annual Report 2021
+Philippines
+› Penang¹
+Backend manufacturing
+> Melaka
+Frontend manufacturing
+> Kulim
+Backend manufacturing
+Malaysia
+) Cheonan
+Korea
+Backend manufacturing
+> Batam
+Indonesia
+> Regional headquarters;
+Backend manufacturing
+(test only)
+Singapore
+Frontend manufacturing
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Internal management system
+Net of certain reversal of impairments and impairments (in particular on goodwill)
+Impact on earnings of restructuring and closures, net
+Operating profit, adjusted for:
+Segment Result is defined as follows:
+< 93 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Internal management system
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Segment Result is the key figure of the Group for measuring operating performance
+(for an analysis of the development of Segment Result of Infineon and the individual
+segments in the 2021 fiscal year, see the chapters "The segments", p. 58 ff., and
+"2021 fiscal year”, p. 56). Expressed as a percentage of revenue (Segment Result
+Margin), it measures the profitability of revenue and shows how well operations are
+being managed. The activities of Infineon's segments are managed on the basis of
+Segment Result. Responsibility for optimizing Segment Result within the framework
+of Group strategy (as approved by the Management Board) rests with the manage-
+ment teams of the relevant segments, acting, however, in close coordination with
+the Management Board.
+Segment Result
+The three performance indicators described above are also the cornerstones of the
+system for variable remuneration. Most of the variable salary components pertaining
+to employees and management are directly linked to these performance indicators.
+> Return on Capital Employed (ROCE)
+> Free Cash Flow from continuing operations and
+> Segment Result and Segment Result Margin
+In order to measure its success in implementing its strategies, Infineon uses the
+following three principal performance indicators:
+Principal performance indicators
+Performance indicators
+As part of the process of managing business performance, management also attaches
+great importance to ensuring that Infineon acts in strict compliance with all relevant
+legal requirements and, of equal importance, that its internal Corporate Governance
+Standards are complied with (see the chapter "Corporate Governance", p. 128 ff.).
+Infineon deploys a comprehensive controlling system to manage its business with
+respect to the strategic targets it has set itself. The system involves the use of finan-
+cial and operating performance indicators. Information for controlling purposes is
+derived from annual long-term planning, quarterly outlooks, actual monthly data
+and information available on a weekly basis, such as the volume of orders received.
+This knowledge enables management to base its decisions on sound information
+with respect to the current situation and future expected financial and operational
+developments. Sustainable business practices and the consideration of forward-
+thinking qualitative factors are important for Infineon's long-term success. As an
+enterprise very much aware of its responsibilities towards society, Infineon also takes
+account of non-financial factors, mainly in the field of environment and regarding
+diversity of employees. See the report "Sustainability at Infineon" on our website
+www.infineon.com/csr_reporting| Although these factors are not used to manage
+business performance, they nevertheless help Infineon achieve its financial targets.
+In this context, growth, profitability and investments are all interdependent. Profit-
+ability is the prerequisite for being able to finance operations internally, which,
+put another way, means opening up potential opportunities for growth. Growth,
+in turn, requires continual investment in research and development as well as in
+manufacturing capacities. Growing at a commensurate rate enables Infineon to
+achieve leading market positions and generate economies of scale that contribute
+to greater profitability. Employing financial resources efficiently is a critical factor
+in achieving these goals.
+Overall, the achievement of our long-term financial targets will lead to a sustainable
+increase in the value of the Company by generating a permanent premium on the
+cost of capital.
+The internal management system at Infineon is designed to help implement Group
+strategy, p. 35 ff., and the related long-term financial targets, p. 45 f. Accordingly,
+performance indicators are used that enable profitable growth and efficient
+employment of capital to be measured.
+Internal management system
+Q = < 92 >
+Further information
+Consolidated Financial Statements
+Asia-Pacific
+Share-based payment
+Backend manufacturing
+Hungary
+Backend manufacturing
+> Tijuana
+Mexico
+AMERICA
+Manufacturing sites
+Q = < 91 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Manufacturing
+Manufacturing sites
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+In September 2021, a 20-minute power cut in Dresden led to an interruption in
+production. Manufacturing was ramped up again in the following weeks.
+USA
+In February 2021, a severe winter storm in Austin resulted in power outages and
+interruptions to gas and water supplies. Following a pause in manufacturing,
+production increased over the following months, and the facility was back to full
+capacity by July.
+Impact of the coronavirus pandemic, the winter storm in
+Austin (Texas, USA) and the power cut in Dresden on supply
+and manufacturing chains
+The planned sale or closure of the site in Temecula (California, USA) has been post-
+poned to the end of the 2022 fiscal year so that we can respond to current demand
+as far as possible. The products manufactured there will be transferred to other
+Infineon sites or outsourced for manufacturing to external partners.
+In Cegléd (Hungary), the construction of the building for a new module manufactur-
+ing facility was completed and “ready for equipment”. Moreover, in February 2020,
+construction started on the new manufacturing facility at our largest backend site, in
+Melaka (Malaysia), which will focus on automotive power semiconductors.
+The 300-millimeter factory in Dresden is continuing to be fitted with production
+facilities. Investment in our Malaysian frontend site in Kulim is focusing on MEMS
+microphone technology and our power semiconductors.
+The Villach site in Austria with the new 300-millimeter chip factory (large building, back left)
+and the new research and development building (front center).
+Other investment focus areas in manufacturing in the 2021 fiscal year
+Capacity for SiC and GaN continues to be expanded on the Villach site. Existing build-
+ings and manufacturing lines can be reused for these compound semiconductors,
+enabling us to achieve capital-efficient capacity expansion. This makes it possible for
+the further ramp-up of volume production of our SiC MOSFETs in trench technology
+and SiC diodes on 150-millimeter SiC wafers.
+With the new 300-millimeter factory on the Villach site in Austria in conjunction with
+our manufacturing facility in Dresden (Germany), we are establishing the concept of
+manufacturing control spread over different locations. Villach and Dresden will use the
+same processes and plants and the same automation and digitalization concepts. As a
+result, we will achieve greater manufacturing flexibility and shorter development times.
+Furthermore, shared learning will enable a fast and seamless transfer of technology
+between sites and have a positive impact on productivity and on the stability of our
+manufacturing.
+Q = < 90 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Manufacturing
+Business focus and strategy
+Management Board and
+Supervisory Board
+The spread of the coronavirus pandemic is still presenting challenges for our supply
+and manufacturing chains. In the fiscal year just ended, we had production losses
+in our backend manufacturing in Malaysia in particular, as a result of flare-ups of
+coronavirus infections. Thanks to the use of extensive hygiene protocols and the
+administering of vaccinations to employees, as well as our classification as a system-
+relevant industry, we were given permission to continue, for the most part, with our
+manufacturing.
+> El Segundo, CA
+Regional headquarters
+> Milpitas, CA
+2 The site in Temecula will be closed in the 2022 fiscal year.
+1 Penang is assigned to the Austin site. The Known Good Die (KGD) test takes place in Penang.
+For definition frontend/backend manufacturing p. 51
+• Regional headquarters • Frontend and backend manufacturing
+■Corporate headquarters
+Backend manufacturing
+> Warstein
+Frontend and backend
+manufacturing
+› Regensburg
+Frontend manufacturing
+› Dresden
+Corporate headquarters
+> Neubiberg
+Germany
+Frontend manufacturing
+> Villach
+Austria
+Europe, Middle East, Africa
+Frontend manufacturing
+› Temecula, CA 2
+Backend manufacturing
+> San José, CA
+Frontend manufacturing
+€600 million
+Backend manufacturing
+> Leominster, MA
+Frontend manufacturing
+> Austin, TX
+Regional headquarters
+› Cegléd
+Acquisition-related depreciation/amortization and other expense
+› Mesa, AZ
+Impact on earnings of sales of businesses, or interests in subsidiaries
+Market capitalization²
+Trading in the USA
+Daily average shares traded on Xetra
+Market capitalization²
+Listings
+Nasdaq IR Insight
+Bloomberg
+Ticker symbol
+WKN
+ISIN
+Own shares
+Shares issued¹
+Share capital
+Daily average ADS traded
+1.125% Bond from 24 June 2020
+1.500% Bond from 10 March 2015
+Ordinary registered shares in the form of shares or
+American Depositary Shares (ADS) with a notional value
+of €2 each (ADS: shares = 1:1)
+Share types
+Basic information on bonds and other financing instruments
+Basic information on shares
+The Infineon share
+Q = < 96 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The Infineon share
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon
+0.750% Bond from 24 June 2020
+Index membership (selected)
+€2,611,842,274 (as of 30 September 2021),
+€2,611,842,274 (as of 30 September 2020)
+1,305,921,137 (as of 30 September 2021),
+1,305,921,137 (as of 30 September 2020)
+4,545,602 shares (as of 30 September 2021),
+5,251,391 shares (as of 30 September 2020)
+DE0006231004
+Other expenses
+due on 10 March 2022, ISIN: XS1191116174
+due on 24 June 2023, ISIN: XS2194282948
+due on 24 June 2026, ISIN: XS2194283672
+due on 24 June 2029, ISIN: XS2194283839
+due on 24 June 2032, ISIN: XS2194192527
+first reset date 1 January 2025,
+ISIN: XS2056730323
+1 October 2019
+€600 million
+2.875% Hybrid Bond from
+€650 million
+2.000% Bond from 24 June 2020
+€500 million
+€750 million
+€750 million
+€750 million
+1.625% Bond from 24 June 2020
+Rating of S&P Global Ratings
+US Private Placement from 5 April 2016
+US Private Placement from 5 April 2016
+US Private Placement from 5 April 2016
+US Private Placement from 16 June 2021
+US Private Placement from 16 June 2021
+US Private Placement from 16 June 2021
+US Private Placement from 16 June 2021
+Term loan from 3 June 2019
+4.500% Convertible Bond from
+23 June 2016
+1 October 2019
+Dow Jones Sustainability World Index
+S&P-Europe-350
+MSCI Germany
+Dow Jones Germany Titans 30
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+Dow Jones STOXX Europe 600
+EURO STOXX 50
+DAX 40
+180,128 (in the 2021 fiscal year)
+US$53,539 million (as of 30 September 2021)
+ADS, over-the-counter trading on the OTC market (OTCQX)
+4,884,416 (in the 2021 fiscal year)
+€46,231 million (as of 30 September 2021)
+Shares: Frankfurt Stock Exchange (FSE)
+IFX GY (Xetra trading system), IFNNY US
+IFX-XE, IFNNY-PK
+IFX (share), IFNNY (ADS)
+623100
+TER
+Infineon Technologies | Annual Report 2021
+TecDAX
+Sustainability at Infineon
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+ROCE 1/②
+= Capital employed ②
++ Short-term financial debt and current maturities of long-term financial debt
++ Liabilities classified as held for sale
+Total current liabilities
+Assets classified as held for sale
+Financial investments
+Cash and cash equivalents
+Assets
+= Operating profit from continuing operations after tax ①
+Share of profit (loss) of associates and joint ventures accounted for using the equity method
+Income tax
+Combined Management Report
+Internal management system
+Financial result excluding interest result
+ROCE is defined as follows:
+The performance indicator RoCE measures the return on capital and shows the cor-
+relation between profitability and the capital resources required to run the business
+(for the mathematical derivation and development of the ROCE in the 2021 fiscal year,
+see the chapter "Review of financial condition", ☐ p. 105). ROCE describes how effi-
+ciently a company uses its resources and serves as an instrument for value-based cor-
+porate management. It is also analyzed by Infineon at Group level only and not at
+segment level.
+Return on Capital Employed (ROCE)
++ Cash flows from the purchase and sale of financial investments
++ Net cash provided by (used in) investing activities from continuing operations
+Net cash provided by (used in) operating activities from continuing operations
+Free Cash Flow at Infineon is defined as follows:
+The main factors influencing Free Cash Flow are a positive earnings trend combined
+with effective management of inventories, trade accounts receivable and payable,
+and capital expenditures.
+Free Cash Flow measures the ability to generate sufficient cash flows to finance day-
+to-day operations and fund required investments out of the ongoing business. It is
+Infineon's stated target to sustainably generate positive Free Cash Flow. The consistent
+generation of Free Cash Flow is of growing importance in view of the significantly
+increased debt following the acquisition of Cypress (for an explanation of the devel-
+opment of Free Cash Flow during the 2021 fiscal year, see the chapter "Review of
+liquidity", p. 106 f.). Free Cash Flow is managed by Infineon at Group level only and
+not at segment level.
+Free Cash Flow
+Supplementing the Annual Report 2021
+= Segment Result
+Net of other income and expense
+Operating profit, adjusted for:
+Consolidated Financial Statements
+= Free Cash Flow
+Q = < 94 >
+In accordance with the stipulations of the German CSR
+Directive Implementation Act, Infineon Technologies AG
+is required to publish a non-financial report at both
+Company and Group level for the 2021 fiscal year. This
+report is published jointly for Infineon Technologies
+AG and the Group as a summarized separate non-
+financial report within the sustainability report. The
+information required by law is marked accordingly
+to distinguish it from the voluntary reporting accord-
+ing to GRI standards. The entire report "Sustainability
+at Infineon", including the chapters of the Non-Financial
+Report, have been subjected to a limited assurance
+audit by KPMG AG Wirtschaftsprüfungsgesellschaft,
+Munich (Germany), and has been certified without
+restrictions. In addition, selected indicators were sub-
+jected to a reasonable assurance audit and certified
+without restrictions.
+Sustainability activities are described in the separate
+report "Sustainability at Infineon".
+The separate report "Sustainability at Infineon",
+including the summarized Non-Financial Report,
+is available on Infineon's website at
+www.infineon.com/csr_reporting.
+Further information
+Sustainability at Infineon
+Q = < 95 >
+Further information
+Combined Management Report
+Sustainability at Infineon
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+The chapter "Outlook”, p. 109, contains a table comparing the actual values
+achieved in the 2021 fiscal year for principal and selected supplementary perfor-
+mance indicators with the values forecasted as well as the expectations for the
+2022 fiscal year.
+Actual and target values for performance indicators
+These goals are also reflected in the remuneration of the Management Board
+(see the chapter "Remuneration report”, □ p. 132 ff.).
+Already at the 2020 Annual General Meeting, Infineon announced that it wanted to
+become CO2 neutral by 2030. By 2025, Infineon would like to reduce its CO2 emissions
+by 70 percent compared to the 2019 calendar year.
+Consolidated Financial Statements
+Non-financial performance indicators
+The non-financial performance indicators at Infineon include CO2 emissions and
+indicators from the area of diversity.
+Growth and profitability indicators
+The principal performance indicators are supplemented by the following additional
+performance indicators.
+In order to analyze the operating profitability in detail, the result and cost block
+components of the Segment Result are considered. These are the gross profit,
+research and development costs, selling, general and administrative expenses,
+as well as their relation to revenue.
+Liquidity performance indicators
+Selected supplementary performance indicators
+These indicators are analyzed as well at Group level as at segment level (for the
+development of these indicators in the 2021 fiscal year, see the chapter "Review of
+results of operations", p. 99 ff.).
+> Gross cash position: Cash and cash equivalents plus financial investments.
+› Net cash position: Gross cash position less short-term and long-term
+financial debt.
+> Investments: The total amount invested in property, plant and equipment and
+other intangible assets, including capitalized development costs.
+For an analysis of changes in these performance indicators during the 2021 fiscal
+year, see the chapter "Review of liquidity”. p. 106 f.
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of
+liquidity at its disposal and an optimal capital structure. Liquidity is managed at
+Group level, not at segment level, using the following performance indicators:
+Since the three principal performance indicators and especially Segment Result posi-
+tively correlate with revenue growth, the latter is not used as a principal performance
+indicator in its own right but is covered by the three above-stated performance indi-
+cators indirectly.
+Americas
+therein: USA
+12%
+1,027
+1,015
+11%
+1,254
+Industrial
+Power Control
+Connected
+Secure Systems
+Systems
+Power & Sensor
+Automotive
+9%
+765
+10%
+9%
+1,094
+Japan
+Other Operating
+Segments
+845
+13% Connected Secure Systems
+0% Other Operating Segments,
+Corporate and Eliminations
+Total
+Consolidated Financial Statements
+29%
+Combined Management Report
+Group performance
+Review of results of operations
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Gross profit (revenue less cost of goods sold) amounted to €4,260 million, 53 percent
+up on the €2,776 million recorded one year earlier. The gross margin improved
+accordingly from 32.4 percent in the 2020 fiscal year to 38.5 percent in the 2021
+fiscal year.
+China (comprising Mainland China and Hong Kong) accounted for €3,178 million,
+or 29 percent of Infineon's global revenue, and therefore had the largest share at
+the individual country level, followed by Germany with €1,278 million or 12 percent.
+Gross margin significantly improved
+The distribution of revenue by region remained more or less unchanged compared to
+the 2020 fiscal year. As in the previous year, Greater China was the largest region in
+revenue terms, accounting for 38 percent of total revenue generated in the 2021 fiscal
+year worldwide, followed by the Europe, Middle East, Africa region with 25 percent.
+10%
+Negative impact of currency developments on revenue growth
+The majority of revenue was generated in foreign currencies in the 2021 fiscal year,
+with revenue denominated in US dollars accounting for the largest share. The average
+euro/US dollar exchange rate changed from around 1.12 in the previous fiscal year
+to 1.19 in the 2021 fiscal year, giving rise to negative currency effects.
+14% Industrial Power Control
+● 44% Automotive
+0
+C38 Revenue by segment in the 2021 fiscal year
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+100%
+8,567
+100%
+11,060
+● 29% Power & Sensor Systems
+2,472
+25%
+3,178
+3,268
+27%
+2,322
+2,773
+Europe, Middle East, Africa
+3,521
+4,841
+2020
+2021
+€ in millions, except percentages
+Regional distribution of revenue largely unchanged year-on-year
+€ in millions
+C37 Revenue by segment
+< 100 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Group performance
+Review of results of operations
+Further information
+2,650
+29%
+1,406 1,542
+1,278
+therein: Mainland China, Hong Kong
+16 12
+2021
+37%
+3,174
+38%
+4,195
+Greater China¹
+2020
+974
+1,397
+15%
+1,291
+16%
+1,744
+Asia-Pacific (excluding Japan, Greater China)
+12%
+1,056
+12%
+therein: Germany
+Q =
+20%
+At €6,800 million, the cost of goods sold during the fiscal year under report was
+€1,009 million or 17 percent higher than the previous year's figure of €5,791 million.
+The increase was therefore less pronounced than that of revenue. Factors contributing
+to this strong earnings performance included lower idle costs compared to one year
+earlier and favorable revenue-related pricing effects. Conversely, the pandemic-related
+restrictions on manufacturing in Melaka (Malaysia) worked in the opposite direction.
+Cost of goods sold also include expenses in connection with the shutdown of the fabri-
+cation plant in Austin (Texas, USA), which was ordered by the relevant authorities fol-
+lowing a severe winter storm that resulted in prolonged power outages in the region.
+Increase in net amount of other operating income and expenses
+The net amount of other operating income and expenses improved to a positive
+amount of €12 million (2020: negative €40 million). Other operating income fell by
+€12 million, whereby it should be noted that the previous year's figure included one-off
+income of €20 million arising on the sale of non-current assets. Other operating
+expenses went down by €64 million, mainly due to the €31 million decrease in acqui-
+sition-related expenses to €14 million (2020: €45 million).
+Selling, general and administrative expenses increased by €312 million or 30 percent
+to €1,354 million year-on-year. The figure also includes the twelve-month contribution
+from Cypress, higher earnings effects from purchase price allocations and acquisi-
+tion-related expenses for the acquisition of Cypress and International Rectifier totaling
+€219 million (2020: €161 million). As a percentage of revenue, selling, general and
+administrative expenses amounted to 12.2 percent in the 2021 fiscal year and were
+therefore at the same level as one year earlier (2020: 12.2 percent).
+12.2%
+12.2%
+30%
+1,042
+1,354
+2020
+2021
+Percentage of revenue
+Change year-on-year
+Selling, general and administrative expenses
+€ in millions, except percentages
+Selling, general and administrative expenses
+Review of results of operations
+Q = < 102 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Group performance
+Slight deterioration in financial result
+Business focus and strategy
+The financial result deteriorated from a negative amount of €148 million in the
+previous year to negative €160 million. Of this, negative €150 million relates to net
+interest result. Further details are provided in note 3 to the Consolidated Financial
+Statements. p. 172
+The income tax expense for the 2021 fiscal year increased to €144 million (2020:
+€52 million), mainly due to the higher level of pre-tax income. Based on profit from
+continuing operations before income taxes of €1,319 million (2020: €424 million),
+the effective tax rate for the reporting period was 10.9 percent (2020: 12.3 percent).
+Review of financial condition
+Adjusted earnings per share (diluted) increased from €0.64 to €1.20 per share and
+were calculated as follows:
+comparability of operating performance over time, Infineon computes the adjusted
+earnings per share (diluted). Adjusted profit (loss) for the period and adjusted earn-
+ings per share (diluted) should not be seen as a replacement or superior performance
+indicator, but rather as additional information to the profit (loss) for the period and
+earnings per share (diluted) determined in accordance with IFRS.
+Review of results of operations | Review of financial condition
+Group performance
+Combined Management Report
+Q = < 103 >
+Further information
+Consolidated Financial Statements
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Earnings per share in accordance with IFRS are influenced by amounts relating to
+purchase price allocations for acquisitions (in particular Cypress and International
+Rectifier), by one-time expenses recorded within the financial result in conjunction
+with the acquisition of Cypress and other exceptional items. To enable better
+Increase in adjusted earnings per share
+The calculation of earnings per share in accordance with IFRS is presented in detail
+in note 7 to the Consolidated Financial Statements. □ p. 176 f.
+Both basic and diluted earnings per share amounted to €0.87 (2020: €0.26) for the
+2021 fiscal year.
+The higher profit for the period resulted in a corresponding increase in earnings
+per share.
+Further details regarding income tax expense are provided in note 5 to the Consoli-
+dated Financial Statements. p. 173 ff.
+As in the previous fiscal year, the income tax expense for the 2021 fiscal year was
+affected by foreign tax rates, non-deductible expenses, tax-exempt income, tax credits
+and changes in valuation allowances on deferred tax assets.
+Effective tax rate down to 10.9 percent
+< 101 >
+Management Board and
+Supervisory Board
+The main research and development activities undertaken during the 2021 fiscal year
+are described in more detail in the chapter "Research and development”. ▷ p. 81 ff.
+32.4%
+38.5%
+Percentage of revenue (gross margin)
+2,776
+4,260
+Gross profit
+67.6%
+61.5%
+Percentage of revenue
+15%
+17%
+Change year-on-year
+5,791
+6,800
+2021
+2020
+Cost of goods sold
+€ in millions, except percentages
+Cost of goods sold also includes expenses arising in connection with the acquisition
+of Cypress and, to a lesser extent, with the acquisition of International Rectifier (in the
+2015 fiscal year) totaling €295 million (2020: €288 million). This amount comprised
+the income statement impact of amortization and depreciation of fair value adjust-
+ments recognized in conjunction with the respective purchase price allocations
+as well as €17 million (2020: €28 million) of other acquisition-related expenses. The
+figure reported for the previous fiscal year also included expenses arising on the
+consumption of inventories measured at their fair value in conjunction with the
+acquisition of Cypress.
+Operating expenses stable as percentage of revenue
+Infineon Technologies | Annual Report 2021
+Operating expenses (research and development expenses, selling, general and
+administrative expenses) increased by €647 million to €2,802 million year-on-year
+(2020: €2,155 million), corresponding to 25.3 percent of revenue (2020: 25.2 percent).
+Research and development expenses
+Research and development expenses, gross
+As a percentage of revenue, research and development expenses amounted to
+13.1 percent in the 2021 fiscal year, roughly at the same level as one year earlier
+(13.0 percent).
+Research and development expenses amounted to €1,448 million in the 2021 fiscal
+year, an increase of €335 million or 30 percent compared to the previous year's figure
+of €1,113 million. The principal reasons for the higher figure were the inclusion of
+Cypress for the full twelve-month period compared to the previous year, a further
+increase in research and development activities, and the recruitment of additional
+staff. In this context, the number of people employed in research and development
+functions rose by 12 percent to 10,372 employees (30 September 2020: 9,262 employ-
+ees). Moreover, acquisition-related expenses amounting to €15 million were included
+in research and development expenses (2020: €18 million).
+13.0%
+13.1%
+18%
+30%
+1,113
+1,448
+(158)
+(199)
+(108)
+(123)
+1,379
+1,770
+2020
+2021
+Capitalized development costs
+Research and development expenses
+Change year-on-year
+Percentage of revenue
+Grants received
+Minus:
+€ in millions, except percentages
+Profit for the period and earnings per share up on previous year
+After deducting income taxes and the loss from discontinued operations, Infineon
+recorded profit for the period of €1,169 million for the 2021 fiscal year (2020:
+€368 million).
+Total equity
+Non-current assets
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+(6,727)
+1,574
+(1,372)
+795
+(7,172)
+(2,284)
+Business focus and strategy
+1,817
+2020
+2021
+Net cash provided by operating activities from continuing operations
+Net cash used in investing activities from continuing operations
+Purchases of (proceeds from sales of) financial investments, net
+Free Cash Flow
+€ in millions
+Infineon reports the Free Cash Flow figure, defined as net cash provided by and/or used
+in operating activities and net cash provided by and/or used in investing activities,
+both from continuing operations, after adjusting for cash flows related to the purchase
+and sale of financial investments. Free Cash Flow serves as an additional performance
+indicator, since Infineon holds part of its liquidity in the form of financial investments.
+This does not mean that the Free Cash Flow calculated in this way is available to cover
+other disbursements, since dividends, debt-servicing obligations and other fixed dis-
+bursements are not deducted. Free Cash Flow should not be seen as a replacement or
+superior performance indicator, but rather as an additional useful item of information
+over and above the disclosure of the cash flow reported in the Consolidated State-
+ment of Cash Flows, and as a supplementary disclosure to other liquidity performance
+indicators and other performance indicators derived from the IFRS figures. Free Cash
+Flow only includes amounts from continuing operations and is derived as follows
+from the Consolidated Statement of Cash Flows:
+Free Cash Flow
+In the 2020 fiscal year, net cash provided by financing activities from continuing
+operations totaled €6,274 million. This included net cash inflows of €4,443 million
+relating to new financial debt, net proceeds of €1,040 million from the share capital
+increase executed in May 2020 and net proceeds of €1,184 million from the issuance
+of a hybrid bond in two tranches in October 2019. An offsetting effect resulted from
+the payment of the dividend for the 2019 fiscal year amounting to €336 million and
+payments to hybrid capital investors amounting to €20 million.
+Net cash used in financing activities from continuing operations totaled €885 million
+in the 2021 fiscal year. This included net outflows of €486 million for the repayment of
+financial debt (see the chapter "Review of financial condition", p. 104, and note 15 to
+the Consolidated Financial Statements, ☐ p. 184 f.). The payment of the dividend
+for the 2020 fiscal year amounting to €286 million, payments for leasing liabilities
+amounting to €76 million and cash outflows to hybrid capital investors amounting to
+€39 million also had the effect of reducing cash and cash equivalents.
+3,063
+Repayment of financial debt and payment of dividend result in net cash
+used in financing activities from continuing operations
+Combined Management Report
+Group performance
+Review of liquidity
+Further information
+ber 2021
+30 Septem-
+30 Septem-
+ber 2020
+Net cash position
+Gross financial debt
+Short-term financial debt and current portion of long-term financial debt
+Long-term financial debt
+Minus:
+Gross cash position
+Consolidated Financial Statements
+Financial investments
+€ in millions
+The following table reconciles the gross cash position and the net cash position
+(i.e., after deduction of financial debt). Since some liquid funds are held in the form
+of financial investments, which, for IFRS purposes, are not considered to be cash
+and cash equivalents, Infineon reports on its gross and net cash positions in order
+to provide investors with a better understanding of its overall liquidity situation.
+The gross and net cash positions are determined as follows from the Consolidated
+Statement of Financial Position:
+Gross cash position and net cash position
+Free Cash Flow in the previous fiscal year was a negative amount of €6,727 million,
+influenced primarily by the net payment (i.e., net of cash and cash equivalents
+acquired) amounting to €7,433 million used to acquire Cypress as well as by other
+cash outflows in connection with the acquisition totaling €205 million. Excluding cash
+used in conjunction with the acquisition of Cypress, Free Cash Flow in the 2020 fiscal
+year would have been a positive amount of €911 million. Investments in property,
+plant and equipment as well as in intangible assets and other assets resulted in cash
+outflows totaling €1,099 million.
+Free Cash Flow in the 2021 fiscal year amounted to €1,574 million, with net cash pro-
+vided by operating activities from continuing operations amounting to €3,063 million
+easily exceeding investments in property, plant and equipment and other intangible
+and other assets totaling €1,497 million.
+Significant increase in Free Cash Flow
+< 107 >
+Q =
+Cash and cash equivalents
+In the 2020 fiscal year, net cash used in investing activities from continuing
+operations totaled €7,172 million, including net cash outflows of €7,433 million for
+the acquisition of Cypress. The net amount arising on purchases and sales of financial
+investments resulted in a net cash inflow of €1,372 million. In addition, €915 million
+was invested in property, plant and equipment and €184 million in intangible and
+other assets.
+Net cash used in investing activities from continuing operations totaled €2,284 mil-
+lion in the 2021 fiscal year, including €1,268 million invested in property, plant and
+equipment and €229 million in intangible and other assets (see the chapter "Review
+of financial condition”, p. 104). Furthermore, a net cash outflow of €795 million
+arose in conjunction with the purchase and sale of financial investments deemed to
+be part of the gross cash position and which are therefore not included in Free Cash
+Flow (see below the chapter "Free Cash Flow").
+Net cash used in investing activities from continuing operations dominated by
+investments in property, plant and equipment
+Financial investments
+(1,749)
+Cash and cash equivalents
+Plus/minus:
+21,999
+23,334
+Assets
+In the 2020 fiscal year, net cash provided by operating activities from continuing
+operations totaled €1,817 million. Taking profit from continuing operations before
+depreciation, amortization, impairment losses, interest and taxes amounting to
+€1,797 million as the starting point, changes in inventories, trade receivables and
+trade payables totaling €99 million were the main items with a positive impact on net
+cash provided by operating activities from continuing operations. Net cash outflows
+(2,173)
+Net cash provided by operating activities from continuing operations in the 2021
+fiscal year amounted to €3,063 million, an increase of €1,246 million compared to the
+previous fiscal year's figure of €1,817 million. The main reason for the higher figure
+was the improvement of €1,197 million in profit from continuing operations before
+depreciation, amortization, impairment losses, interest and tax, which rose in total
+to €2,994 million. The increase in trade payables and provisions exceeded the higher
+amount tied up in trade receivables and inventories, contributing a net amount of
+€379 million to the improvement in cash provided by operating activities from con-
+tinuing operations. Cash outflows for income taxes and interest had an offsetting
+effect totaling €325 million.
+3.0%
+473
+1,325
+Operating profit from continuing operations after tax ①
+(52)
+(144)
+Income tax
+(9)
+Sharp increase in net cash provided by operating activities
+from continuing operations
+(1,851)
+(1,376)
+Assets classified as held for sale
+(9)
+for interest and taxes totaled €180 million. Changes in provisions, other non-cash
+income/expense and gains on the disposal of property, plant and equipment
+accounted for the remainder.
+< 106 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Group performance
+Review of liquidity
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+1 The financial result for the 2021 and 2020 fiscal year amounted to negative €160 million and negative €148 million, respectively,
+and included negative €150 million and negative €101 million, respectively, of net interest result.
+8.4%
+ROCE 1/②
+505
+15,827
+15,793
+833
+Short-term financial debt and current maturities of long-term financial debt
+Capital employed ②
+(3,450)
+(4,443)
+Total current liabilities
+1,749
+1,851
+2,173
+1,376
+Selected supplementary
+performance indicators
+8.4%
+Around 7.5%
+3.0%
+1,574
+of €11 billion)
+Around €1.5 billion
+(6,727)
+Free Cash Flow from
+continuing operations
+ROCE
+Revenue respectively
+18.7%
+13.7%
+Segment Result Margin
+indicators
+Principal performance
+Actuals
+FY 2021
+Outlook for
+FY 2021¹
+FY 2020
+except percentages
+Above 18%
+(at a revenue level
+8,567
+change in revenue com-
+pared to previous year
+Investments
+Revenue increase
+to around €11 billion
+Infineon Technologies | Annual Report 2021
+A Return on Capital Employed (ROCE) of about 6 percent was originally forecast in
+November 2020 for the 2021 fiscal year. With the publication of the figures for the
+first half of the 2021 fiscal year, this forecast was raised to 7.5 percent. The actual
+ROCE for the 2021 fiscal year came in at 8.4 percent, a significant improvement on that
+reported for the 2020 fiscal year, mainly due to the good operating profit from con-
+tinuing operations.
+Free Cash Flow was originally expected to exceed €700 million. Here, too, the outlook
+was raised in stages. Initially, the outlook was raised in February 2021 and predicted
+to exceed €800 million. In August 2021, Free Cash Flow was anticipated to come in
+at around €1.5 billion. Free Cash Flow generated in the 2021 fiscal year ultimately
+amounted to €1,574 million and was therefore in line with the forecast.
+In conjunction with the adjustments to the revenue forecast, the expected Segment
+Result Margin was also adjusted in each quarter. Originally, a Segment Result Margin of
+16.5 percent was forecast for the 2021 fiscal year. After initially raising the outlook to
+17.5 percent with the publication of first-quarter figures of the 2021 fiscal year and
+subsequently to around 18 percent with the publication of second-quarter figures, the
+most recent outlook, published in August 2021, forecast the Segment Result Margin
+at above 18 percent. In the final analysis, this outlook was achieved with an actual
+Segment Result Margin of 18.7 percent.
+Revenue for the 2021 fiscal year was originally forecast in November 2020 at an amount
+of €10.5 billion, plus or minus 5 percent. In light of the positive business performance,
+the outlook was raised at a number of points over the following quarters to an expected
+revenue of around €11 billion. The actual amount of revenue generated in the 2021
+fiscal year was €11,060 million. This figure was in line with the most recent outlook
+dated 3 August 2021 and slightly above the range stated in the original outlook from
+November 2020.
+Comparison of original outlook and actual figures
+for the 2021 fiscal year
+1 The forecast presented here corresponds to the forecast last finalized in the third quarter of the 2021 fiscal year.
+target range of €1 billion plus
+at least 10% of revenue
+Around €2.4 billion
+Around €4 billion and
+therefore within the
+Revenue increase
+to around €12.7 billion
+plus or minus €500 million
+Minimum 10%
+Around 21%
+(at a revenue level
+of €12.7 billion)
+Around €1 billion
+Outlook for
+FY 2022
+1,497
+3,922
+Around €1.6 billion
+In the range of €2.9 billion to
+€3.6 billion and therefore
+within the target range of
+€1 billion plus at least 10%
+of revenue
+3,227
+Gross cash position
+1,099
+11,060
+Actuals
+9
+€ in millions,
+Actual and target values for performance indicators
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+The Infineon treasury's stated objective is to ensure financial flexibility based on
+a solid capital structure. Its primary goal is to ensure that sufficient cash funds are
+available to finance operating activities and planned investments throughout all
+phases of the business cycle. We aim to achieve a gross liquidity level of €1 billion,
+plus at least 10 percent of revenue.
+Principles and structure of Infineon's treasury
+Infineon is party to two financing agreements that contain a number of standard
+covenants, including a debt coverage ratio that provides for a certain relationship
+between the size of debt (adjusted) and earnings (adjusted) (see note 20 to the
+Consolidated Financial Statements, p. 195).
+Taking into account the financial resources available to Infineon - including internal
+liquidity on hand, net cash that will be generated, and currently available credit
+facilities amounting to €69 million (2020: €69 million, see note 15 to the Consolidated
+Financial Statements, p. 185) - Infineon assumes that it will be able to cover those
+capital requirements for the 2022 fiscal year that are currently expected. These include
+the repayment of financial debt. Forecasted capital requirements also include other
+financial obligations, such as orders already placed for initiated or planned investments
+in property, plant and equipment (see note 22 to the Consolidated Financial State-
+ments, p. 197). Investments planned for the 2022 fiscal year are discussed in the
+chapter "Outlook". p. 109 ff.
+The net cash position, which is defined as the gross cash position less short-term and
+long-term financial debt, improved accordingly by €1,143 million to stand at a nega-
+tive amount of €2,663 million at the end of the reporting period (30 September 2020:
+negative €3,806 million).
+The gross cash position as of 30 September 2021 increased by €695 million to
+€3,922 million, with most of the increase reflecting the high Free Cash Flow amounting
+to €1,574 million. An offsetting effect resulted from net repayments of financial debt
+amounting to €486 million, the dividend payment for the 2020 fiscal year amounting
+to €286 million and payments for leasing liabilities amounting to €76 million.
+Business focus and strategy
+(3,806)
+7,033
+6,585
+6,528
+5,752
+505
+833
+3,227
+3,922
+(2,663)
+Combined Management Report
+Group performance
+Review of liquidity
+Consolidated Financial Statements
+Further information
+Outlook
+Report on outlook, risk and opportunity
+Report on outlook, risk and opportunity
+Outlook
+Q = < 109 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Following the acquisition of Cypress, the financing and treasury activities of Cypress
+are being successively integrated into Infineon's core structures. Significant further
+progress was made in this respect during the 2021 fiscal year.
+A Treasury Committee is in place to deliberate on current financial market develop-
+ments and their potential impact on Infineon and coordinate key liquidity, hedging,
+and financing issues. The Committee, which meets on a quarterly basis, comprises
+the CFO and representatives from the Finance & Treasury, Accounting and Financial
+Reporting, Controlling, and Tax departments.
+Furthermore, to the extent permitted by law, all financing activities and credit lines
+worldwide are arranged, structured and managed either directly or indirectly by the
+Group Finance & Treasury department in accordance with stipulated treasury principles.
+following derivative financial instruments in our continuous operations for hedging
+purposes: forward foreign currency contracts to reduce the impact of exchange rate
+exposures (to the extent foreign currency cash flows are not offset within the Group)
+and commodity swaps to reduce price risks for expected purchases of gold. Derivative
+financial instruments are not used for trading or speculation purposes. Further infor-
+mation regarding derivative financial instruments and the management of financial
+risks is provided in note 26, p. 203 ff., and note 27 to the Consolidated Financial
+Statements, p. 211 ff.
+In the context of centralized liquidity management and where permitted by law
+and economically feasible, cash pooling structures are in place in order to ensure the
+best possible allocation of liquidity within the Group and reduce external financing
+requirements. Liquidity accumulated at Group level is invested centrally by the Group
+Finance & Treasury department based on a conservative approach to investments,
+in which preservation of capital is prioritized over return maximization. The Group
+Finance & Treasury department is also responsible for managing currency and interest
+rate risks and for the execution of the commodity price hedging. We employ the
+In accordance with our treasury principles, we follow a centralized approach in which
+the Group Finance & Treasury department is responsible for all major tasks and
+processes worldwide relating to financing and treasury matters.
+The treasury principles referred to are in place regarding all issues relating to liquidity
+and financing, such as banking policies and strategies, execution of financing agree-
+ments, liquidity and investment management worldwide, currency and interest rate
+risk management and the handling of external and intragroup cash flows.
+As a general rule, debt should only constitute a modest proportion of the financing
+mix to ensure that sufficient headroom is available at all times. The key objective
+is to maintain an investment grade rating. Infineon is currently rated by S&P Global
+Ratings as "BBB-" with positive outlook. The originally medium-term objective of
+Infineon to reduce its debt level to or below the maximum target value of twice the
+gross financial debt to EBITDA after the closing of the Cypress transaction is expected
+to be achieved already in the 2022 fiscal year. For further information on the nature,
+maturity, currency and interest rate structure of gross financial debt, see note 15 to
+the Consolidated Financial Statements, ☐ p. 184 f.
+Q = < 108 >
+The following table and subsequent comments compare the actual and forecast
+values of Infineon's key performance indicators for the 2021 fiscal year and show the
+outlook for the 2022 fiscal year.
+accounted for using the equity method
+Share of profit (loss) of associates and joint ventures
+(47)
+1.7%
+5.0%
+ROCE 6
+(1)
+1
+Losses (gains) on sales of businesses, or interests in subsidiaries, net
+5
+Inventory intensity
+48.9%
+Debt-to-equity ratio 4
+544
+Acquisition-related depreciation/amortization and other expenses
+14
+27
+Return on equity ³
+20
+Equity ratio 2
+(11)
+540
+46.5%
+10.3%
+3.6%
+(126)
+(131)
+the annually updated earnings forecast
+Tax effects on adjustments
+3 Return on equity = Profit (loss) for the period/Total equity
+2 Equity ratio = Total equity/Total assets
+49
+7
+Acquisition-related expenses within financial result
+1 Return on assets = Profit (loss) for the period/Total assets
+27
+31
+Other income and expense, net
+3.0%
+8.4%
+9.3%
+9.3%
+68.8%
+57.8%
+(1)
+Revaluation of deferred tax assets resulting from
+Impairments (reversal of impairments) (in particular on goodwill)
+Impact on earnings of restructuring and closures, net
+Share-based payment
+Plus/minus:
+7,179
+8,252
+Change
+year-on-year
+30 Septem-
+ber 2020
+30 Septem-
+ber 2021
+Business focus and strategy
+(35)
+(26)
+15%
+372
+Total liabilities
+Non-current liabilities
+2020
+2021
+Current liabilities
+Profit (loss) from continuing operations - diluted
+Compensation of hybrid capital investors'
+€ in millions (unless otherwise stated)
+Total assets
+1,175
+15,082
+14,820
+2%
+Statement of Financial Position ratios:
+337
+1,149
+Profit (loss) from continuing operations, attributable to
+shareholders of Infineon Technologies AG - diluted
+12%
+10,219
+11,401
+1%
+11,780
+11,933
+(10%)
+8,330
+7,490
+29%
+3,450
+4,443
+6%
+21,999
+23,334
+Return on assets 1
+€ in millions, except percentages
+Current assets
+(64)
+4 Debt-to-equity ratio = (Long-term and short-term financial debt)/Total equity
+Net cash provided by operating activities from continuing operations
+€ in millions
+Cash flow
+Review of liquidity
+Financial result excluding interest result¹
+Plus/minus:
+Operating profit
+€ in millions, except percentage
+2021
+ROCE for the 2021 and 2020 fiscal years is calculated as follows:
+At €15,793 million, however, capital employed was almost identical to one year ear-
+lier (30 September 2020: €15,827 million).
+The higher level of operating profit was mainly due to the significant revenue growth
+in connection with the resulting good utilization (see the chapter "Review of results
+of operations", ☐ p. 99 f.).
+< 105 >
+Q =
+Further information
+Consolidated Financial Statements
+Review of financial condition | Review of liquidity
+Group performance
+As a result, the Return on Capital Employed (ROCE) rose sharply from 3.0 percent
+to 8.4 percent.
+2020
+3,063
+1,817
+(10)
+581
+1,470
+830
+(102)
+(83)
+2
+Effect of foreign exchange rate changes on cash and cash equivalents
+Change in cash and cash equivalents
+2020
+2021
+913
+(104)
+(6)
+2
+6,274
+(885)
+(7,172)
+(2,284)
+Net cash used in investing activities from continuing operations
+Net cash used in (provided by) financing activities from continuing operations
+Net change in cash and cash equivalents from discontinued operations
+Cash-relevant change in cash and cash equivalents
+Combined Management Report
+(35)
+Business focus and strategy
+Infineon Technologies | Annual Report 2021
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Group performance
+Review of financial condition
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Significant increase in current assets mostly due to gross cash position
+Current assets went up by €1,073 million to stand at €8,252 million as of 30 Septem-
+ber 2021, compared to €7,179 million one year earlier. The increase resulted mainly
+from the gross cash position, which improved by €695 million to €3,922 million (30 Sep-
+tember 2020: €3,227 million). For comments on the change of the gross cash position,
+2 The calculation of the adjusted earnings per share is based on unrounded figures.
+Q = < 104 >
+1 Including the cumulative tax effect.
+1.20
+1,266
+1,304
+814
+1,563
+Adjusted profit (loss) for the period from continuing operations
+attributable to shareholders of Infineon Technologies AG - diluted
+Weighted-average number of shares outstanding (in millions) - diluted
+Adjusted earnings per share (in euro) - diluted²
+6 Calculation see following section about ROCE in this chapter, p. 104 f.
+5 Inventory intensity = Inventories (net)/Total assets
+0.64
+see the chapter "Review of liquidity", p. 107 Trade receivables also increased by
+€287 million due to the significant rise in revenue. Inventories went up by €129 mil-
+lion to keep pace with continued high demand at this especially unfinished goods.
+Slight increase in non-current assets mainly due to investments
+in property, plant and equipment
+Non-current assets increased by €262 million to stand at €15,082 million at the end
+of the reporting period (30 September 2020: €14,820 million). The increase was
+primarily due to the higher level of property, plant and equipment, which went up by
+€333 million to €4,443 million compared to €4,110 million as of 30 September 2020,
+with additions exceeding depreciation. Investments related primarily to the manu-
+facturing sites in Villach (Austria), Dresden and Regensburg (both Germany), Kulim
+and Melaka (both Malaysia), Singapore and Cegléd (Hungary). Goodwill increased by
+€65 million to €5,962 million due to currency factors. Besides this, deferred tax assets
+increased by €68 million and right-of-use assets by €50 million. By contrast, other
+intangible assets decreased by €272 million to €3,349 million, mainly due to the
+amortization of technologies acquired in the course of the acquisition of Cypress.
+ROCE significantly improved due to higher operating profit
+The equity ratio as of 30 September 2021, based on total assets amounting to
+€23,334 million, was 48.9 percent (30 September 2020: 46.5 percent, based on total
+assets amounting to €21,999 million).
+Equity increased by €1,182 million to stand at €11,401 million at the end of the
+reporting period (30 September 2020: €10,219 million), mostly due to the profit for
+the period for the 2021 fiscal year amounting to €1,169 million. Actuarial gains arising
+on the measurement of pensions and similar commitments totaling €128 million
+after tax recognized through other comprehensive income also had a positive impact
+on equity. Positive currency effects amounting to €90 million, which were recognized
+in other reserves, also contributed to the higher figure. These increases in equity
+were offset mainly by the dividend of €286 million paid out for the 2020 fiscal year.
+Shareholders' equity up mainly due to profit for the period
+Pensions and similar commitments decreased by €122 million, primarily due to an
+actuarial gain of €128 million after tax arising on the measurement of net pension
+obligations and as a consequence of interest rate and credit spread developments on
+financial markets during the fiscal year just ended (see note 18 to the Consolidated
+Financial Statements, ☐ p. 187 ff.).
+49%
+2021
+Euro
+51%
+US dollar
+6,585
+50%
+50%
+7,033
+2020
+C39 Financial debt by currencies
+€ in millions
+At the same time, gross financial debt decreased by €448 million to €6,585 million
+(30 September 2020: €7,033 million), partly due to the early repayment of €310 million
+of financial debt raised in connection with the acquisition of Cypress. Information
+on the composition and maturities of gross financial debt is provided in note 15 to the
+Consolidated Financial Statements. ☐ p. 184 f.
+Total liabilities stood at €11,933 million as of 30 September 2021 and were therefore
+€153 million higher than one year earlier (30 September 2020: €11,780 million). Trade
+payables increased by €409 million from €1,160 million to stand at €1,569 million
+at the end of the reporting period due to high utilization of production, on the one
+hand, and even more to higher investments. Provisions went up by €385 million to
+€1,134 million, as the recognition of the performance-related employee remuneration
+for the reporting period exceeded the payments made for the previous year.
+Liabilities slightly higher
+Management Board and
+Supervisory Board
+Management Board and
+Supervisory Board
+In the 2021 fiscal year, operating profit from continuing operations after tax increased
+sharply by €852 million to €1,325 million (2020: €473 million).
+In February 2021, in light of rising revenue expectations, the forecast for investments
+for the 2021 fiscal year was increased to around €1.6 billion. The original intention
+had been to invest between €1.4 billion and €1.5 billion. At €1.5 billion, investments
+were below the most recent outlook, but at the upper end of the original outlook
+from November 2020.
+Dependence on individual suppliers (RC: high)
+-
+We cooperate with numerous suppliers who provide us with materials and services
+or manage parts of our supply chain. We do not always have alternative sources for
+some of these suppliers and therefore depend on their ability to deliver products and
+services of the required quality. The unexpectedly high demand for semiconductor
+products in the 2021 fiscal year – particularly for the automotive market, renewable
+energy applications, data centers, the expansion of mobile communications infra-
+structure, many aspects of digitalization and the electronics used at work and in
+homes in general - continues to cause supply problems, particularly for our contract
+manufacturers. The situation has not only led to delays in supplying our customers, but
+also resulted in an actual loss of revenue during the period under report. At the same
+time, we are currently confronted with price increases from suppliers and there is a risk
+that it will not be possible to fully pass on these increases to our customers. Cypress'
+business operations, in particular, rely heavily on independent contract manufacturers
+and subcontractors to manufacture its products, including wafer fabrication, assembly,
+packaging and testing. Any failure of one or more of these suppliers to meet their
+obligations to Infineon could have an adverse impact on Infineon's business operations,
+liquidity and earnings.
+Data and IT systems security (RC: high)
+The reliability and security of Infineon's IT systems are of crucial importance. At the
+same time, the world has seen a general rise in the level of threats to data security.
+This applies to the deployment of IT systems to support business processes, on the
+one hand, and internal and external communications, on the other. Despite the array
+of precautionary measures put in place, any major disruption to these systems could
+result in risks relating to the confidentiality, availability and reliability of data and
+systems used in development, manufacturing, selling or administration functions,
+which, in turn, could have an adverse impact on our reputation, competitiveness and
+operations.
+Potential cyber-attacks on IT systems used in manufacturing processes, present
+risks that could result in production downtime and supply bottlenecks. In addition,
+cyber-attacks with industrial espionage intent and any related potential loss of
+intellectual property or patents pose risks that could jeopardize our investment in
+research and development and impair our long-term competitiveness.
+Increasingly dynamic markets (RC: high)
+The accelerating pace of events in the markets in which we operate, increased
+demands for flexibility by our customers, and short-term changes in order volumes
+could result in rising costs due to the underutilization of manufacturing capacities,
+higher inventory levels and unfulfilled commitments to suppliers.
+Thus, despite the fact that manufacturing processes and sites have become even
+more flexible, fluctuations in capacity utilization levels and purchase commitments,
+coupled with idle costs at manufacturing sites, nevertheless pose risks related to
+our cost position. These risks could possibly jeopardize our ability to achieve growth
+and profitability targets that are based on cycle averages.
+This situation is exacerbated by the fact that some of our products are highly depen-
+dent on the degree of success achieved by individual customers in their own markets.
+Furthermore, there is a risk of losing future business and design wins if we are unable
+to deliver volumes over and above our contractual obligations if called upon by cus-
+tomers to do so. These factors could have an adverse impact on Infineon's liquidity
+and earnings.
+Operational risks
+Dependence on the success of specific customers may also grow if they account for
+an above-average share of Infineon's revenue and earnings. This situation could be
+driven by the exceptionally strong performance of a particular customer, resulting,
+for instance, from exceptional demand for its products or from consolidation trends,
+in particular those affecting our first- and second-tier customers.
+Product quality assurance is a key success factor for our business. Potential quality
+risks - for example due to high capacity utilization levels - can affect yield fluctuations
+and hence our ability to supply customers. Shortfalls in product quality can lead
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q =
+< 117 >
+to product recalls at our customers and related potential costs for liability claims.
+In addition, quality risks could also damage Infineon's reputation and thus have
+a significant adverse impact on future earnings.
+Product development delays (RC: medium)
+Product quality trends (RC: medium)
+Q = < 116 >
+Further information
+Consolidated Financial Statements
+Significant risks
+In the following section, we describe risks that could have a significant or material
+adverse impact on the Segment Result and/or business objectives, reputation, or
+compliance, and which have therefore been allocated to the risk classes "high" or
+"medium". Unless otherwise stated, the risks described apply to all segments.
+Depending on the potential degree of impact and the estimated likelihood of
+occurrence, the risk class is shown in parentheses for each risk (e.g., “RC: high”).
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q = < 115 >
+Strategic risks
+Unsettled political and economic climate (RC: high)
+As a globally operating company, our business is highly dependent on global economic
+developments. A worldwide economic downturn - particularly in the markets we
+serve - may result in us not achieving our forecasted revenue and contribution to
+earnings. Risks can also arise due to political and social changes, in particular when
+those changes occur in countries in which we manufacture and/or sell our products.
+Trade and customs disputes as well as trade restrictions, for instance between the
+USA and China, could constrain global trade, thereby dampening global economic
+growth. Such developments can be triggered by political tensions and/or trade con-
+flicts between individual countries or regions, which - as a result of short-term and
+sometimes unforeseeable decisions – could have a significant impact on Infineon's
+revenue and earnings.
+Our relative dependence on the Chinese market in relation to the total group revenue
+of business remains essentially unchanged. This includes the risk of a decline in
+external demand from a Chinese perspective and hence a decline in manufacturing
+capacity utilization levels in China. There is also a risk that an increased volume of
+previously imported semiconductors will be manufactured in China and that a greater
+volume of those made in that country will be exported.
+The government debt situation has worsened considerably as a result of the eco-
+nomic stimulus programs launched to mitigate the consequences of the coronavirus
+pandemic. Regardless of our assessment of potential scenarios and outcomes within
+this complex set of risks, these developments could have an adverse impact on
+Infineon's business operations, financial condition, liquidity, cash flows and earnings.
+Cyclical market and sector development (RC: high)
+The worldwide semiconductor market is dependent on global economic growth and
+hence subject to fluctuations. Our target markets are exposed to the risk of short-term
+market fluctuations. As a result, our own forecasts of future business developments
+are subject to a high degree of uncertainty. It is possible, for instance, that future
+market downturns will follow another pattern, for example, an L-shape with longer
+periods of flat growth. The absence of market growth or its decline would make it
+considerably more difficult to attain our own growth targets. In the event that we are
+unprepared for market fluctuations, or our response to any such fluctuations turns
+out to be inappropriate, this could have a sustained materially adverse impact on
+Infineon's operations, financial condition, liquidity, cash flows and earnings.
+Increased market competition and commoditization of products (RC: high)
+The rapid pace of technological change in the market also results in a greater replace-
+ability of products. Due to the resulting aggressive pricing policies, we may be unable
+to achieve our long-term strategic goals of gaining and/or maintaining market share
+and of product pricing. Moreover, accelerating M&A (Merger & Acquisition) activity
+within the semiconductor industry could result in even tougher competition. Potential
+benefits for competitors in this market include improved cost structures and more
+effective sales channels. Overall, this situation could have an adverse impact on
+Infineon's earnings.
+Risks arising from the coronavirus pandemic (RC: medium)
+In the 2020 fiscal year, the rapid spread of the coronavirus pandemic led to a signifi-
+cant deterioration in global economic conditions and also had an adverse effect
+on Infineon's operations and earnings. By the second half of the 2020 calendar year,
+the global economy had recovered unexpectedly quickly, leading to a massive
+increase in demand for semiconductors and significantly mitigating the impact of the
+coronavirus pandemic in the 2021 fiscal year. However, the pandemic continued to
+disrupt manufacturing output in certain countries, affecting not only Infineon's sites,
+but also those of its international suppliers and customers, which continues to nega-
+tively impact the availability of raw materials and components as well as Infineon's
+revenue. These risks could be exacerbated if the coronavirus pandemic were to flare
+up again. The coronavirus pandemic and indeed any other pandemic, epidemic or
+outbreak of infectious disease could have a materially adverse effect on the business
+operations, earnings, liquidity and cash flows of the Group.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+The ever-increasing complexity of technologies and products, shorter development
+cycles and higher customer expectations can cause a great deal of tension in the
+field of product development. Buffer times built into processes to compensate for
+potential delays are reduced accordingly. In the event of being unable to execute our
+development plans at the desired quality levels, the outcome could be development
+delays and increased development costs, which could have an adverse impact on
+Infineon's operations, financial condition, liquidity, cash flows and earnings.
+Cypress' ICS is being continuously integrated into the Group's ICS in conjunction with
+the merger of legal entities and
+processes.
+Manufacturing cost trends - raw materials prices, cost of materials
+and process costs (RC: medium)
+Moreover, our dependence on various components (such as wafer substrates) and
+raw materials (such as gold and copper) used in manufacturing, as well as our energy
+requirements expose us to substantial price risks. We are also dependent on supplies
+of the so-called rare earths required for selected manufacturing processes in conjunc-
+tion with production process integration. At the time of writing, financial instruments
+are in place to hedge our price risk exposure for gold wire during the 2022 fiscal year,
+based on the planned volume requirements. The prices of raw materials and energy
+have recently been subject to significant fluctuation and there is no reason to assume
+the situation will change in the near future. If we are unable to offset cost rises or
+pass them on to customers via price adjustments, it could have an adverse impact
+on earnings.
+Impact of our global operations (RC: medium)
+Our global business strategy requires the maintenance of research and development
+locations and manufacturing sites throughout the world. The location of such facilities
+is determined by market entry hurdles, technology and cost factors. Risks could,
+Infineon Technologies | Annual Report 2021
+< 110 >
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 119 >
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Further information regarding litigation and government inquiries is provided in
+note 23 to the Consolidated Financial Statements. p. 198 ff.
+therefore, arise if adverse economic and geopolitical crises were to affect our
+regional markets and if country-specific legislation and regulations were to influence
+investment activities and the ability to trade freely. Differing practices in the way tax,
+judicial and administrative regulations are interpreted could also have a negative
+impact on operations. We could also be exposed to the risk of fines, sanctions and
+reputational damage.
+Acquisitions and cooperation arrangements (RC: medium)
+In order to develop or expand our business, we may seek to acquire other businesses
+or enter into various forms of cooperation arrangements. In the case of acquisitions,
+there is a risk that these activities prove to be unsuccessful, particularly regarding the
+integration of people and products in existing business structures. These issues could
+adversely impact our financial condition and earnings performance.
+In the case of acquisitions or portfolio decisions, there is a risk of non-compliance
+with antitrust regulations due to lack of knowledge or failure to make the people
+involved in such transactions adequately aware of the issues. This could result in high
+levels of cost (e.g., significant time spent by management, assignment of attorneys)
+and fines. Infineon's reputation could also suffer under these circumstances.
+Tax, fair trade and capital market regulations can all entail additional risks. In order
+to mitigate these risks, we rely upon the advice of both in-house and external experts
+and provide suitable training to our employees.
+Non-achievement of strategic or operational targets and risks
+relating to the integration of Cypress (RC: medium)
+The strategic and operational targets we have set with respect to the acquisition and
+integration of Cypress are based on assumptions and estimates that may subsequently
+prove to be incorrect. These include the financial and operational performance of
+Cypress and the synergy and innovation potential of the two companies as well as
+future economic developments and market changes.
+In the event of unexpected difficulties in terms of integration, the weaker-than-fore-
+cast growth of Cypress-related business or other unforeseen deviations in business
+development could potentially force us to recognize an impairment loss on non-
+current assets and/or on goodwill arising from the acquisition of Cypress.
+In particular, the possible loss of key employees could also have a negative impact.
+As a prerequisite for the successful integration and implementation of a joint strategy,
+we need talented managers and employees from both Infineon and Cypress. If, for
+instance, we are unable to retain employees due to potential uncertainties regarding
+jobs, locations or corporate culture, the benefits of integration and the ability to
+exploit the respective strengths of the two companies may be impaired.
+Measures to implement our risk management strategy
+At a strategic risk level, we endeavor to mitigate the typical risks that arise in the
+semiconductor sector due to economic and demand fluctuations and the risks
+related to Infineon's operations, financial condition, liquidity and earnings by closely
+monitoring changes in early warning indicators as well as by developing specific
+response strategies appropriate to the current position within the economic cycle.
+This can be done, for instance, by rigorously adjusting capacities and inventory levels
+at an early stage, initiating cost-saving measures and making flexible use of external
+manufacturing capacities at both frontend and backend facilities.
+Infineon Technologies | Annual Report 2021
+Asian markets are particularly important to our long-term growth strategy. Our
+operations in China are influenced by a legal system that may be subject to change.
+One example is the fact that local regulations could make it mandatory to enter
+into partnerships with local companies. These circumstances could lead, on the one
+hand, to Infineon's intellectual property no longer being sufficiently protected and,
+on the other, to intellectual property developed by Infineon in China not being freely
+transferable to other countries and locations, thus impairing Infineon's financial
+condition and earnings.
+We cannot rule out that patent infringement claims will be upheld in a court of law,
+thus resulting in significant claims for damages or restrictions in selling the products
+concerned. Any such outcome could, in turn, have an adverse impact on Infineon's
+financial condition, liquidity and earnings.
+Whilst we often benefit from cross-licensing arrangements with major competitors,
+no such opportunities exist to safeguard against risks of this nature in the case of
+companies specializing in the exploitation of patent rights.
+As with many other companies in the semiconductor industry, from time to time
+allegations are made against us that we have infringed other parties' protected rights.
+Regardless of the prospects of success of such claims, substantial legal defense costs
+can arise.
+Determining and adjusting manufacturing volumes (RC: medium)
+Frontend and backend manufacturing processes need to be optimally synchronized
+to enable Infineon to develop competitive, high-quality products designed to provide
+customized technological solutions. In view of the rapid pace of technological change
+and increasingly stringent customer requirements, coordination processes need to
+become increasingly sophisticated. Failure to continue making progress in this area
+could result in quality problems, product development or market maturity delays
+as well as higher research and development expenses and hence adversely impact
+Infineon's earnings.
+One risk that semiconductor companies operating in-house manufacturing facilities
+typically face is that of delays in the ramping up of production volumes at new manu-
+facturing sites or in the transfer of technology. One good example is in the Automotive
+segment, where customers' product approval and testing processes can be conducted
+over an extended period of time, thus influencing our global manufacturing strategy
+as well as short- and medium-term capacity utilization. Failure to anticipate these
+changes in the manufacturing process in good time could result in capacity shortages
+and hence lower revenue, on the one hand, as well as costs incurred due to underutili-
+zation, on the other.
+Dependence on individual manufacturing sites (RC: medium)
+Our South-East Asian manufacturing sites are of critical importance for our production.
+If, for example, political upheavals, natural disasters or pandemic outbreaks in the
+region were to restrict or completely obstruct our ability to manufacture at these
+sites on the planned scale or to export products manufactured at those sites, it would
+have an adverse impact on our financial condition, liquidity and earnings. Our current
+manufacturing capacities in this region are, to a large extent, not insured against
+political risks such as the expropriation of assets. The transfer of manufacturing
+capacities from these sites would, therefore, not only involve a great deal of time
+and technical effort, but Infineon would also be required to bear the necessary
+cost of investment.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 118 >
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Need for qualified staff (RC: medium)
+One of the key factors in our success is the availability of sufficient numbers of qualified
+employees at all times. There is, however, a general risk of losing qualified staff or not
+being able to recruit, train and retain adequately qualified people within the business.
+A lack of technical or management staff could, among other things, restrict future
+growth and hence adversely impact Infineon's liquidity and earnings.
+Financial risks
+Currency risks (RC: medium)
+Our involvement and participation in various regional markets around the world creates
+cash flows in a number of currencies other than the euro - primarily in US dollars.
+A significant share of revenue, on the one hand, and of operating costs and investments,
+on the other, is denominated in US dollars and correlated currencies. For the most
+part, Infineon generates a US dollar surplus from these transactions. The integration
+of Cypress has increased this surplus.
+Specified currencies are hedged Group-wide by means of derivative financial instru-
+ments. These hedges are based on forecasts of future cash flows, the occurrence
+of which is uncertain. Under these circumstances, exchange rate fluctuations could
+- despite hedging measures - also have an adverse impact on earnings.
+Risk of default by banking and financing partners (RC: medium)
+The relatively high level of our holdings of liquid funds (gross cash position) exposes us
+to the potential risk of a default by one or more of the banking and financing partners
+with whom we do business. We mitigate this risk - which could still arise despite various
+state-insured deposit protection mechanisms – by a combination of risk avoidance
+analyses and risk-spreading measures. The failure of these measures could have
+a materially adverse impact on Infineon's financial condition and liquidity situation.
+Further information regarding the management of financial risks is provided in note 27
+to the Consolidated Financial Statements. ☐ p. 211 ff.
+Legal and compliance risks
+Qimonda insolvency (RC: medium)
+The insolvency proceedings relating to Qimonda and the resulting actions of the
+insolvency administrator expose Infineon to potential risks, which are described in
+detail in note 23 to the Consolidated Financial Statements. p. 198 f.
+Provisions are recognized in connection with these matters as of 30 September 2021.
+The provisions reflect the amount of those liabilities that management believes are
+probable and can be estimated with reasonable accuracy as of that date. There can
+be no assurance that these provisions will be sufficient to cover all liabilities that may
+be incurred in conjunction with the insolvency proceedings relating to Qimonda.
+Intellectual property rights and patents (RC: medium)
+Our medium- and long-term forecasts are based on expected manufacturing cost
+trends. In this context, measures aimed at optimizing manufacturing costs for raw
+materials and supplies, energy, labor and automation, as well as for bought-in services
+from external business partners, may not be feasible to the extent envisaged.
+Both the Risk and Opportunity Management System and the Internal Control System
+are continuously developed and expanded to ensure compliance with internal and
+external requirements. Regular improvements made to these systems contribute
+to the continuous monitoring of the relevant risk areas, including the responsible
+organizational units.
+Management Board and
+Supervisory Board
+Furthermore, in a Representation Letter, all legal entities, segments and relevant
+corporate functions confirm that all business transactions, all assets and liabilities
+and all income and expense items have been recognized in the financial statements.
+In the 2021 fiscal year, investments totaled €1,497 million, comprising €1,268 million
+for property, plant and equipment and €229 million for capitalized development
+costs and other intangible assets. In the 2022 fiscal year, investments in capitalized
+development costs and other intangible assets are expected to be at about the same
+level than in the 2021 fiscal year.
+Depreciation and amortization are predicted to be between €1.6 billion and €1.7 billion.
+Approximately €400 million of that amount relates to depreciation and amortization
+resulting from purchase price allocations, mainly in connection with the acquisition
+of Cypress and, to a lesser degree, the acquisition of International Rectifier.
+Overall statement on the expected development
+Based on forecasts for the development of the global economy and the semicon-
+ductor market in the 2022 calendar year, Infineon expects Group revenue to grow
+to €12.7 billion plus or minus €500 million. The Segment Result Margin is forecast
+to come in at the middle of the range for the revenue forecast at around 21 percent
+of revenue. Investments are expected to be in the region of €2.4 billion. Deprecia-
+tion and amortization are expected to total between €1.6 billion and €1.7 billion.
+Free Cash Flow from continuing operations should reach around €1 billion. The Return
+on Capital Employed (ROCE) is forecast to reach minimum 10 percent.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q = < 112 >
+Investments (defined by Infineon as the sum of investments in property, plant and
+equipment, investments in other intangible assets and capitalized development
+costs) are planned at around €2.4 billion for the 2022 fiscal year. The main focus is on
+expanding frontend manufacturing capacities that will enable Infineon to continue
+meeting the expected growth in demand in the medium term. Further investments
+in frontend facilities will be used to implement structural measures, optimize product
+quality, increase the degree of automation and promote innovation. A significant
+amount is also planned for investments at backend facilities, albeit at a much lower
+level than for frontend facilities. The majority of investment in buildings will be used
+to expand Infineon's frontend locations.
+Risk and opportunity report
+Coordinated risk management and control system elements are in place that
+enable us to pursue our stated risk policy in practice. Alongside the “Risk and
+Opportunity Management System” and the “Internal Control System with respect
+to financial reporting processes” described below, these elements also includes
+the related forecasting, management and internal reporting processes as well as
+the Compliance Management System.
+Risk and Opportunity Management System
+Infineon's centralized risk management system is based on a Group-wide, manage-
+ment-oriented Enterprise Risk Management (ERM) approach, which aims to cover
+all relevant risks and opportunities. The approach is based on the "Enterprise Risk
+Management - Integrated Framework" developed by the Committee of Sponsoring
+Organizations of the Treadway Commission (COSO). The objective of the system
+is the early identification, assessment and management of risks and opportunities
+that could have a significant influence on Infineon's ability to achieve its strategic,
+operational, financial, legal and compliance targets. We therefore define risk/
+opportunity as the occurrence of future uncertainties that could result in either
+a negative or a positive variance from plan. We incorporate all relevant organiza-
+tional units within the Group in this analysis, thus covering all segments, significant
+central functions and regions.
+Responsibility for processes and systems relating to risk and opportunity management
+rests with the Risk Management and Internal Control System (ICS) function within
+the Group Finance department as well as with designated Risk Officers working at
+segment, corporate function and regional levels. Responsibility for the identification,
+measurement, management and reporting of risks and opportunities lies with the
+management of the organizational unit concerned.
+In organizational terms, the Risk and Opportunity Management System is structured
+in a closed-loop, multiple-stage process, which stipulates the manner and criteria
+to be applied to identify, measure, manage and report on risks and opportunities and
+defines how the system is to be monitored as a whole. Major components of the sys-
+tem are a quarterly analysis of risks and opportunities, reporting by all consolidated
+entities, an analysis of the overall situation at segment, regional and Group level,
+reporting to the Management Board on the risks and opportunities situation as well
+as major management measures undertaken. The Management Board, in turn, reports
+regularly to the Supervisory Board's Investment, Finance and Audit Committee. Where
+necessary, standard processes are supplemented by the ad-hoc reporting of any
+major risks identified between regular reporting dates.
+Risks and opportunities are measured cumulatively over the multi-year planning
+horizon on a net basis, i.e., after taking into account any existing risk mitigation or
+hedging measures. The time periods and the measurement categories used are closely
+linked to our short- and medium-term business planning and entrepreneurial targets.
+All relevant risks and opportunities are assessed uniformly across the Group in quan-
+titative and/or qualitative terms, based on the factors degree of impact on segment
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Risk policy: Underlying principles of our risk and opportunity management
+Effective risk and opportunity management is central to all of our business activities
+and supports the implementation of our strategic goals and growth drivers. Infineon's
+risk and opportunity profile is still characterized by periods of rapid growth, followed
+by periods of significant market decline, a substantial need for capital investment
+in order to achieve and sustain our market position and an extraordinarily rapid pace
+of technological change. Gaining a leading edge through technological innovation also
+has a legal dimension. Against this background, Infineon's risk policy is aimed firstly
+at taking advantage of identified opportunities as quickly as possible in a way most
+appropriate to growing the enterprise value, and secondly at pro-actively mitigating
+risks - particularly those capable of posing a threat to Infineon's going-concern
+status - by adopting appropriate countermeasures. Risk management at Infineon
+is therefore closely linked to corporate planning and the implementation of our busi-
+ness strategies. Ultimate responsibility for risk management lies with the Infineon
+Management Board.
+Investments and depreciation/amortization
+The gross cash position is expected to finish the 2022 fiscal year at a level of around
+€4 billion. The original medium-term target of reducing debt to or below the maximum
+target value of twice gross financial debt to EBITDA following the closing of the Cypress
+transaction is expected to be achieved as early as the 2022 fiscal year.
+Gross cash position
+At the end of the annual cycle, the material legal entities review and confirm the
+effectiveness of the ICS with regard to the accounting and financial reporting process.
+The Management Board and the Investment, Finance and Audit Committee of the
+Supervisory Board are regularly informed about any significant control deficiencies
+and the effectiveness of the internal controls.
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Outlook
+Business focus and strategy
+Management Board and
+Supervisory Board
+Explanatory comments to the outlook for the 2022 fiscal year
+The following outlook is based on current business developments and internal forecasts.
+Assumed euro/US dollar exchange rate
+As a globally operating organization, Infineon generates revenue not only in euros,
+but also in foreign currencies, predominantly US dollars. It also incurs expenses in
+US dollars and, to some extent, in currencies correlated to the US dollar, such as
+the Singapore dollar, the Malaysian ringgit and the Chinese renminbi. The impact of
+non-euro-denominated revenue and expenses does not always balance out. For this
+reason, fluctuations in exchange rates, particularly between the euro and the US dollar,
+influence the amounts reported for revenue and earnings. A stronger US dollar against
+the euro has a positive effect, whereas a weaker US dollar against the euro has an
+adverse effect on revenue and earnings. Excluding the effect of currency hedging instru-
+ments, the impact of a deviation of 1 US cent in the actual exchange rate of the US dollar
+against the euro compared to the forecast rate would amount to a change in Segment
+Result of approximately €5 million per quarter or approximately €20 million per fiscal
+year compared to the forecast value. These figures are calculated on the assumption
+that the exchange rates of currencies correlated with the US dollar - in which costs
+arise for Infineon – change in line with the euro/US dollar exchange rate. In terms of
+revenue, the impact of exchange rates is limited primarily to the euro/US dollar rate,
+where a deviation of 1 US cent in the actual exchange rate compared to the forecast
+rate would continue to have an impact on revenue of approximately €15 million per
+quarter or approximately €60 million per fiscal year. Planning for the 2022 fiscal year
+is based on an assumed average exchange rate of US$1.20 to the euro.
+Growth prospects for the global economy and the semiconductor market
+The world economy contracted by 3.5 percent in the 2020 calendar year as a con-
+sequence of the coronavirus pandemic. A strong recovery is expected in the 2021
+calendar year, with experts at the International Monetary Fund (IMF) projecting
+growth of 4.8 percent back in October 2020. In view of the improved growth prospects
+over the course of the 2021 calendar year, the IMF revised its projection upwards to
+5.7 percent in October 2021, R11. The rapid development and approval of effective
+vaccines to combat the coronavirus as well as extensive stimulus measures by many
+governments have contributed to the stronger recovery. However, vaccination rates
+remain low in some emerging and developing countries, posing a risk to the scale of
+the upturn going forward. Should further outbreaks or mutations of the coronavirus
+occur, they could result in value chain disruptions with negative consequences for the
+further growth of the world economy. The current shortage of certain raw materials
+and components caused by supply difficulties, as well as a variety of geopolitical con-
+flicts, also pose additional risks.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Outlook
+Consolidated Financial Statements
+Further information
+Q = < 111 >
+Revenue forecasted to grow to €12.7 billion plus or minus €500 million
+Based on the forecasts for the growth of the world economy and the semiconductor
+market segments relevant for Infineon described above and an assumed average
+exchange rate of US$1.20 to the euro, Infineon forecasts that revenue will grow in the
+2022 fiscal year to €12.7 billion plus or minus €500 million. Automotive and Connected
+Secure Systems segment revenue is expected to increase at a higher percentage rate
+than Group revenue overall. The revenue growth rate in the Power & Sensor Systems
+segment is forecast to be at a similar level to that of the Group. Industrial Power Control
+segment revenue is expected to increase by a mid-to-high single-digit percentage.
+Segment Result Margin of about 21 percent expected
+If the middle of the range for the revenue forecast is reached, the Segment Result
+Margin is expected to be around 21 percent in the 2022 fiscal year.
+Free Cash Flow from continuing operations
+For the 2022 fiscal year, Infineon forecasts Free Cash Flow of around €1 billion.
+ROCE
+For the 2022 fiscal year, Return on Capital Employed (ROCE) is forecast to reach
+minimum 10 percent.
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+The recovery of the world economy in the 2021 calendar year, after a slump in the
+previous year, combined with the ongoing trend towards digitalization and electrifi-
+cation, have driven up demand for semiconductors quite significantly in the 2021
+calendar year. Market analysts at Omdia expect Infineon's reference market (i.e., the
+semiconductor market excluding DRAM and NAND flash memory chips and micro-
+processors) to grow by 18 percent in US dollar terms in the 2021 calendar year, R09.
+Despite the pandemic and the resulting lockdowns, this market grew by 8 percent in
+the previous year, driven by the sharp hike in demand for data and telecommunica-
+tions servers, computers and other electronic and electrical devices. In particular,
+demand for semiconductor chips in the automotive sector has risen sharply during
+the 2021 calendar year. Given the high capacity utilization rate at semiconductor
+fabrication plants for the aforementioned product groups, supply bottlenecks have
+arisen that cannot be remedied in the short term. For the 2022 calendar year, market
+analysts at Omdia expect the world economy to continue recovering and the Infineon
+reference market to grow at a rate of 5 percent, R09.
+Q = < 113 >
+2 <40% Possible
+3 <60% Likely
+4 <90% Probable
+5 >90% Certain
+Risk and Opportunity Managers are designated at appropriate hierarchical levels
+to manage and monitor identified risks and opportunities. They are responsible for
+formally determining a set of appropriate strategies (in the case of risk avoidance,
+mitigation, transfer to other parties or acceptance). Working closely with corporate
+functions and individual managers, the Risk and Opportunity Managers are also
+responsible for defining and monitoring measures aimed at implementing the
+adopted management strategy. In order for our system to operate successfully, it is
+essential that risks and opportunities are managed and monitored pro-actively and
+with a great deal of commitment.
+Compliance with the ERM approach is monitored by the corporate function responsible
+for risk management and ICS using procedures incorporated in business processes.
+Group Internal Audit also performs tests for compliance with legal requirements and
+Infineon guidelines and, where appropriate, rules relating to risk and opportunity
+management and recommends corrective measures.
+The Supervisory Board's Investment, Finance and Audit Committee oversees the
+effectiveness of the Risk Management System. As part of the statutory audit, the
+external Group auditor also examines our early warning system pursuant to section
+91, paragraph 2, of the German Stock Corporation Act to ascertain its suitability to
+detect risks that could pose a threat to Infineon's going-concern status and reports
+thereon annually to the Chief Financial Officer (CFO) and the Investment, Finance and
+Audit Committee of the Supervisory Board.
+Internal Control System with respect to the financial reporting process
+The principal focus of the Internal Control System (ICS) is on the financial reporting
+process, with the aim of monitoring the proper maintenance and effectiveness of
+accounting systems and financial reporting. The primary objective of the ICS is to
+minimize the risk of misstatement in Infineon's internal and external reporting and to
+ensure with a reasonable amount of certainty that the Consolidated Financial State-
+ments comply with all relevant regulations. Appropriate controls must therefore be in
+place throughout the organization to ensure compliance. Clear lines of responsibility
+are assigned to each of the processes.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q = < 114 >
+The ICS is based on the "Internal Control - Integrated Framework" developed by
+the "Committee of Sponsoring Organizations of the Treadway Commission (COSO)"
+and is an integral part of the accounting process in all relevant legal entities and
+corporate functions.
+The system monitors compliance with stated principles and stipulated procedures
+based on preventive and detective controls. Among other things, we regularly
+check that:
+> Group-wide financial reporting, measurement and accounting guidelines are
+continually updated and adhered to;
+> issues relevant for financial reporting and disclosures in connection with agreements
+entered into are recognized and appropriately presented;
+> processes and controls are in place to explicitly guarantee the completeness and
+correctness of the year-end financial statements and financial reporting; and
+> processes are in place for the segregation of duties and for the dual control principle
+in the context of preparing financial statements, as well as for authorization and
+access rules for relevant IT accounting systems.
+Assessment of effectiveness
+We systematically assess the effectiveness of the ICS with regard to the corporate
+accounting process. An annual risk analysis is initially performed, and the defined
+controls are revised, as and when required. The assessment involves identifying and
+updating significant risks relating to accounting and financial reporting in the relevant
+legal entities and corporate functions. The controls defined for identifying risks are
+documented in accordance with Group-wide guidelines. Regular random tests are
+Further information
+performed to assess the effectiveness of these controls. The tests constitute the basis
+for assessing the appropriateness of design and the effectiveness of the controls.
+The results are documented and reported in a global IT system. Any deficiencies
+identified are remedied, with due consideration given to their potential impact.
+1 <10% Unlikely
+Likelihood of occurrence
+> intragroup transactions are fully accounted for and properly eliminated;
+High risk
+The scales used to measure these two factors (degree of impact and likelihood of
+occurrence, measured cumulatively over the multi-year planning horizon) and the
+resulting risk assessment matrix are depicted in chart C40.
+5 > €500 million Major
+result and/or business objectives, reputation, compliance, on the one hand, and
+likelihood of occurrence, on the other.
+Based on the potential degree of impact as well as the estimated probability of
+occurrence, a risk is classified as "high", "medium" or "low".
+All risks and opportunities reported for Infineon are reviewed for possible cumulative
+effects and analyzed using an Infineon-specific categorization model. Risk and oppor-
+tunity analysis and new developments in risk management culture are supplemented
+by interdisciplinary workshops held at segment, corporate and regional levels. Import-
+ant information relevant for Infineon's Risk and Opportunity Management System is
+available to all employees via our intranet system, including access to ERM tools and
+ERM guidelines containing job descriptions for all functions involved in the process
+as well as all information necessary for reporting purposes.
+Degree of impact
+Degree of impact
+on Segment Result
+1
+<€60 million Marginal
+2 >€60 million Minor
+3 > €100 million Moderate
+C40 Risk assessment matrix
+5
+Medium risk
+Low risk
+4 > €250 million Significant
+5
+4
+2 3
+Likelihood of occurrence
+1
+2
+3
+1
+4
+Result from investments, net
+Interest result
+Further information
+Q =
+< 126 >
+Earnings position
+Statement of income of Infineon Technologies AG in accordance with
+the German Commercial Code (condensed)
+Net assets and financial position
+Statement of financial position of Infineon Technologies AG
+€ in millions
+Revenue
+Cost of goods sold
+Gross profit
+Research and development expenses
+Selling expenses
+General and administrative expenses
+Other income (expense), net
+Consolidated Financial Statements
+in accordance with the German Commercial Code (condensed)
+Combined Management Report
+Infineon Technologies AG
+< 125 >
+Management Board and
+Supervisory Board
+The Segment Result totaled €2,072 million for the 2021 fiscal year, 77 percent up
+on the €1,170 million reported one year earlier. The Segment Result Margin rose
+accordingly, coming in at 18.7 percent compared to 13.7 percent one year earlier.
+Other financial result
+Investments during the 2021 fiscal year totaled €1,497 million, up €398 million or
+36 percent on the previous year's figure of €1,099 million. The increase was slightly
+more pronounced than revenue growth, reflecting the strong upturn in demand.
+Investments as a percentage of revenue edged up from 12.8 percent to 13.5 percent
+year-on-year.
+Free Cash Flow from continuing operations in the 2021 fiscal year was a positive
+amount of €1,574 million (2020: negative €6,727 million) and arose mainly due to the
+high level of net cash provided by operating activities from continuing operations
+totaling €3,063 million (2020: €1,817 million). The figure reported for the previous fiscal
+year was influenced primarily by the net payment (i.e., net of cash and cash equivalents
+acquired) amounting to €7,433 million used to acquire Cypress.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Overall statement on Infineon's financial condition | Infineon Technologies AG
+Business focus and strategy
+Further information
+The Return on Capital Employed (ROCE) improved from 3.0 percent to 8.4 percent
+year-on-year, mainly reflecting the sharp rise in operating profit from continuing
+operations after tax from €473 million to €1,325 million compared with one year
+earlier. Capital employed stood at €15,793 million as of 30 September 2021 and was
+therefore similar to the amount reported one year earlier (30 September 2020:
+€15,827 million).
+Outlook
+For around three quarters now, we have been talking about the imbalance between
+supply and demand, caused by the pandemic, cyclical tailwinds and structural factors.
+In general terms, a stabilization of this boom phase is occurring at present. In the
+majority of markets, capacities are tight and inventories are lower-than-healthy.
+Demand is outstripping supply but not accelerating further from elevated levels.
+Stock levels in some areas are going slightly up, while staying considerably below
+long-term averages. Of course, dynamics are different in the various sub-markets; in
+some, a supply-demand equilibrium will be reached sooner than in others. For our
+target applications, however, we do not see this happening in the near future. Supply
+limitations for automotive, industrial, data center, IoT and other areas will persist
+well into 2022. As a consequence, our outlook for the 2022 fiscal year is determined
+from the supply side, that is, by the extent by which we can expand capacities, both
+in-house as well as from external manufacturing partners.
+Based on the forecasts for the development of the global economy and the semi-
+conductor market in the 2022 calendar year, the company expects an increase in
+Group revenue to around €12.7 billion plus or minus €500 million. The Segment
+Result Margin is forecast to come in at the middle of the range for the revenue fore-
+cast at around 21 percent of revenue. Investments are expected to be in the region of
+€2.4 billion. Depreciation and amortization are expected to total between €1.6 billion
+and €1.7 billion. Free Cash Flow from continuing operations should reach around
+€1 billion. The Return on Capital Employed (ROCE) is forecast to reach minimum
+10 percent.
+Infineon Technologies AG
+In addition to reporting on Infineon as a whole, in the following section, we also
+provide information on the performance of Infineon Technologies AG.
+Infineon Technologies AG is the parent company of Infineon and performs the Group's
+management and corporate functions. It is responsible for key Group-wide functions
+such as Finance and Accounting, Treasury Management, Investor Relations, Corporate
+Compliance, Internal Audit, Business Continuity, Business Excellence, Information
+Technology, Strategy, Mergers and Acquisitions, Legal and Patent Department, Human
+Resources, strategic and product-oriented research and development activities and
+also Corporate and Marketing Communication worldwide. Furthermore, it manages
+supply chain processes throughout the Group. Infineon Technologies AG also has its
+own manufacturing facilities, located in Regensburg and Warstein (both in Germany).
+Unlike the Consolidated Financial Statements, which are prepared in accordance
+with International Financial Reporting Standards ("IFRS”), Infineon Technologies AG's
+Separate Financial Statements are prepared in accordance with the provisions of
+the German Commercial Code ("HGB"). The complete Separate Financial Statements
+are published separately.
+Infineon Technologies | Annual Report 2021
+Q =
+Income tax
+1,257
+Transfers from retained earnings
+1,207
+(444)
+(370)
+Receivables and other assets
+1,872
+1,659
+(229)
+(198)
+Cash and cash equivalents, marketable securities
+3,656
+2,587
+26
+(2)
+Current assets
+6,785
+5,453
+64
+270
+Infineon generated revenue of €11,060 million in the 2021 fiscal year, an increase of
+29 percent compared to the previous year's figure of €8,567 million.
+Inventories
+(1,091)
+(1,203)
+12,958
+2021
+2020
+€ in millions
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+6,311
+5,346
+Intangible assets, property, plant and equipment
+Income after taxes/net profit (previous year: net loss)
+592
+(4,133)
+(3,745)
+Financial assets
+12,446
+12,266
+2,178
+1,601
+Non-current assets
+13,038
+692
+We are continuing the process of aligning our product portfolio with the two key
+trends of the current and the next decade; namely, electrification and digitalization.
+Both trends and the interplay between them will accelerate structural semiconductor
+growth. The general market picture and our business situation continue to look very
+positive. This is reflected in our recent numbers:
+New technologies and materials (OC: medium)
+Current issues with allocation have only strengthened our view that we also need to
+champion our own manufacturing. The most critical bottlenecks arose for products
+that come from foundries – in some product categories, we are dependent on their
+supplies, as well. However, we are less dependent on foundries than competitors
+with fabless business models and, if we look across our entire portfolio, we are more
+resistant to supply problems. We have continued to develop our collaboration with
+contract manufacturers and have broadened our supplier base, so that in the future
+we will be even better equipped to deal with fluctuations in the supply situation.
+Overall statement by Group management on the risk situation
+The overall risk assessment is based on a consolidated view of all significant individual
+risks. The risk situation as a whole remains essentially unchanged from the previous
+year. We are not currently aware of any individual risks capable of jeopardizing
+Infineon's going-concern status.
+Opportunities
+The principal opportunities are described in the following section. The list is not
+exhaustive and represents only a cross-section of the opportunities available. Our
+assessment of these opportunities is subject to continuous change, reflecting the
+fact that our business, our markets and the technologies we deploy are continuously
+subject to new developments, bringing with them fresh opportunities, causing others
+to become less relevant or otherwise changing the significance of an opportunity
+from our perspective. Depending on the potential degree of impact and the estimated
+probability of occurrence, each of these opportunities is assigned to an "opportunity
+class" (OC) in the same way that risks are allocated to a risk class. These classifications
+are shown in parentheses (e.g., “OC: medium”).
+High demand for semiconductors allows price increases (OC: high)
+The worldwide high demand for semiconductor products is predicted to continue in
+the 2022 fiscal year and gives us the opportunity to increase our sales prices. This
+may have a positive impact on Infineon's business operations, liquidity and earnings.
+Opportunities arising in connection with the acquisition
+and integration of Cypress (OC: medium)
+The products and technologies of Infineon and Cypress complement one another in
+an outstanding manner. The previous focus on power semiconductors, sensors and
+microcontrollers for automotive and security applications has now been broadened
+to include connectivity-related products, multi-purpose microcontrollers for industrial
+and IoT applications together with the related software, as well as memories for
+specialty applications ("grow in scope").
+The resulting comprehensive portfolio enables Infineon to offer complete system
+solutions that are needed to link the real with the digital world. The key to success
+is ensuring secure connectivity for energy-efficient devices. Advances in functional
+integration mean that a whole host of relevant applications are currently in an early
+phase of growth.
+We are pushing ahead with our strategic approach "Product to System" in order
+to strengthen and expand core business by growing in both related and new fields.
+To cite two examples, firstly, the combination of Infineon's security expertise with
+Cypress' connectivity knowhow will accelerate entry into new loT applications in
+the industrial segment. Secondly, in the field of automotive semiconductors, the
+expanded portfolio of microcontrollers and NOR flash memories offers great potential,
+especially in light of their growing importance for driver assistance systems and new
+electronic architectures in vehicles.
+Quite apart from their product portfolios, the two companies also complement each
+other in further aspects. We also see an excellent match in terms of geographical
+focus and sales channels, with Infineon gaining wider market access through Cypress,
+particularly in Japan, as well as via distributors. Infineon will also be adding to its
+research and development presence in Silicon Valley. On account of its product port-
+folio, the manufacturing strategy of Cypress focuses to a much greater extent on con-
+tract manufacturing. The combination of the two companies will help our business
+diversify, make it more robust and enable us to generate additional synergies.
+We are constantly striving to develop new technologies, products and solutions and
+to improve on existing ones, both separately and in collaboration with customers. We
+therefore continually invest in research and development relating to the use of new
+technologies and materials. Those in current use may well lose their predominance
+in the foreseeable future, such as Si, which is reaching its physical limits in some
+applications.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+< 121 >
+Q =
+Further information
+Consolidated Financial Statements
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Q =
+< 120 >
+At an operational level, we have adopted various quality management strategies
+aimed at avoiding quality risks (such as "Zero Defects” and “Six Sigma") in order to
+prevent or solve problems and to improve our business processes. Our Group-wide
+quality management system has been certified on a worldwide basis in accordance
+with ISO 9001 and ISO/TS 16949 for a number of years and also encompasses supplier
+development. Our processes and initiatives to ensure continuous quality improve-
+ment in corporate procedures are aimed at identifying and eliminating the causes of
+quality-related problems at an early stage.
+A structured project management system is in place to handle development projects,
+including those of a customer-specific nature. Clear project milestones and verifica-
+tion procedures required to be carried out during a project, as well as clearly defined
+limits of authority, help us identify potential project risks at an early stage and counter
+these risks with specific measures.
+Q =
+We seek to minimize procurement-related risks through appropriate purchasing
+strategies and techniques, including constant product and cost analysis ("Best Cost
+Country Sourcing” and “Focus-on-Value”). These programs include cross-functional
+teams of experts who are responsible for standardizing purchasing processes with
+respect to materials and technical equipment.
+In response to the general increase in threats to data security and the high degree of
+professionalism meanwhile applied in the area of cybercrime, we have initiated an
+information security program to further improve protection against hacking attacks
+and related risks to our IT systems, networks, products, solutions and services.
+Information security is achieved primarily with the aid of Infineon's systematically
+applied global Information Security Management System (ISMS), the prime objectives
+of which are to identify and measure all potential IT risks and to ensure that effective
+processes and tools are in place to minimize and avoid risk. The ISMS covers all
+areas of Infineon's business and is certified in line with the globally recognized
+ISO/IEC 27001 standard. All relevant risk areas are continuously monitored and
+optimized in conjunction with regular internal and external audits.
+We minimize legal risks relating to intellectual property rights and patents by pursuing
+a well-defined patent strategy, including thorough patent research and the selective
+development and registration of Infineon patents, as well as precautionary protective
+measures in the form of agreements with major competitors. However, no such
+opportunities exist to safeguard against risks of this nature in the case of companies
+that specialize in exploiting patent rights.
+We have implemented a Group-wide Compliance Management System (CMS) with
+the aim of managing Compliance-related risks in a systematic, comprehensive and
+sustainable manner. We are continuously enhancing the seven elements of our
+CMS to prevent, detect and respond to Compliance-related incidents. The Corporate
+Compliance Officer reports to the Chief Financial Officer and, on a quarterly basis,
+to the Management Board and to the Investment, Finance and Audit Committee of
+the Supervisory Board. At entities or sites formerly operated by Cypress, we have
+appointed Compliance Contacts, who are responsible for the implementation of the
+CMS at the entities or sites.
+In certain cases, insurance policies have been taken out to protect against potential
+claims and liability risks, with the aim of avoiding or at least minimizing any adverse
+impact on Infineon's financial condition and liquidity.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+In order to take the growing importance of Infineon's ecosystem partners into account,
+a partner risk evaluation system for Go2Market and IP/R&D partners has been devel-
+oped and integrated. This partner risk assessment focuses on the dependency of
+Infineon from its ecosystem partners. As a result, the high risk ecosystem partners
+throughout the group are now identified, continuously assessed and corrective risk
+mitigation measures are implemented to avoid an adverse impact on the Segment
+Result and/or business objectives, reputation, compliance.
+A significant element of our strategic evolution is the expansion of our own manu-
+facturing landscape. Without a doubt, the most important milestone was the opening
+of our new 300-millimeter semiconductor manufacturing facility in Villach (Austria)
+on 17 September 2021. We will operate the new factory, together with our factory in
+Dresden (Germany), as one unit, based on the One Virtual Fab concept, which gives
+us more flexibility and greater economies of scale.
+< 122 >
+Strategic approach "Product to System" (OC: medium)
+We are also convinced that current global carbon emissions targets cannot be achieved
+without further electrification. The need for increased efforts in this field is relevant
+not only for electromobility (i.e., hybrid, plug-in hybrid and all-electric vehicles), but
+also for power units in vehicles with combustion engines. IT security within the vehicle
+is also further gaining in importance. Our expertise in the field of security controllers
+makes us extremely well positioned to exploit opportunities in this area.
+Growth from mobile applications (OC: medium)
+The ongoing trend towards increased mobility is also reflected in the unbroken high
+demand for smartphones and tablets. We benefit from this development in two ways.
+Firstly, through the components we supply for mobile devices (MEMS microphones,
+TVS diodes, GPS signal amplifiers, CMOS-RF switches), and secondly, through power
+semiconductors, which form the key components for energy-efficient chargers
+(high-voltage and low-voltage power transistors, driver ICs and control ICs).
+Security applications (OC: medium)
+The trend towards electronic identity documents continues to have a positive impact
+on Connected Secure Systems segment revenue. Paper-based documents are increas-
+ingly being replaced by chip-based versions, due to the higher level of security they
+offer. New markets are also emerging in conjunction with the loT and the Industrial
+Internet ("Industry 4.0"). The authentication of devices is playing an increasingly
+important role in both of these fields, for which Infineon offers the corresponding
+security chips.
+Liquidity position (OC: medium)
+Our current liquidity position, which we describe in the chapter "Review of liquidity",
+I p. 105 ff., enables us to obtain and, if necessary, make use of favorable refinancing
+conditions.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Consolidated Financial Statements
+Further information
+Q = < 124 >
+Combined Management Report
+Overall statement on Infineon's financial condition
+Overall statement on Infineon's financial condition
+Signs of an economic recovery following the outbreak of the coronavirus pandemic
+began to appear about one year ago. These indications quickly gathered steam
+across many markets and geographies, soon leading to a stronger-than-expected
+economic rebound and an unprecedented global chip shortage. Manufacturing
+capacities became, and continue to be, the limiting factor, even more so as natural
+disasters and regional Covid spikes caused specific disruptions. In this challenging
+environment, we rapidly switched our operational mode from managing the under-
+utilization to handling severe allocation.
+And that picture remains valid today: demand is by far outstripping supply. Near-term
+indicators tell us that the positive momentum in our key markets is intact, whereas,
+in a few applications with lower relevance for us, we see some normalization. Overall,
+the speed of growth is determined by the speed by which additional capacity is
+becoming available.
+For the time being, supply constraints remain pervasive, and demand is strong across
+a large majority of product categories and end markets. Supply is bound to catch
+up with demand eventually, but we do not see this happening on a broader scale
+within 2022.
+-
+We expect semiconductor content per vehicle to continue growing. The primary
+driving force behind this trend is the rising demand for electromobility, active safety
+features and driver assistance systems.
+Further growth of semiconductor content in vehicles (OC: medium)
+Our success in positioning Infineon in China as an integral part of Chinese industry
+(and hence of Chinese society) could well open up a multitude of new opportunities
+that is highly likely to have a positive impact on the growth and profitability of our
+business.
+At the G20 summit held in Hangzhou (People's Republic of China) in September 2016,
+China ratified the Paris Agreement, thereby giving its formal commitment to reducing
+carbon emissions. As a consequence, the importance of expanding renewable energy
+sources in China increased enormously. Our presence in this market, alongside our
+collaboration with leading companies in the wind and solar power sectors, will create
+further opportunities for long-term growth.
+With the strategic approach "Product to System" we seek to identify additional
+benefits for our customers at a system level from within our broad portfolio of tech-
+nologies and products. This strategy enables us to exploit further revenue growth
+potential and thereby achieve our growth and margin targets. This approach also
+enables us to reduce customers' development costs and shorten the lead times
+required to bring their products to market.
+Support for change in energy policies and consideration
+of climate change issues (OC: medium)
+Population growth and increasing industrialization in all parts of the world are
+resulting in an ever-greater global demand for energy. Electric power is becoming
+the most important energy carrier of the 21st century and renewables are playing
+a key role in reducing carbon emissions. The long-term objective is to achieve global
+decarbonization by the end of the century, as resolved at the Climate Change Con-
+ference held in Paris (France) in December 2015. As part of its Green Deal concept,
+the European Union intends to become carbon-neutral by 2050.
+Infineon's semiconductors enable electric power to be generated from renewable
+energy sources. They offer efficiency gains at all stages of the energy industry's
+value chain, whether in generation, transmission or, above all, in the use of electric
+power. They form the basis for the intelligent and efficient use of electric power,
+for instance, in industrial applications, power supplies for computers, consumer elec-
+tronics and vehicles.
+Digitalization (OC: medium)
+The trend towards digitalization offers substantial business potential for Infineon.
+This is partially reflected in the optimization of internal processes, such as for our
+interconnected manufacturing capabilities on a global scale. At the same time, our
+portfolio of sensors, microcontrollers, power semiconductors, security controllers
+and specific software puts us in an excellent position to exploit growing market
+potential. Our strategic approach "Product to System” makes us ideally placed to
+penetrate and develop the markets involved. Good examples already visible today
+include automated driving, voice and gesture control for devices and machines, the
+advancing development of the lot and big data.
+Ability to meet supply requirements with available capacities (OC: medium)
+Our in-house manufacturing capacities, together with those of our external partners,
+provide us with a degree of flexibility to meet demand. In particular, the further
+expansion of 300-millimeter production in Dresden (Germany), the second manufac-
+turing module in Kulim (Malaysia), and the recent start of production of a second,
+fully automated 300-millimeter factory at the Villach site (Austria) will strengthen our
+ability to meet the growing demand for power semiconductors.
+Market access and activities in China (OC: medium)
+Infineon generates more revenue in China than in any other country. Accordingly,
+developments and growth opportunities in China are of the utmost importance to
+the Group and relate to the following markets that we serve:
+We see numerous opportunities for working with new materials, such as those asso-
+ciated with SiC or GaN, to develop more powerful and/or lower-cost products. These
+materials could well have a positive influence on our ability to attain our strategic
+growth and profitability targets.
+China is the world's largest automotive market, with growth rates still at a high level.
+In particular, the rapid growth in the production of plug-in hybrid and all-electric
+vehicles means that China has been the world's largest market for electromobility
+for a number of years. For this reason, during the 2018 fiscal year, Infineon and SAIC
+Motor (China's largest car manufacturer) established SIAPM, a joint venture that offers
+power semiconductor solutions for electric vehicles. Volume production has already
+commenced. The joint venture strengthens our position in China, whilst also offering
+additional potential for Infineon's global business going forward.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 123 >
+Report on outlook, risk and opportunity
+Risk and opportunity report
+China is the world's largest market for trains and, with CRRC (an Infineon customer),
+the country is home to the world's largest train manufacturer by far. The continued
+expansion of China's rail network and the growing volume of international infra-
+structure projects both represent growing business opportunities for Infineon.
+Infineon Technologies | Annual Report 2021
+Prepaid expenses
+121
+section 289a, paragraph 1, and
+section 315a, paragraph 1, of the
+German Commercial Code (HGB)
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+For information regarding Infineon's long-term dividend policy, see "Dividend” in the
+chapter "The Infineon share”. □ p. 98 ff.
+The Company paid a dividend of €0.22 per share (€286 million in total) for the 2020
+fiscal year.
+Infineon Technologies AG reported unappropriated profit of €353 million in its financial
+statements for the fiscal year ended 30 September 2021. With regard to the 2021 fiscal
+year, a proposal will be made to pay a dividend of €0.27 per dividend-entitled share out
+of the unappropriated profit of Infineon Technologies AG, amounting to €353 million.
+The disbursement of the proposed dividend is subject to approval by the shareholders.
+In accordance with the German Stock Corporation Act (AktG), the amount of the
+dividend available for distribution to shareholders is based on the level of unappro-
+priated profit (Bilanzgewinn) recorded by the ultimate parent, as determined in
+accordance with the German Commercial Code (HGB).
+Dividend
+For information on Infineon's own shares, please see the comments relating to
+section 160, paragraph 1, no. 2 of the German Stock Corporation Act (AktG) provided
+in the Separate Financial Statements of Infineon Technologies AG.
+https://www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
+Provisions for pensions and similar commitments increased by a total of €17 million,
+mainly due to the reduction in the average market interest rate for the past ten years
+used to measure obligations. The positive development of the fair value of the plan
+assets had an offsetting effect. Other provisions increased by a total of €83 million,
+relating mainly to provisions for obligations to employees amounting to €315 million
+(2020: €171 million) while provisions for unrealized fair value measurement losses on
+interest rate hedging contracts could be derecognized (2020: €66 million). Liabilities
+went up by €1,350 million from €7,978 million at the end of the 2020 fiscal year to
+€9,328 million as of 30 September 2021. The increase resulted from the higher
+amount of payables to affiliated companies, mainly in connection with intragroup
+financing management.
+The decrease in equity (€31 million) was mainly due to the dividend paid out for
+the 2020 fiscal year amounting to €286 million and, with an offsetting effect, the net
+profit for the 2021 fiscal year amounting to €239 million.
+Total assets increased by 7.6 percent from €18,529 million as of 30 September 2020
+to €19,946 million as of 30 September 2021. Non-current assets went up by €80 million
+year-on-year due to capital contributions at the level of affiliated companies while
+intangible assets and property, plant and equipment decreased. Current assets
+increased by €1,332 million, mainly due to an increase of cash and cash equivalents
+and marketable securities by €1,069 million to €3,656 million at the end of the report-
+ing period (30 September 2020: €2,587 million). Cash and cash equivalents and
+marketable securities accounted for 53.9 percent of current assets. Receivables and
+other assets increased in total by €213 million due to the higher volume of business.
+< 127 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Infineon Technologies AG
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+18,529
+19,946
+2
+1
+7,978
+Further information
+Q =
+<128>
+Infineon Technologies AG | Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+Infineon Technologies | Annual Report 2021
+Pursuant to section 179, paragraph 1, AktG, responsibility for amending the Articles of
+Association rests with the Annual General Meeting. However, section 10, paragraph 4,
+of the Articles of Association gives the Supervisory Board the authority to amend
+the Articles of Association insofar as any such amendment relates merely to the
+Pursuant to section 84, paragraph 1, sentence 1, AktG, the maximum term of appoint-
+ment for Management Board members is five years. Re-appointment or an extension
+of the term of office, in each case for a maximum of five years, is permitted (section 84,
+paragraph 1, sentence 2, AktG). Section 5, paragraph 1, of the Articles of Association
+and section 84, paragraph 2, AktG stipulate that the Supervisory Board may appoint
+a chairman and a deputy chairman to the Management Board. The Supervisory Board
+may revoke the appointment of a Management Board member and the Chairman of
+the Management Board for good cause (section 84, paragraph 3, AktG).
+If the Management Board does not have the required number of members, in urgent
+cases, the local court ("Amtsgericht” of Munich) makes the necessary appointment
+upon petition of a party concerned pursuant to section 85, paragraph 1, AktG.
+Section 5, paragraph 1, of the Articles of Association stipulates that the Management
+Board of Infineon Technologies AG is required to consist of at least two members.
+With effect from 15 April 2021, the Management Board comprises five members (pre-
+viously four members). Management Board members are appointed and dismissed
+by the Supervisory Board pursuant to section 84, paragraph 1, AktG. As Infineon
+Technologies AG falls within the scope of the German Co-Determination Act (Mitbe-
+stimmungsgesetz - "MitbestG"), the appointment or dismissal of Management Board
+members requires a two-thirds majority of the votes of the Supervisory Board members
+(section 31, paragraph 2, MitbestG). If the required majority is not achieved at the
+first ballot, the appointment may be approved on a recommendation of the Mediation
+Committee at a second ballot by a simple majority of the votes of the Supervisory
+Board members (section 31, paragraph 3, MitbestG). If the required majority is still
+not achieved, a third ballot is held in which the Chairman of the Supervisory Board
+has two votes (section 31, paragraph 4, MitbestG).
+Statutory regulations and Articles of Association provisions governing
+the appointment and dismissal of members of the Management Board
+and amendments to the Articles of Association
+Nature of control over voting rights when employees participate in the
+Company's capital and do not exercise their control rights directly
+Employees who participate in the capital of Infineon Technologies AG exercise their
+control rights directly in accordance with the applicable laws and the Articles of
+Association, just like other shareholders.
+Shares with special rights that confer control rights
+No shares conferring special control rights have been issued.
+Direct or indirect shareholdings exceeding 10 percent of the voting rights
+Section 33, paragraph 1, WpHG requires each shareholder whose voting rights reach,
+exceed or, after exceeding, fall below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the
+voting rights of a listed corporation to notify such corporation and the German Federal
+Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht -
+"BaFin") immediately. As of 30 September 2021, we have not been notified of any
+direct or indirect shareholdings reaching or exceeding 10 percent of the voting rights.
+The shareholdings notified to us as of 30 September 2021 are presented in the Notes
+to the Separate Financial Statements of Infineon Technologies AG under the infor-
+mation pursuant to section 160, paragraph 1, No. 8 AktG.
+Pursuant to section 67, paragraph 2, AktG, rights and obligations arising from shares in
+relation to Infineon Technologies AG exist only for and from the parties entered in the
+share register. In order to be recorded in the share register of Infineon Technologies AG,
+shareholders are required to submit to Infineon Technologies AG the number of shares
+held by them and their name or company name, their postal and electronic address
+and, where applicable, their registered office and their date of birth. Pursuant to sec-
+tion 67, paragraph 4, AktG, Infineon Technologies AG is entitled to request information
+from the party listed in the share register regarding the extent to which shares to which
+the entry in the share register relates are actually owned by the registered party and,
+if it does not own the shares, to receive the information necessary for the maintenance
+of the share register in relation to the party for whom the shares are held. Section 67,
+paragraph 2, AktG stipulates that the shares concerned do not confer voting rights until
+such time as the information requested has been supplied in the appropriate manner.
+Combined Management Report
+Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+< 129 >
+Q =
+9,328
+Further information
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Restrictions on the voting rights of shares may, in particular, arise as a result of the
+regulations of the German Stock Corporation Act (Aktiengesetz - "AktG"). For example,
+pursuant to section 136 AktG shareholders are prohibited from voting under certain
+circumstances and, pursuant to section 71b AktG, Infineon Technologies AG has no
+voting rights from its own shares. Furthermore, non-compliance with the notification
+requirements pursuant to section 33, paragraphs 1 or 2 of the German Securities
+Trading Act (Wertpapierhandelsgesetz - "WpHG") and to section 38, paragraph 1 as
+well as section 39, paragraph 1, WpHG can, pursuant to section 44 WpHG, have the
+effect that certain rights (including the right to vote) may, at least temporarily, not
+exist. We are not aware of any contractual restrictions on voting rights or the transfer
+of shares.
+Restrictions on voting rights or the transfer of shares
+The Company held 4,545,602 of the above-mentioned issued shares as own shares
+as of 30 September 2021 (30 September 2020: 5,251,391 shares). Own shares held by
+the Company on the date of the Annual General Meeting do not carry a vote and are
+not entitled to participate in profit.
+The share capital of Infineon Technologies AG stood at €2,611,842,274 as of 30 Sep-
+tember 2021. This sum is divided into 1,305,921,137 no par value registered shares,
+each of which represents a notional portion of the share capital of €2 per share. Each
+share carries one vote and gives an equal right to the profit of the Company based
+on the profit appropriation resolved by shareholders at the Annual General Meeting.
+Structure of the subscribed capital
+Information pursuant to
+Corporate Governance
+Most transactions within Infineon involving derivative financial instruments are han-
+dled by Infineon Technologies AG. The comments provided in "Principles and structure
+of Infineon's treasury” within the chapter "Review of liquidity”, p. 107 f., regarding
+the nature and scope of transactions involving derivative financial instruments and
+hedged risks also apply to Infineon Technologies AG. Reference is also made to the
+Notes to the Separate Financial Statements of Infineon Technologies AG.
+https://www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
+The expected developments, together with the associated material risks and
+opportunities of Infineon Technologies AG, are very similar to those of the Group
+as a whole. Moreover, it is assumed that the result from investments will play a major
+role in Infineon Technologies AG's earnings performance. As a general rule, Infineon
+Technologies AG participates in the risks of its subsidiaries and equity investments on
+the basis of the relevant shareholding. As the parent company, Infineon Technologies
+AG is integrated into Infineon's overall risk management system and internal control
+system. For more information on this topic, together with the associated material
+risks and opportunities of Infineon Technologies AG, see the chapter "Risk and
+opportunity report". p. 112 ff.
+Expected developments, together with associated material risks
+and opportunities
+Consolidated Financial Statements
+878
+At the end of the reporting period, the equity ratio stood at 47.6 percent, compared
+to 51.4 percent one year earlier.
+2,125
+353
+Unappropriated profit at the end of year
+3,116
+3,007
+Retained earnings
+437
+114
+3,515
+3,525
+Capital reserves
+(150)
+239
+2,601
+287
+2,603
+883
+(42)
+18,529
+19,946
+Total assets
+(216)
+36
+2
+2
+Active difference resulting from offsetting
+(141)
+(147)
+116
+Share capital
+Unappropriated profit
+(3)
+287
+353
+3,430
+341
+378
+1
+2
+4,634
+4,634
+1,129
+725
+808
+304
+321
+Provisions for pensions and similar commitments
+Total liabilities and shareholders' equity
+1,029
+Liabilities
+Shareholders' equity
+Deferred income
+9,488
+9,519
+Special reserve with an equity portion
+Other provisions
+Provisions
+The unchanged high demand for semiconductor products, which resulted in positive
+volume and price effects, led to an increase in revenue of Infineon Technologies AG
+of 18 percent to €6,311 million (2020: €5,346 million) and an increase in gross profit
+of 36.0 percent year-on-year to €2,178 million (2020: €1,601 million). The gross profit
+margin amounted to 34.5 percent in the 2021 fiscal year (2020: 29.9 percent). This
+development led to an increase in functional costs of €217 million to €1,876 million
+in the 2021 fiscal year (2020: €1,659 million), amounting to 29.7 percent of revenue
+(2020: 31.0 percent). Infineon Technologies AG reports net profit of €239 million for
+the 2021 fiscal year after a net loss of €150 million for the 2020 fiscal year. Besides an
+increase in gross profit, a decrease in financial expenses related to the acquisition
+of Cypress was recorded. This was offset by a declining income from investments and
+an increase of expenses by function. After transferring a total of €114 million from
+retained earnings, unappropriated profit amounted to €353 million.
+Loans payable to banks
+Advance payments received
+Trade payables
+Liabilities to affiliated companies
+Other liabilities
+Bonds
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+An STI is paid out only if the levels of target achievement reach at least the 50 percent
+threshold for both performance indicators (Free Cash Flow and RoCE). If one of the
+two target thresholds is not achieved, no annual bonus is paid for the relevant fiscal
+year. If the thresholds are achieved, the arithmetic mean of the two target achieve-
+ments is calculated and used as the percentage rate to determine the actual amount
+of the STI. A cap of 250 percent applies, meaning that the maximum amount that can
+be paid out is two-and-a-half times the target STI (= 100 percent), regardless of an
+actual higher level of achievement. Moreover, the Supervisory Board may increase or
+reduce the amount payable in each case by up to 50 percent as it sees fit, based
+Business focus and strategy
+Management Board and
+Supervisory Board
+Further information
+Infineon Technologies | Annual Report 2021
+(ii) At the end of the fiscal year, the actual levels of target achievement, and hence
+the amount of the STI payouts, are determined by the Supervisory Board by
+reference to the levels of target achievement for Free Cash Flow and RoCE as
+reported in the audited financial statements.
+> Fixed remuneration: Comprises a contractually agreed basic annual salary that is
+not linked to performance and paid in twelve equal monthly installments.
+The short-term incentive (“STI”) is intended to reward performance over the fiscal
+year just ending, reflecting Infineon's recent progress. Assuming 100 percent target
+achievement of the variable remuneration components, the STI constitutes approxi-
+mately 18 percent of target annual income. It is set by the Supervisory Board in
+a two-phase process:
+With the conversion of the current service contracts to the new Management Board
+remuneration system with effect from 1 October 2021 (i.e., for the 2022 fiscal year)
+and, in the case of the LTI with effect from 1 October 2020 (i.e., with the grant made
+on 1 April 2021 for the 2021 fiscal year), the previous multi-year variable bonus (Mid-
+Term Incentive - MTI) was discontinued. The allocation amount previously awarded
+for the MTI has now been largely added to the LTI. This change has the effect of
+increasing the weighting of long-term variable remuneration.
+> Variable (= performance-related) remuneration: Comprises two components - an
+annual bonus (short-term incentive – STI) and a long-term variable remuneration
+component (long-term incentive - LTI).
+As remuneration for their service, all Management Board members receive a target
+annual income which - based on 100 percent target achievement - comprises
+approximately 40 percent fixed remuneration and approximately 60 percent variable
+remuneration components:
+In addition to the horizontal comparison, a vertical view is also taken, whereby
+Infineon's internal remuneration structure is assessed by comparing the remunera-
+tion of the Management Board with that of senior management (senior executives
+in Germany and those performing internationally comparable functions) and the
+workforce as a whole. Apart from the current status, changes in the level of remuner-
+ation over time are also considered.
+Q = < 135 >
+Components of the Management Board remuneration system
+(i) At the beginning of each fiscal year, the target functions with respect to the two
+key performance indicators Free Cash Flow and Return on Capital Employed
+(ROCE) are defined uniformly for all Management Board members. Underpinning
+the consistent approach taken to managing the business, the same target indi-
+cators - supplemented by the Segment Result Margin – serve as the basis for
+determining the variable remuneration components (bonus payments) for
+Infineon managers and employees. The two key performance indicators referred
+to above, which are described in more detail in the chapter "Internal Management
+System", are equally weighted for the purposes of measuring the STI. p. 93.
+With the conversion of the current service contracts to the new Management
+Board remuneration system with effect from 1 October 2021 (i.e., for the 2022
+fiscal year) all three performance indicators (Free Cash Flow, Return on Capital
+Employed and Segment Result Margin) are also relevant for the Executive Board.
+on the performance of the Management Board as a whole, Infineon's position, and
+any exceptional factors that may be relevant. A lower limit applies in this case, such
+that the amount payable may not be less than the amount that would be due given
+50 percent target achievement. The upper limit for an upward adjustment is the cap
+of 250 percent.
+> progress in Environmental, Social & Governance (ESG) matters.
+With regard to the performance indicator Free Cash Flow for the 2021 fiscal year, the
+Supervisory Board had set a threshold of €347 million (0 percent target achieve-
+ment), a target of €770 million (100 percent target achievement) and a maximum of
+€1,232 million (250 percent target achievement).
+Combined Management Report
+Corporate Governance
+Remuneration report
+Q = < 134 >
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+› improved innovative strength and delivery capabilities;
+> successful completion of key projects;
+> optimizations, efficiency improvement programs, restructuring;
+> successful development of new growth markets, improvement of market position;
+> portfolio-related measures, particularly successful mergers and acquisitions as
+well as corresponding integration measures;
+> sustainable strategic, technical or structural development of the business;
+From the 2022 fiscal year onwards, the STI will - alongside the aforementioned finan-
+cial performance criteria and Segment Result Margin – also include a criteria-based
+modifier that enables the Supervisory Board to assess the Management Board's
+collective performance and take appropriate account of extraordinary developments
+that were not adequately reflected in the targets set at an earlier stage. After the
+end of the respective fiscal year, the Supervisory Board applies a factor of between
+0.7 and 1.3 to determine the overall level of target achievement. The collective per-
+formance of the Management Board rewards the extent to which the Management
+Board contributes to the sustainable development of the Company as a whole - in
+strategic, technical or structural terms. Prior to the beginning of each fiscal year, the
+Supervisory Board selects the criteria that it has determined are relevant for the fiscal
+year in question, based on the following categories:
+-
+If both targets (Free Cash Flow and ROCE) end up with the same weighting, the
+arithmetic (mean) target achievement level for the 2021 fiscal year is 194.2 percent.
+Exceptional factors not covered by the definitions of RoCE and Free Cash Flow that
+have a (positive or negative) impact on target achievement are taken into account
+by the Supervisory Board as it sees fit for the purposes of determining the target
+achievement level, provided that such factors are significant and were not already
+included in the forecast.
+When calculating the ROCE relevant for determining the level of target achievement,
+those factors which cannot be influenced by the relevant decision-makers are adjusted
+in the earnings figure (operating profit from continuing operations after taxes). This
+applies in particular to earnings components which are not directly segment-related.
+The RoCE determined in this way for the 2021 fiscal year came in at 11.7 percent,
+corresponding to a target achievement level of 138.5 percent.
+With regard to the performance indicator RoCE for the 2021 fiscal year, the Supervisory
+Board had set a threshold of 3.0 percent (0 percent target achievement), a target of
+9.0 percent (100 percent target achievement) and a maximum of 17.5 percent (250 per-
+cent target achievement).
+Free Cash Flow recorded for the 2021 fiscal year amounts to €1,574 million, corre-
+sponding to a target achievement level of 250 percent.
+If a member's term of office on the Management Board begins or ends during a fiscal
+year, that member's entitlement to the STI is reduced on a pro rata monthly basis
+(by one twelfth for each full month missing from the complete STI tranche). A Manage-
+ment Board member is not entitled to receive an STI bonus for the fiscal year in which
+he/she resigns from office (unless the resignation is for a reason ("good cause") for
+which the member is not responsible or if the Management Board member's service
+contract is terminated by the Company for good cause.
+Further information
+The aforementioned amendments to the Management Board remuneration system,
+which already apply for the 2021 fiscal year, are described in detail in this remuneration
+report. The other adjustments, which will only be relevant from the 2022 fiscal year,
+are outlined hereinafter in "Revision of the Management Board remuneration system”,
+p. 147 ff. They are included in full and in detail in the notice of the Annual General
+Meeting held on 25 February 2021 and also presented on the website of Infineon.
+https://www.infineon.com/cms/en/about-infineon/investor/corporate-governance/#equity-
+Combined Management Report
+Corporate Governance
+Remuneration report
+› Bayer AG
+> BASF SE
+> Adidas AG
+> Allianz SE
+The horizontal view compares the remuneration of Infineon's Management Board
+members with that of similar companies. In its most recent review of the appropriate-
+ness of Management Board remuneration, the Supervisory Board used a peer group
+of comparable DAX-listed companies (as of 31 December 2019, but excluding Linde
+plc and Wirecard AG, as no annual reports were available for these companies at the
+time of the comparison for 2019), comprising the following:
+To ensure appropriateness, the Supervisory Board performs both horizontal and
+vertical comparisons at regular intervals.
+as a whole, including changes in the level of remuneration over time. The stated
+objective is that the remuneration structure should be designed in such a way that it
+promotes sustainable and long-term business development. The level of remuneration
+should contribute towards achieving Infineon's business strategies, with a cap in
+place in the event of exceptional developments. Infineon sets remuneration at a level
+that is competitive both nationally and internationally, with the aim of inspiring and
+rewarding dedication and success in a dynamic environment.
+In accordance with applicable legal requirements and the recommendations of the
+DCGK, the remuneration paid to Management Board members is intended to reflect
+the typical level and structure of management board remuneration at peer com-
+panies, as well as Infineon's economic position and future prospects. The duties,
+responsibilities and performance of each Management Board member are also to be
+considered, as is Infineon's wider pay structure. This includes considering Management
+Board remuneration in relation to that of senior management and the workforce
+> Beiersdorf AG
+Appropriateness of Management Board remuneration
+> Elmos Semiconductor SE
+However, the amended rules governing the variable remuneration component relating
+to the Long-Term Incentive (LTI) have been applied taking into account the grant made
+on 1 April 2021 (and thus retrospectively from 1 October 2020 for the 2021 fiscal year).
+The rationale for the early implementation of the new LTI rules was, firstly, that the
+Performance Share Plan (PSP) for employees, which had been designed as an LTI plan,
+was amended with effect from 1 April 2021, and it was desirable to synchronize that
+plan with the Management Board's LTI. Secondly, this procedure obviated the need to
+grant a further tranche of the variable remuneration component relating to the Mid-
+Term Incentive (MTI) in the 2021 fiscal year, reflecting the fact that the new remunera-
+tion system no longer includes an MTI component, the latter having been incorporated
+in the LTI with a view to strengthening long-term variable remuneration.
+< 133 >
+Q =
+Further information
+Consolidated Financial Statements
+> Fuji Electric CO., LTD.
+based-compensation
+> BMW AG
+› Continental AG
+> Daimler AG
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+> Siemens AG
+› SAP SE
+› RWE AG
+> Münchener Rückversicherungs-Gesellschaft AG
+> MTU Aero Engines AG
+> Merck KGaA
+> Henkel AG & Co. KGaA
+> HeidelbergCement AG
+> Fresenius SE & Co. KGaA
+> Fresenius Medical Care AG & Co. KGaA
+> E.ON SE
+> Deutsche Lufthansa AG
+> Deutsche Börse AG
+> Deutsche Bank AG
+Consolidated Financial Statements
+› GigaDevice Semiconductor
+Q =
+> Knowles Corp.
+18.0%
+Diversity target for the 2021 fiscal year
+17.5%
+17.0%
+16.5%
+16.0%
+15.5%
+Diversity
+15.0%
+50%
+80%
+90%
+100%
+110%
+125%
+150%
+0%
+Target achievement
+C41 Diversity target
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+Further information
+Q = < 138 >
+are therefore important in that they align the interests of both the Management
+Board and other stakeholders and contribute to the long-term sustainable success
+of the Group as a whole.
+The specific ESG targets to be used for a particular tranche are determined and defin-
+itively resolved by the Supervisory Board prior to the beginning of the performance
+period. The Supervisory Board defines up to three specific ESG targets, which are
+weighted equally. At the end of the performance period, target achievement is deter-
+mined on the basis of a target/actual comparison and, as in the case of the LTI financial
+performance criterion, can range between 0 percent and 150 percent. The specific
+ESG targets, target achievement curves and target achievements are disclosed ex post
+in the remuneration report. The Supervisory Board is entitled to determine further
+ESG targets and their relative weightings.
+For the LTI tranche allocated on 1 April 2021, the Supervisory Board has defined
+two ESG targets: one relating to environment and the other to social matters.
+The environmental target is to achieve 50 percent carbon neutrality in the 2024 fiscal
+year. The base period for these purposes is the 2019 calendar year. The target is to
+be achieved by reducing PFC emissions, energy efficiency measures or development
+assistance measures linked to decarbonization. The aim is to achieve a total reduc-
+tion of 100,000 tons of carbon emissions by the end of the 2024 fiscal year. Target
+achievement can range between 0 percent and 150 percent. If carbon emissions are
+reduced by less than 25,000 tons, target achievement is 0 percent. If carbon emis-
+< 139 >
+sions are reduced by 100,000 tons, target achievement is 100 percent. If they are
+reduced by 150,000 tons or more, target achievement is 150 percent. Target achieve-
+ments between the defined target achievement points are interpolated linearly. If
+carbon neutrality is not achieved, the target achievement is 0 percent regardless of the
+aforementioned linear component. The environmental target contributes 10 percent
+to the overall target achievement of the LTI.
+The aim is to increase the percentage of women in GG (Global Grade) 13+ positions to
+within a target range between 18 percent and 20 percent by the 2030 fiscal year. Target
+achievement for the diversity target can range between 0 percent and 150 percent. A
+100 percent target achievement corresponds to an increase of between 1.2 percentage
+points and 1.8 percentage points at the end of the performance period. The baseline
+is 15.2 percent as of 30 September 2020. If the proportion of women is increased by up
+to 0.3 percentage points during the performance period, this results in a target achieve-
+ment of 0 percent, while an increase in the proportion of women by more than 2.3 per-
+centage points would result in a target achievement of 150 percent. Target achieve-
+ments between the defined target achievement points are interpolated linearly. The
+diversity target contributes 10 percent to the overall target achievement of the LTI.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+Further information
+The Supervisory Board has also defined a further ESG target in the area of social
+matters. In the light of this diversity target, gender diversity is taken into account,
+i.e., the proportion of women in management positions as well as other diversity
+factors. A target range has been defined for the percentage of women in management
+positions.
+Final allocation
+After the final fiscal year of the four-year performance period has ended, the Super-
+visory Board determines the number of performance shares that will be definitively
+allocated. The Supervisory Board reserves the right to make a cash settlement rather
+than actually transferring Infineon shares. The Supervisory Board is required to make
+the decision prior to the end of the four-year vesting period; otherwise the right to
+make a cash settlement lapses. If the Supervisory Board decides to settle in cash, the
+amount to be paid out is calculated by multiplying the number of performance shares
+definitively allocated by the average share price over the last 60 trading days prior
+to the end of the four-year performance period. Payment must be made within one
+month after the end of the vesting period. Here too, the definitive LTI payout amount
+is limited to 250 percent of the individual allocation amount.
+LTI rules prior to the changeover to the new remuneration system
+> Toshiba Corp.
+> Texas Instruments Inc.
+> STMicroelectronics N.V.
+> Silicon Laboratories, Inc.
+> Shanghai Fudan Microelectronics
+Group Co., Ltd.
+> Rohm CO., LTD.
+> Renesas Electronics Corp.
+> Vishay Intertechnology, Inc.
+› Qualcomm Technologies, Inc.
+> ON Semiconductor Corp.
+> Omron Corp.
+> NXP Semiconductors N.V.
+> Micron Technology, Inc.
+> Microchip Technology Inc.
+› MediaTek Inc.
+> Macronix International Co., Ltd.
+> Power Integrations Inc.
+> Winbond Electronics Corp.
+> Wolfspeed, Inc.
+> Mitsubishi Electric Corp.
+The LTI tranches already allocated prior to the changeover to the new remuneration
+system will continue to be subject to the old rules described below.
+-
+The (virtual) performance shares were allocated as of 1 March for the fiscal year that
+began on 1 October, initially on a provisional basis. The final allocation and transfer
+of (real) Infineon shares took place four years later. Performance shares were allo-
+cated provisionally on the basis of the contractually agreed "LTI allocation amount"
+in euros and agreed upon individually in the service contract of each Management
+Board member. The number of performance shares was determined by dividing the
+LTI allocation amount by the average price of the Infineon share (Xetra closing price)
+during the nine months prior to the allocation date. The prerequisites for the defini-
+tive allocation of the - at that stage still virtual – performance shares are (i) that the
+Management Board member invests 25 percent of his/her individual LTI allocation
+amount in Infineon shares and (ii) that the holding period of four years applicable
+both for the member's own investment and for the performance shares has come to
+an end. 50 percent of the performance shares are also performance-related; they are
+only allocated definitively if (iii) the Infineon share outperforms the Philadelphia
+Semiconductor Index (SOX) between the date of the performance shares' provisional
+allocation and the end of the holding period. If the conditions for the definitive allo-
+cation of performance shares - either all or only those that are not performance-
+related - are met at the end of the holding period, the Management Board member
+acquires an entitlement against the Company for the transfer of the corresponding
+number of (real) Infineon shares. Any performance shares that do not achieve the
+target are forfeited. The value of the performance shares definitively granted to the
+Management Board member per LTI tranche at the end of the holding period may not
+exceed 250 percent of the relevant LTI allocation amount; any performance shares
+above this amount lapse (cap).
+Based on its own best judgment, the Supervisory Board has the option to grant a
+special bonus, such as for exceptional achievements of the Management Board or its
+individual members. In each case, however, the bonus is capped at a maximum of
+30 percent of the fixed remuneration of the Management Board member concerned.
+Under the new Management Board remuneration system, the option to grant a special
+bonus has been removed without replacement.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+ESG targets are defined as non-financial, quantitative and qualitative performance
+criteria relating to environmental, social and governance (ESG) matters. These include,
+for example, contributions to global climate protection (such as carbon neutrality
+by 2030) or the furthering of diversity at Infineon that has a positive impact on inno-
+vation, employee commitment and financial performance. Establishing a clear link
+between ESG targets and Infineon's business and sustainability strategies, on the one
+hand, and current market requirements, on the other, creates incentives for managing
+the company on a sustainable basis in the best interest of stakeholders. The ESG targets
+Beginning Stock Price
+(Change in Stock Price + Dividends Paid)
+TSR =
+ESG
+The TSR target achievement can range between 0 percent and 150 percent. If Infineon's
+TSR is positioned at the 60th percentile, the target achievement is 100 percent. A posi-
+tion at or below the 25th percentile results in a target achievement of 0 percent, while
+a position at or above the 75th percentile results in a target achievement of 150 percent.
+Target achievements between the defined target achievement points are interpolated
+linearly. The TSR includes all cash dividends paid out during the performance period
+by all companies in the peer group (including Infineon) and is calculated as follows:
+The target achievement for Infineon's TSR performance criterion is determined
+using the ranking method. In this context, the TSR is calculated for Infineon and all
+companies in the sector peer group and ranked according to size. This ranking results
+in a percentile rank that indicates where Infineon's TSR is positioned.
+Only companies that exist (and remain) as a legally independent entity throughout
+the performance period are considered part of the peer group. The Supervisory
+Board may adjust the peer group as it sees fit prior to the beginning of a new perfor-
+mance period.
+1 Dialog Semiconductor PLC was acquired by Renesas Electronics Corporation in August 2021.
+> Nuvoton Technology Corp.
+(Beijing) Inc.
+Business focus and strategy
+> Broadcom Inc.
+Infineon Technologies | Annual Report 2021
+The TSR is defined as Infineon's share price performance over the performance period,
+including any dividends per share paid during that period (cumulative and notionally
+reinvested) compared to a pre-defined peer group. The TSR measures the total share-
+holder return, reflects the overall success of an investment, and is used as an indicator
+to determine the increase in market or company value. Target achievement for the
+TSR is based on a comparison with Infineon's main international competitors (sector
+peer group):
+› Analog Devices Inc.
+Combined Management Report
+Corporate Governance
+Remuneration report
+> China Electronics Huada
+Technology Company Ltd.
+› Dialog Semiconductor PLC1
+Management Board and
+Supervisory Board
+Business focus and strategy
+Consolidated Financial Statements
+TSR
+Further information
+Combined Management Report
+Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+wording, such as changes in the share capital amount resulting from a capital increase
+out of conditional or authorized capital or a capital decrease by means of cancellation
+of own shares. Unless the Articles of Association provide for another majority, sec-
+tion 179, paragraph 2, AktG stipulates that resolutions of the Annual General Meeting
+regarding the amendment of the Articles of Association require a majority of at least
+three quarters of the share capital represented. Section 17, paragraph 1, of the Articles
+of Association of Infineon Technologies AG provides in principle for resolutions to be
+passed with a simple majority of the votes cast and, when a capital majority is required,
+with a simple majority of the capital unless a higher majority is required by law or in
+accordance with other stipulations contained in the Articles of Association.
+Powers of the Management Board, in particular with respect to
+the issuing or buying back of shares
+The power of the Management Board to issue shares derives from section 4 of the
+Articles of Association, in conjunction with applicable legal provisions. Further infor-
+mation relating to the Company's existing Authorized and Conditional Capital can
+be found in note 19 to the Consolidated Financial Statements. p. 192 f.
+Authorization to issue convertible bonds and/or bonds with warrants
+The Annual General Meeting held on 20 February 2020 authorized the Management
+Board, in the period through 19 February 2025, either once or in partial amounts, to
+issue convertible bonds and/or bonds with warrants (referred to collectively as "bonds")
+of an aggregate nominal amount of up to €4,000,000,000, to guarantee such bonds
+issued by subordinated Group companies of the Company and to grant bond creditors
+and/or bondholders conversion or option rights to up to 130,000,000 no par value
+registered Company shares, representing a notional portion of the share capital of up
+to €260,000,000 in accordance with the relevant terms of the bonds. With the approval
+of the Supervisory Board, the Management Board is authorized to exclude the right
+of shareholders to subscribe to the bonds
+> if the issue price is not substantially lower than the bonds' theoretical market
+value as determined in accordance with accepted valuation methods, in particular
+those based on financial mathematics. However, this right of exclusion only
+applies insofar as the aggregate value of the shares to be issued to service the
+conversion or option rights established on this basis does not exceed 10 percent
+of the share capital, neither at the time the resolution concerning this authorization
+was passed by the Annual General Meeting, at the time of this authorization
+becoming effective, nor at the time it is exercised;
+> in order to exclude fractional amounts resulting from a given subscription ratio
+from the subscription rights of the shareholders to the bonds, or insofar as any
+such action is necessary in order to grant holders of conversion or option rights
+arising from bonds that have already been or will in future be issued by the Com-
+pany or its subordinated Group companies subscription rights to that extent to
+which they would be entitled after exercising their rights, or after the fulfillment of
+any conversion or option obligations; and
+Q = < 130 >
+Performance criteria and measuring success
+If the service contract of a Management Board member begins and/or ends during the
+fiscal year, the LTI grant amount for the fiscal year shall be reduced pro rata temporis
+on a monthly basis (by one twelfth for each missing full month).
+< 137 >
+Consolidated Financial Statements
+Further information
+Q = < 136 >
+For the 2022 fiscal year, the Supervisory Board has defined two specific criteria at the
+recommendation of the Executive Committee:
+> Firstly, the performance of the Management Board should be measured in terms
+of its implementation of the digital transformation strategy.
+> Secondly, the development of key technologies and innovations and, in this context,
+the corresponding market growth for SiC and GaN products, which is strategically
+vital for Infineon.
+Management Board and
+Supervisory Board
+As the previous MTI allocation amount has now been added to the LTI with a four-year
+performance period, a temporary payout shortfall arises, which will be compensated
+by temporarily increasing the STI allocation amount for the Management Board
+members concerned in the 2022, 2023 and 2024 fiscal years. Therefore, a maximum
+remuneration of €8,200,000 (Chief Executive Officer) and €4,800,000 (ordinary member
+of the Executive Board) applies to current service contracts for fiscal years 2022, 2023
+and 2024.
+The Long-Term Incentive ("LTI") was adjusted with retrospective effect from 1 Octo-
+ber 2020.
+The LTI is a Performance Share Plan with a four-year performance period. Assuming
+100 percent target achievement of the variable remuneration components, the LTI
+constitutes approximately 42 percent of target annual income.
+The performance period begins on 1 October of the first fiscal year of the performance
+period and ends on 30 September four years later. During this period, performance is
+measured on the basis of two criteria, namely a financial performance criterion based
+on relative Total Shareholder Return (TSR) as compared to a selected sector peer group
+and a non-financial performance criterion derived from strategic Environmental,
+Social & Governance (ESG) targets. The TSR and the ESG targets contribute 80 percent
+and 20 percent to overall target achievement respectively.
+The LTI tranche is allocated on 1 April in the first fiscal year of the performance
+period (allocation date). The vesting period begins on the allocation date. Unlike
+the performance period, the vesting period ends four years after the allocation date,
+i.e., on 31 March. In order to determine the number of performance shares to be
+provisionally awarded on the allocation date, at the beginning of the performance
+period, the individual allocation amount is divided by the average share price over
+the last 60 trading days prior to the beginning of the performance period. The extent
+of target achievement is determined at the end of the four-year performance period.
+The definitive number of performance shares to be allocated after the end of the
+vesting period is calculated by multiplying the number of provisionally allocated
+performance shares by the total target achievement of the two performance criteria
+applied during the performance period. The definitive allocation of performance
+shares in an LTI tranche may not result in the Management Board member's gain
+(before taxes) exceeding 250 percent of the respective LTI allocation amount. Above
+this cap, any performance shares that could still theoretically be allocated will lapse.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+Further information
+Q =
+> insofar as bonds are issued in return for a capital contribution in kind, provided
+that the value of any such capital contribution in kind is appropriate in relation to
+the market value of the bonds.
+Even if the dilution protection regulations are applied, the conversion or option price
+must equal at least 80 percent of the arithmetic mean of the closing prices of the
+Company's share in Xetra trading on the Frankfurt Stock Exchange (or comparable
+successor system). Further details - including the conditions under which the con-
+version or option price may be reduced - are set out in the authorization.
+The Mid-Term Incentive ("MTI") was intended to reward sustained performance by
+the Management Board that reflected Infineon's medium-term progress. As explained
+above, the MTI has been discontinued as a remuneration component with effect from
+1 October 2020. In concrete terms, this means that no new three-year MTI tranches
+have been granted since 1 October 2020, i.e., for the 2021 fiscal year. The two MTI
+tranches allocated for the 2019 and 2020 fiscal years continued to be valid but will
+not be supplemented with additional annual tranches. Accordingly, after the end of
+the 2021 fiscal year, the tranche allocated for the 2019 fiscal year was paid out in two
+annual installments (for the 2019 and 2020 fiscal years). After the end of the 2022 fiscal
+year, the tranche allocated for the 2020 fiscal year will be paid out with only one annual
+tranche (for the 2020 fiscal year). The Supervisory Board may increase or reduce the
+amount to be paid under the MTI in each case by up to 50 percent as it sees fit, based
+on the performance of the Management Board as a whole, Infineon's position and
+any exceptional factors.
+Authorization to acquire own shares
+Consolidated Financial Statements
+Further information
+Q =
+< 132 >
+Information pursuant to the German Commercial Code (HGB)
+Statement on Corporate Governance of the German Commercial Code (HGB)/Corporate Governance Report
+Remuneration report
+the event of dismissal/termination of contract by Infineon Technologies AG. All service
+contracts have since been adapted to the new Management Board remuneration
+system, so that the maximum period of continued payment has been reduced to
+24 months for all Management Board members with effect from 1 October 2021.
+Further details are contained in the remuneration report.
+The change-of-control clauses agreed with Management Board members are intended
+to provide financial security to those members in the event of a change of control,
+with a view to preserving their independence in this situation.
+The conditions of both the Performance Share Plan and the Restricted Stock Unit Plan,
+in which Infineon managers and other selected employees worldwide participate,
+contain rules that are triggered in the event of a defined change of control. For the most
+part, these rules specify that the vesting periods that are envisaged by the relevant
+plans are aborted in the event of a change of control. Although Management Board
+members also participate in the Performance Share Plan, the rules therein relating
+to a change of control do not apply to Management Board members, given that their
+service contracts take precedence.
+Statement on Corporate Governance
+pursuant to sections 289f and 315d
+of the German Commercial Code (HGB)/
+Corporate Governance Report
+The Statement on Corporate Governance pursuant to sections 289f and 315d of
+the German Commercial Code (HGB), including the Corporate Governance Report,
+is publicly available.
+☑www.infineon.com/declaration-on-corporate-governance
+Remuneration report
+This remuneration report, which forms part of the Combined Management Report,
+explains the principles of the remuneration system for the Management Board and
+Supervisory Board of Infineon Technologies AG as well as the level of remuneration
+paid to the individual Management Board and Supervisory Board members.
+In addition to statutory requirements, the remuneration report is based primarily on
+the German Accounting Standard on Reporting on the Remuneration of Members of
+Governing Bodies (DRS 17). The remuneration report also contains the model tables
+recommended by the German Corporate Governance Code (Deutsche Corporate
+Governance Kodex - "DCGK") in the version dated 7 February 2017 (DCGK 2017). This
+information is provided despite the fact that the DCGK was revised with effect from
+20 March 2020 and accordingly, the recommendation to disclose the model tables
+no longer applies. For reasons of consistency and transparency, the model tables are
+to be continued until the changeover to the new remuneration report stipulated in
+Section 162 of the German Stock Corporation Act and introduced in accordance with
+the Act Implementing the Second Shareholder Rights Directive (ARUG II). The new
+report becomes binding for Infineon Technologies AG for the first time for the fiscal
+year beginning on 1 October 2021.
+Management Board remuneration
+Remuneration system
+Similar to the remuneration paid to individual Management Board members, the
+Management Board remuneration system is defined and regularly reviewed by
+the full Supervisory Board on the basis of recommendations made by the Executive
+Committee.
+On 20 November 2020, the Supervisory Board adopted a new Management Board
+remuneration system based on the recommendation of the Executive Committee.
+The new system was approved by the Annual General Meeting on 25 February 2021 in
+accordance with Section 120a of the German Stock Corporation Act and will apply as
+a general rule for incumbent Management Board members effective 1 October 2021.
+Subject to the requirements resolved by the shareholders at the Annual General
+Meeting, the Management Board is authorized to determine the further details of the
+bond issue, including its terms and conditions.
+Corporate Governance
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+A resolution passed by the Annual General Meeting on 22 February 2018 authorizes
+Infineon Technologies AG, in the period through 21 February 2023, to acquire its
+own shares, within the statutory boundaries, in an aggregate amount not exceeding
+10 percent of the share capital at the time the resolution was passed or - if the latter
+amount is lower - of the share capital in existence at the time the authorization is
+exercised. The Company may not use the authorization for the purposes of trading in
+its own shares. The Management Board decides whether own shares are acquired
+Business focus and strategy
+Management Board and
+Supervisory Board
+Business focus and strategy
+Consolidated Financial Statements
+Further information
+Q =
+< 131 >
+Combined Management Report
+Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+Infineon Technologies | Annual Report 2021
+Infineon shares acquired or being acquired on the basis of this or an earlier autho-
+rization may - if not sold either via the stock exchange or by means of a public
+offer to purchase addressed to all shareholders - be used for all legally admissible
+purposes. The shares may also be canceled or offered to third parties in conjunction
+with business combinations or the acquisition of companies, parts of companies or
+participations in companies. Subject to the approval of the Supervisory Board, under
+specified circumstances the shares may also be sold to third parties in return for cash
+payment (including by means other than through the stock exchange or through an
+offer to all shareholders), used to meet the Company's obligations under convertible
+bonds and bonds with warrants and stock option plans, offered for sale or granted
+as a remuneration component to members of corporate bodies and employees within
+the Group, and/or used to repay securities-backed loans. The subscription right of
+shareholders is excluded in all of the above cases (except when the shares are can-
+celed). In addition, the subscription rights of shareholders are excluded in respect
+of fractional amounts in instances in which the shares are sold through a public offer
+addressed to all shareholders.
+According to a resolution passed by the Annual General Meeting on 22 February 2018,
+the acquisition of Infineon Technologies AG shares may also be effected using equity
+derivatives. The total number of shares that can be acquired using derivatives may
+not exceed 5 percent of the Company's share capital, determined either at the time of
+this authorization becoming effective or at the time of its exercise through the use of
+the derivatives. The shares acquired through the exercise of this authorization are
+to be counted toward the acquisition threshold for the shares acquired in accordance
+with the authorization to acquire own shares as described above. The authorization
+stipulates other restrictions when derivatives are deployed, including their execution,
+term, servicing and acquisition price.
+If own shares are acquired using derivatives in accordance with the requirements
+stipulated in the authorization, any right of the shareholders to conclude such deriva-
+tive transactions with the Company will be excluded in analogous application of
+section 186, paragraph 3, sentence 4, AktG. Shareholders have no right to conclude
+derivative transactions with the Company.
+Shareholders have a right to sell their Infineon shares in this connection only insofar
+as the Company is required to accept the shares under the derivative transactions.
+No other right to sell shares shall apply in this connection.
+The use of own shares acquired through derivatives is governed by the same rules as
+those applicable for the direct acquisition of own shares.
+Significant agreements that are subject to the condition of a change of
+control as a result of a takeover bid and compensation agreements with
+Management Board members or employees in the event of a takeover bid
+Various financing agreements with lending banks and capital market creditors contain
+defined change-of-control clauses that give creditors the right to demand early
+repayment. These clauses reflect standard market practice.
+Furthermore, certain patent cross-licensing agreements, development agreements,
+subsidy agreements and approvals, supply contracts, joint venture agreements and
+license agreements contain customary change-of-control clauses, which, in the event
+of a change of control at Infineon Technologies AG, make the continuation of the
+agreement dependent on the consent of the contracting party, grant special rights to
+the contracting party that may be unfavorable for Infineon, or even entitle the con-
+tracting party to terminate the agreement.
+Infineon Technologies | Annual Report 2021
+through the stock exchange, by means of a public offer to purchase addressed to
+all shareholders, a public invitation to submit offers for sale, or via a bank or other
+entity that meets the requirements of section 186, paragraph 5 sentence 1, AktG.
+The authorization includes differentiating requirements – in particular with regard
+to the permissible purchase price – for each method of acquisition.
+If a Management Board member leaves their position in connection with a defined
+change of control, that member is entitled to continued payment of the relevant
+annual remuneration for the entire remaining contract term. In accordance with
+a special contract termination right granted to Management Board members, the
+period of continued payment is capped at a maximum of 36 months in the event that
+the member resigns, or at a minimum of 24 months and a maximum of 36 months in
+129,139
+1,538,875
+131,044
+814,403
+1 Ms. Hufenbecher is entitled to one twenty-fourth of the individual STI or LTI grant amount for the month of April 2021, and thus to a total of 11 twenty-fourths for the entry fiscal year.
+Infineon Technologies | Annual Report 2021
+2020
+Consolidated Financial Statements
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Further information
+Q =
+< 145 >
+Commitments to Management Board members upon termination
+of their Board activities
+120,148
+1,974,260
+Management Board and
+Supervisory Board
+1,553,114
+Total remuneration (DCGK)
+1,956,855
+884,438
+325,875
+1,075,783
+625,260
+1,075,783
+625,260
+302,628
+Pension expense
+Benefits and pension entitlements in the 2021 fiscal year
+72,298
+3,096,692
+368,802
+2,928,368
+278,244
+2,043,019
+294,037
+1,500,662
+98,884
+106,961
+Based on the amendment to the Executive Board compensation system in 2010,
+all Management Board members have received a defined contribution pension
+commitment that is essentially identical to the Infineon pension plan applicable to
+all employees. Accordingly, the Company has set up a personal pension account
+(basic account) for each beneficiary, to which it makes annual pension contributions.
+The Company adds annual interest to the balance in the basic account using the
+highest statutory interest rates valid for the insurance industry (guaranteed interest
+rates) until disbursement of the pension begins and may also award surplus credits.
+95 percent of any income earned over and above the guaranteed interest rate is
+credited to the pension account, either at the date on which disbursement of the
+pension begins or, at the latest, when the beneficiary reaches the age of 60. The
+balance of the basic account when disbursement of the pension begins (due to age,
+invalidity or death) - increased by an adjusting amount in the event of invalidity or
+death - constitutes the retirement benefit entitlement and is paid out to the Manage-
+ment Board member or his or her surviving dependents in twelve annual installments,
+or, if so requested by the Management Board member, in eight annual installments,
+as a lump sum, or as a life-long pension. In addition to the defined contribution
+pension plan that has been in place for Dr. Ploss since 1 January 2016, a fully vested
+fixed-amount pension entitlement of €210,000 p.a. also exists for his Board activities
+up to 31 December 2015, which will not increase in the future.
+Business focus and strategy
+The plan rules applicable to Management Board members are as follows:
+period
+Benefit
+amounts
+determined
+for the
+relevant
+fiscal year
+Present value
+of pension
+and benefit
+entitlement
+Dr. Reinhard Ploss¹
+2021
+in €
+372,000
+210,000
+2020
+372,000
+210,000
+Dr. Sven Schneider
+2021
+Chief Executive Officer
+Pension
+entitlements
+(annual) as
+of beginning
+Fiscal year
+Original
+service cost
+(earned in
+the current
+year)
+> Dr. Gassel and Mr. Hanebeck have statutorily vested pension entitlements as a result
+of their previous periods of employment in senior management positions with
+Infineon. Their service contracts specifically state that the amounts made available
+to cover their vested pension entitlements represent a continuation of those vested
+entitlements and are, therefore, not subject to any separate vesting arrangements.
+The Company makes a fixed annual pension contribution on behalf of Dr. Gassel
+and Mr. Hanebeck for each full fiscal year of service on the Management Board,
+equivalent to 30 percent of the relevant agreed basic annual salary. The Supervisory
+Board is not required to decide each time on the amount to be contributed. The
+pension contributions for the 2021 fiscal year for Dr. Gassel and Mr. Hanebeck
+amounted to €225,000 in each case.
+> The pension contribution made for Ms. Hufenbecher also amounts to 30 percent
+of the relevant agreed basic annual salary. Due to the entry during the fiscal year,
+the pension contribution made by the Company for the 2021 fiscal year amounted
+to €112,500.
+> The defined contribution pension commitment in place for Dr. Ploss is also based
+on a fixed contribution amount of 30 percent of the relevant agreed basic annual
+salary. The pension contribution made by the Company for the 2021 fiscal year
+amounted to €372,000.
+> The corresponding contribution for Dr. Schneider also amounts to 30 percent
+of the relevant agreed basic annual salary. The pension contribution made by the
+Company for the 2021 fiscal year amounted to €247,500.
+The amounts credited to the pension entitlement accounts of Management Board
+members - in line with the plan rules applied to Infineon employees – are paid out on
+or after reaching the age of 67, provided the service contract arrangements have also
+ended. Upon request, amounts can also be paid out at an earlier point in time if the
+service contract arrangements end on or after reaching the age of 60 or, in the case of
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+Further information
+Q =
+< 146 >
+commitments made from 2012 onwards, on or after reaching the age of 62. If the
+beneficiaries elect to have their pension paid out in monthly installments, the
+pension amount is adjusted automatically each year in accordance with the Infineon
+pension plan.
+Alongside the annual retirement entitlements and related benefit amounts, the
+following table shows the present values of pension entitlements earned to date and
+the service cost in accordance with IFRS. The present value of pension and benefit
+entitlements is particularly dependent on changes in the discount rate that is required
+to be applied (30 September 2021: 1.25 percent; 30 September 2020: 0.95 percent).
+Pension entitlements
+If the entitlements of Management Board members (i) have not yet legally vested or
+(ii) have legally vested but are not protected by the state pension insurance scheme
+(Pensionssicherungsverein), the Company maintains pension reinsurance policies
+in favor of, and pledged to, the Management Board members concerned.
+of pension
+131,044
+511,775
+2020
+Full member of the Board
+Accumulation phase
+Chairman of the Management Board (CEO) 150% of gross annual basic salary
+Mandatory personal investment in Infineon shares
+variable remuneration components
+Partial or complete reduction or reclamation of
+Share Ownership Guidelines (SOG)
+Other contractual elements
+Malus and clawback
+Generally in shares, after waiting period expires
+250% of the allocation amount
+Four years
+Four years
+> 20% ESG targets
+> 80% relative Total Shareholder Return (TSR)
+Performance Share Plan
+Maximum remuneration
+In cash, after performance period ends
+One year
+> Extraordinary developments
+› Collective performance of the Management Board
+> 1/3 Segment Result Margin (SRM) as planned
+1/3 Free Cash Flow (FCF) as planned
+> 1/3 Return on Capital Employed (ROCE) as planned
+>
+Primarily a company car with chauffeur (also for private use)
+and an allowance for health and nursing care insurance
+as well as various insurance and general employee benefits
+Defined contribution plan that provides an annual pension
+contribution and capital market-oriented interest
+Fixed, non-performance-related remuneration paid in
+twelve equal monthly installments
+Waiting period
+Limitation/cap
+Payment
+Performance period
+Performance criteria
+Plan type
+Long-Term Incentive (LTI)
+250% of the allocation amount
+100% of gross annual basic salary
+Generally five years
+Maximum remuneration payable to the Management Board
+capped in accordance with section 87a, paragraph 1,
+number 1, AktG (including fringe benefits and expenses for
+company pension plans)
+Chairman of the Management Board (CEO) €7,200,000
+Infineon Technologies | Annual Report 2021
+› Furthermore, the attendance fee for extraordinary meetings held in the form of
+telephone or video conference calls was reduced from €2,000 to €1,000.
+> The previous threshold clause, according to which only the highest function-based
+allowance is paid if more than one function is performed, was deleted. The rationale
+for the change is that working on several committees involves an additional time
+commitment, which should be remunerated accordingly. Conversely, the payment
+of a function-based allowance solely on the condition that at least three committee
+meetings have taken place during a fiscal year ensures that only relevant additional
+time commitments are remunerated. In addition, the function-based allowances
+for work on committees are capped at 100 percent of the fixed basic remuneration.
+As a result, the remuneration for a Supervisory Board member will in the future be
+limited to €200,000, that of the Chair of the Supervisory Board to €300,000 and that
+of his/her deputy to €230,000.
+> Whereas the fixed basic remuneration and the function-based allowances for the
+Chairman of the Supervisory Board were increased only slightly, the function-based
+allowances for the committees and the Chairs of the Investment, Finance and
+Audit Committee and the Strategy and Technology Committee were raised more
+significantly to a level in line with the market.
+In light of the changes brought about by ARUG II, Section 113, paragraph 3, AktG also
+required the Supervisory Board remuneration system to be submitted for approval
+at the Annual General Meeting. The Management Board and Supervisory Board came
+to the conclusion that the current Supervisory Board remuneration system is no
+longer in line with the market in some respects and therefore proposed changes at the
+Annual General Meeting held on 25 February 2021, which were adopted accordingly.
+The main changes compared with the current Supervisory Board remuneration system
+are as follows:
+Review of the Supervisory Board remuneration system
+Moreover, Supervisory Board members are reimbursed for all expenses incurred in
+connection with the performance of their Supervisory Board duties as well as for any
+value-added tax payable by them in this connection. The Company also pays Super-
+visory Board members any value-added tax incurred on their total remuneration
+(including meeting attendance fees).
+In the event that a member, during a fiscal year, joins (or leaves) the Supervisory
+Board or one of its committees, or takes on a Supervisory Board function for which
+an allowance is payable, the relevant remuneration components are disbursed
+on a pro rata basis, i.e., payment of one twelfth of the relevant annual remuneration
+component for each (started) month of membership or exercise of function.
+› A meeting attendance fee of €2,000 per meeting of the Supervisory Board or one
+of its committees that is attended in person. The meeting attendance fee is paid
+only once if more than one meeting of the relevant committees takes place on
+a given day.
+> Allowances in recognition of additional work involved in performing certain
+functions within the Supervisory Board: The Chairman of the Supervisory Board
+receives an allowance of €90,000, each deputy receives an allowance of €30,000,
+the Chairman of the Investment, Finance and Audit Committee and the Chairman
+of the Strategy and Technology Committee each receive an allowance of €25,000,
+and each member of a Supervisory Board committee receives an allowance of
+€15,000 – with the exception of the Nomination Committee and the Mediation
+Committee. The additional allowance is payable only if the body to which the
+Supervisory Board or committee member belongs has convened or passed resolu-
+tions in the fiscal year concerned. A Supervisory Board member performing more
+than one of the functions indicated receives only the highest single additional
+allowance payable to a member performing the functions concerned. The allow-
+ance is payable to the relevant holder of office within one month of the end of
+each fiscal year.
+› A fixed remuneration (basic remuneration) of €90,000. This amount applies to
+each Supervisory Board member and is payable within one month of the end of
+each fiscal year.
+The remuneration of the members of the Supervisory Board (total remuneration)
+is governed by section 11 of the Company's Articles of Association and comprises
+the following:
+Remuneration structure
+Remuneration report
+< 149 >
+Q =
+Further information
+Full member of the Board
+Change-of-control clause
+€4,200,000
+In the event of a change of control, right of extraordinary
+termination within limited period of time and with restricted
+severance pay regulation
+A detailed presentation of the new Management Board remuneration system is
+available in the notice of the Annual General Meeting held on 25 February 2021 and
+on the Infineon website. https://www.infineon.com/cms/en/about-infineon/investor/corporate-
+governance/#equity-based-compensation
+Performance period
+Limitation/cap
+Payment
+Supervisory Board remuneration
+compensation
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Consolidated Financial Statements
+On 25 February 2021, the Annual General Meeting resolved amendments to the Articles
+of Association regarding Supervisory Board remuneration and approved the Super-
+visory Board remuneration system in accordance with Section 113, AktG. The amend-
+ments apply with effect from 1 October 2021. A brief summary of these amendments
+is provided below. The complete wording of the amendments is available in the notice
+of the Annual General Meeting held on 25 February 2021 and on the Infineon website.
+https://www.infineon.com/cms/en/about-infineon/investor/corporate-governance/#equity-based-
+Modifier (0.7 to 1.3)
+Performance criteria
+Short-Term Incentive (STI)
+Premature termination of the service contract
+1 The upper line for Dr. Ploss in the 2021 fiscal year respectively 2020 shows the contribution amount, the present value and the service cost
+relating to the defined contribution pension commitment additionally granted to him with effect from 1 January 2016. The second line
+in the 2021 fiscal year respectively 2020 shows the pension entitlement and the present value of his fixed-amount pension plan.
+2 The service cost for Ms. Hufenbecher takes into account that she was appointed to the Management Board during the year on 15 April 2021,
+and therefore was not in the office for the entire 2021 fiscal year.
+700,618
+898,939
+1,182,000 13,500,891
+1,069,500 14,081,096
+210,000
+210,000
+2021
+2020
+Total
+2020
+since 15 April 2021
+Management Board member
+278,244
+294,037
+98,884
+106,961
+120,148
+129,139
+131,044
+2,653,885
+2,995,017
+3,279,840
+131,044
+225,000
+112,500
+2021
+Constanze Hufenbecher²
+2020
+247,500
+247,500
+Dr. Helmut Gassel
+2021
+225,000
+2,290,395
+5,114,761
+2,474,927
+5,279,415
+554,907
+393,029
+2,414,767
+72,298
+The service contracts of Management Board members include a change-of-control
+clause, which stipulates the terms that apply when the activities of a Management
+Board member are terminated in the event of a significant change in Infineon's owner-
+ship structure. A change of control for the purposes of this clause occurs when a
+third party, individually or together with another party, acquires at least 50 percent of
+the voting rights in Infineon Technologies AG as defined in section 30 of the German
+Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz –
+“WpÜG”). Management Board members have the right to resign and terminate their
+service contracts within twelve months of the announcement of any such change of
+control and any who choose to do so are entitled to continued payment of their annual
+remuneration through to the end of the originally agreed duration of their contract
+for a maximum of 36 months. If Infineon Technologies AG removes a Management
+Board member or terminates their service contract within twelve months of the
+announcement of a change of control, the Management Board members concerned
+are entitled to continued payment of their annual remuneration through to the end
+of the originally agreed duration of their contract, subject to a minimum period of
+24 months and a maximum period of 36 months.
+368,802
+2020
+225,000
+Jochen Hanebeck
+2021
+225,000
+Management Board member
+Management Board member
+Chief Financial Officer
+The Management Board service contracts otherwise contain no promises of severance
+pay for situations in which contracts are prematurely terminated.
+270,905
+1,282,355
+Variable (i.e., performance-related)
+remuneration
+Company pension plan
+Fringe benefits
+Basic annual salary
+Fixed remuneration
+Overview of the various components of the remuneration system
+The structure of the new Management Board remuneration system can be summarized
+as follows:
+< 148 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+> As a final point, a malus and clawback clause has been introduced that allows
+the Supervisory Board to withhold or reclaim variable remuneration components
+in certain cases.
+> The Management Board remuneration system now includes Share Ownership
+Guidelines that require Management Board members to build up a minimum
+holding of Infineon shares over a period of generally five years and to hold them
+for
+up to two years after leaving office. This minimum holding has been set at the
+equivalent to 150 percent of the fixed basic annual salary for the Chairman and
+at 100 percent of the basic annual salary for other Management Board members.
+Payments to former Management Board members in the 2021 fiscal year
+Total remuneration (primarily pension benefits) of €2,609,306.24 (2020: €2,211,263.52)
+was paid to former Management Board members in the 2021 fiscal year. As of 30 Sep-
+tember 2021, accrued pension liabilities for former Management Board members
+amounted €72,369,256 (2020: €76,593,563).
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+Under the new Management Board remuneration system, the maximum period of
+continued payment of fixed and variable remuneration is reduced to 24 months in
+any case. The service contracts of the incumbent Management Board members were
+adjusted accordingly with effect from 1 October 2021. For Ms. Hufenbecher, on the
+other hand, the new regulations have already applied since she took office.
+Further information
+Revision of the Management Board remuneration system
+The Act Implementing the Second Shareholder Rights Directive (ARUG II) came into
+force on 1 January 2020. Furthermore, the Government Commission on the German
+Corporate Governance Code adopted a new version of the DCGK, which became
+effective on 20 March 2020. The Supervisory Board deliberated on this matter at
+length with the support of an external independent remuneration expert. Based on
+the preparatory work of the Executive Committee and its recommendation, the
+Supervisory Board adopted a new Management Board remuneration system at its
+meeting on 20 November 2020, which was approved by the Annual General Meeting
+on 25 February 2021 in accordance with section 120a, AktG.
+In addition to the changes already relevant for the 2021 fiscal year and described above
+(i.e., the incorporation of the MTI into the LTI and the new LTI rule), the remaining
+parts of the new Management Board remuneration system for the incumbent Manage-
+ment Board members apply from 1 October 2021. The main additional changes can
+be summarized as follows:
+> The option of the Supervisory Board to award a “special bonus” amounting to up
+to 30 percent of the fixed basic remuneration of Management Board members has
+been removed without replacement.
+> In the case of the STI, the existing financial targets ROCE and Free Cash Flow will
+be supplemented by the addition of a third target, namely the Segment Result
+Margin (SRM), which already serves as a key performance indicator for Infineon.
+The SRM was also previously taken into account in the STI target structure appli-
+cable to employees.
+> The option of the Supervisory Board to reduce or increase the STI payout amounts
+by up to 30 percent at its discretion has been replaced by a criteria-based STI
+modifier. Accordingly, the Supervisory Board defines criteria for assessing the
+collective performance of the Management Board each fiscal year on the basis of
+a fixed catalog (see also above in the section “Components of the Management Board
+remuneration system”, p. 134 ff.). After the end of the fiscal year, the Supervisory
+Board can then reduce or increase the target achievement level for the STI by up
+to 30 percent - depending on the performance of the Management Board and also
+to take account of any exceptional, unforeseeable developments.
+Q = < 147 >
+1,749,156
+Total fixed remuneration
+215,583
+2020
+Dr. Helmut Gassel
+Management Board member
+Dr. Sven Schneider
+Chief Financial Officer
+Dr. Reinhard Ploss
+Chief Executive Officer
+2021
+Fixed remuneration
+in €
+Unlike the disclosures in accordance with DRS 17, the STI is disclosed in the following
+table at the target value (i.e., the value in the event of 100 percent target achievement).
+In a deviation from DRS 17, the MTI was disclosed at the target value for an "average
+probability scenario” at the grant date. For these purposes, Infineon assumes 100 per-
+cent target achievement on a scale ranging from 0 percent to 200 percent. In addition,
+the pension expense, i.e., the service cost in accordance with IAS 19 (see “Commitments
+to Management Board members upon termination of their Board activities" in this
+chapter, p. 145 f.), is included in total remuneration.
+The following table shows the value of remuneration granted for the 2020 and 2021
+fiscal years, including fringe benefits, as well as the minimum and maximum values
+that can be achieved for the 2021 fiscal year.
+in accordance with DCGK 2017 (voluntary disclosure)
+Remuneration granted ("gewährte Zuwendungen")
+Remuneration of the Management Board in the 2021 fiscal year
+In the 2009 fiscal year, the Company entered into a restitution agreement with each
+of the then active Management Board members. Dr. Ploss is the only current Manage-
+ment Board member affected by the agreement. The agreements stipulate that the
+Company covers all costs and expenses of any legal, governmental, regulatory and/or
+parliamentary proceedings and investigations as well as arbitration proceedings in
+which Management Board members are involved in conjunction with their activities on
+behalf of the Company. However, the agreements specifically exclude any restitution
+of costs incurred in conjunction with section 93, paragraph 2, AktG.
+Other awards and benefits
+The Supervisory Board did not award any special bonuses to Management Board
+members during the 2021 fiscal year.
+Special bonuses
+Q = < 142 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+3 Despite taking office on 15th April 2021, Ms. Hufenbecher was granted virtual performance shares retroactively as of 1st April 2021. Ms. Hufenbecher is entitled to one twenty-fourth of the individual LTI grant amount for the month of April 2021,
+and thus to a total of 11 twenty-fourths for the entry fiscal year.
+2 In the 2021 and 2020 fiscal years, virtual performance shares expired because the performance hurdle had not been met.
+1 The share price of the virtual performance shares exercised on 1st October 2020 amounted to €25.50.
+2021 (min.)
+2021 (max.)
+2021
+2020 2021 (min.)
+550,000
+Multi-year variable remuneration
+remuneration (STI)
+Single-year variable
+Variable remuneration
+32,188
+782,188
+750,000
+750,000
+32,188
+782,188
+750,000
+70,893
+820,893
+750,000
+32,188
+782,188
+825,000
+55,337
+880,337
+825,000
+55,337
+880,337
+1,484,211
+451,035
+825,000
+55,750
+880,750
+1,240,000
+35,238
+1,275,238
+1,240,000
+35,238
+1,275,238
+1,240,000
+37,211
+1,277,211
+1,275,238
+Total fixed remuneration
+1,240,000
+35,238
+Fringe benefits
+Basic annual salary
+2021 (max.)
+2020 2021 (min.)
+2021
+2021 (max.)
+825,000
+55,337
+880,337
+335,913
+219,574
+30,937
+17,282
+30,937
+17,282
+104,328
+53,328
+165,725
+13,258
+40,070
+2020
+291,991
+70,248
+8,455
+8,455
+976,672
+33,830
+Jochen Hanebeck
+53,328
+59,802
+21,130
+264,125
+21,130
+2020
+276,840
+54,960
+976,672
+33,830
+21,130
+2021
+Management Board member
+2021
+550,000
+2021
+33,830
+5,145,009
+885,625
+178,213
+70,850
+219,574
+183,288
+2020
+2021
+Total
+2020
+Management Board member since 15 April 20213
+99,473
+15,505
+447,629
+15,505
+53,328
+2021
+104,328
+53,328
+165,725
+13,258
+40,070
+2020
+Management Board member
+291,991
+70,248
+8,455
+8,455
+976,672
+Constanze Hufenbecher
+Dr. Helmut Gassel
+Mid-Term Incentive (MTI)
+550,000
+Long-Term Incentive (LTI)
+340,000
+2020-2022 tranche
+Mid-Term Incentive (MTI)
+Multi-year variable remuneration
+340,000
+340,000
+remuneration (STI)
+Single-year variable
+Variable remuneration
+380,731
+34,140
+28,329
+778,329
+28,329
+778,329
+34,476
+784,476
+778,329
+Total fixed remuneration
+28,329
+Fringe benefits
+346,591
+750,000
+750,000
+750,000
+750,000
+Basic annual salary
+Performance Share Plan'
+976,672
+165,725
+Total variable remuneration
+131,044
+1,115,237
+3,678,477
+120,148
+120,148
+898,477
+129,139
+1,759,340
+2,215,149
+Total remuneration (DCGK)
+120,148
+Pension expense
+884,583
+1,274,166
+389,583
+380,731
+Fixed remuneration
+380,731
+34,140
+346,591
+346,591
+2021 (max.)
+2021 (min.)
+2020
+447,629
+603,462
+1,930,000
+2,780,000
+155,833
+850,000
+845,725
+1,316,672
+34,140
+2021
+2021 (max.)
+2020 2021 (min.)
+340,000
+340,000
+937,500
+278,244
+1,158,581
+294,037
+2,188,912
+278,244
+2,510,253
+72,298
+6,215,036
+264,125
+1,014,125
+976,672
+1,351,672
+3,492,500
+4,867,500
+375,000
+375,000
+850,000
+375,000
+72,298
+1,347,536
+368,802
+3,036,063
+72,298
+3,664,900
+Total remuneration (DCGK)
+Pension expense
+1,390,050
+2,317,364
+Total variable remuneration
+290,050
+1,767,364
+Performance Share Plan¹
+Long-Term Incentive (LTI)
+1,375,000
+2020-2022 tranche
+340,000
+976,672
+1,316,672
+2021
+in €
+Management Board member since 15 April 20212
+Constanze Hufenbecher
+Jochen Hanebeck
+Management Board member
+< 143 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Management Board and
+Supervisory Board
+1,930,000
+2,867,500
+Infineon Technologies | Annual Report 2021
+98,884
+3,661,072
+98,884
+881,072
+1,773,579
+2,197,744
+106,961
+98,884
+4,026,081
+278,244
+2,780,000
+1,930,000
+845,725
+165,725
+1 The figures of the active Management Board members in the 2021 fiscal year were based on a fair market value per performance share amounting to €28.87 (2020: €12.50), which was calculated using a Monte Carlo simulation.
+215,583
+Chief Financial Officer
+182,577
+The Company also maintains accident insurance policies for Management Board
+members in the case of death (€3 million) and invalidity (€5 million).
+In accordance with their service contracts, Management Board members are entitled
+to a chauffeur-driven company car, which may also be used for private purposes.
+Operating and maintenance costs for the company car and chauffeur are borne by
+the Company. Any taxes arising on the fringe benefit related to private usage are
+borne by the individual Management Board members themselves.
+Fringe benefits
+Management Board members did not receive any loans from Infineon or benefits from
+third parties in the 2021 and 2020 fiscal years, whether promised or actually paid,
+for their board activities at Infineon.
+Total remuneration to Management Board members in accordance with DRS 17 and
+benefits to individual Management Board members - also presented in accordance
+with DRS 17 - are shown in the table below.
+Total remuneration
+Management Board remuneration in the 2021 fiscal year in accordance
+with German Accounting Standard 17 (DRS 17)
+Q = < 140 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Remuneration received by Management members ("Zufluss")
+Since the remuneration granted to Management Board members for the 2021 fiscal
+year did not coincide fully with amounts disbursed in a particular fiscal year, a
+separate table is presented below showing the amounts flowing to (i.e., received by)
+Management Board members for the 2021 fiscal year ("Zufluss").
+Accordingly, the fixed remuneration and the STI are disclosed as amounts received by
+Management Board members for the relevant fiscal year. The MTI was disclosed as
+received by Management Board members in the fiscal year in which the plan term of
+the relevant MTI tranche ends. However, due to the discontinuation of the MTI, the
+tranche allocated for the 2019 fiscal year was paid and included two annual install-
+ments (for the 2019 and 2020 fiscal years). In addition to the fixed remuneration and
+the STI granted for the 2021 fiscal year, the Management Board members therefore
+received the 2019-2021 MTI tranche, reduced by the amount of the tranche for the
+2021 fiscal year. Share-based payments are disclosed as received by Management
+Board members on the basis of the relevant time and value for German tax law
+purposes. The amount disclosed as received for the pension expense (i.e., the service
+cost in accordance with IAS 19) corresponds to the amounts granted (see previous
+table), even though it does not strictly constitute an actual receipt.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+Further information
+Q =
+< 144 >
+in €
+Fixed remuneration
+Basic annual salary
+Fringe benefits
+750,000
+28,329
+778,329
+750,000
+70,893
+820,893
+750,000
+32,188
+782,188
+825,000
+55,750
+880,750
+825,000
+55,337
+880,337
+1,240,000
+37,211
+1,277,211
+35,238
+1,275,238
+1,240,000
+2021
+2020
+2021
+2020
+The total remuneration received by individual members of the Management Board
+2021
+2020
+2021
+2020
+2021
+2020
+Total
+Management Board
+Constanze Hufenbecher
+Management Board member
+since 15 April 20213
+Jochen Hanebeck
+Management Board member
+Dr. Helmut Gassel
+Management Board member
+Dr. Sven Schneider
+Chief Financial Officer
+Dr. Reinhard Ploss
+Chief Executive Officer
+Total fixed remuneration
+2021
+for the 2021 fiscal year - analyzed by component - is shown in the following table:
+in €
+Fixed remuneration
+Variable remuneration
+Single-year variable remuneration (STI)
+1,068,100
+477,950
+728,250
+325,875
+660,280
+295,460
+660,280
+295,460
+302,628
+Multi-year variable remuneration
+34,140
+380,731
+Mid-Term Incentive (MTI)
+2018-2020 tranche
+323,400
+156,188
+533,500
+199,920
+199,920
+329,800
+329,800
+Long-Term Incentive (LTI)
+Performance Share Plan
+due in the 2021 fiscal year
+due in the 2020 fiscal year
+Total variable remuneration
+357,656
+2019-2021 tranche
+750,000
+34,476
+784,476
+346,591
+750,000
+28,329
+778,329
+Basic annual salary
+Fringe benefits
+131,044
+1,785,941
+Dr. Reinhard Ploss
+Chief Executive Officer
+2021
+Dr. Sven Schneider
+Chief Financial Officer
+2020
+2021
+Dr. Helmut Gassel
+Management Board member
+2020
+2021
+750,000
+34,476
+784,476
+Jochen Hanebeck
+Management Board member
+2021
+2020
+Constanze Hufenbecher
+Management Board member
+since 15 April 20211
+2021
+1,240,000
+1,240,000
+35,238
+1,275,238
+37,211
+1,277,211
+825,000
+55,337
+880,337
+825,000
+55,750
+880,750
+750,000
+32,188
+782,188
+750,000
+70,893
+820,893
+2020
+Dr. Sven Schneider
+346,591
+34,140
+380,731
+3,911,591
+185,232
+4,096,823
+Performance Share Plan
+Virtual performance
+shares due
+in the fiscal year¹
+in the fiscal year
+Fair value grant date
+Virtual performance
+shares newly granted
+1 The figures of the active Management Board members in the 2021
+fiscal year were based on a fair market value per performance share
+amounting to €28.87 (2020: €12.50), which was calculated using
+a Monte Carlo simulation.
+Further details regarding the LTI tranche that vested on 1 October 2021 and the
+performance shares awarded to Management Board members on 1 April 2021 for
+the 2021 fiscal year are provided in note 21 to the Consolidated Financial Statements.
+p. 195 f.
+The following table shows the number of performance shares awarded to Management
+Board members in the 2021 fiscal year.
+A fair market value of €28.87 (2020: €12.50) per performance share granted in the
+2021 fiscal year was determined, taking account of the cap of 250 percent cap set on
+the LTI allocation amount as well as the performance hurdle.
+As described in the section "Management Board remuneration", the contractually
+agreed LTI is granted to Management Board members by Infineon in the form of
+performance shares, p. 136. The average price of the Infineon share relevant for
+the number of performance shares granted for the 2021 fiscal year was €22.82
+(2020: €18.10).
+Share-based payment
+Other fringe benefits relate mainly to statutory obligations such as the payment of
+inventor's remuneration or general benefits available to all Infineon employees.
+The fringe benefits of Ms. Hufenbecher include a one-time lump sum of €25,000 for
+the reimbursement of start-up costs.
+Q = < 141 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Corporate Governance
+Remuneration report
+Business focus and strategy
+Management Board and
+Supervisory Board
+7,329,823
+12,661,370
+Infineon Technologies | Annual Report 2021
+2 The figures for the active Management Board members in the 2021 fiscal year were based on a fair market value per performance share amounting to €28.87 (2020: €12.50), which was calculated using a Monte Carlo simulation model.
+3 Ms. Hufenbecher is entitled to one twenty-fourth of the individual STI or LTI grant amount for the month of April 2021, and thus to a total of 11 twenty-fourths for the entry fiscal year.
+1 The values include the annual MTI tranche granted in the respective fiscal year based on the fulfillment of the plan requirements.
+1,130,988
+Virtual performance
+shares expired
+in the fiscal year²
+Virtual performance
+shares outstanding
+at the end
+of the fiscal year
+Total expense
+for share-based
+payment
+91,788
+17,282
+17,282
+290,050
+23,204
+103,148
+2020
+523,916
+124,952
+14,027
+14,027
+1,767,364
+1,541,122
+61,218
+2021
+Chief Executive Officer
+Dr. Reinhard Ploss
+in €
+Number
+Number
+Number
+in €
+Number
+Number
+Fiscal year
+Management Board member
+91,788
+2,415,281
+1,577,539
+2,419,140
+98,487
+98,487
+98,487
+108,625
+108,625
+159,317
+159,317
+159,317
+2019-2021 tranche
+2020-2022 tranche
+Mid-Term Incentive (MTI)1
+Multi-year variable remuneration
+98,487
+1,394,745
+302,628
+295,460
+660,280
+295,460
+660,280
+325,875
+728,250
+477,950
+1,068,100
+Single-year variable remuneration (STI)
+Variable remuneration
+3,565,000
+198,330
+3,763,330
+3,419,538
+2020
+98,487
+2 Ms. Hufenbecher is entitled to one twenty-fourth of the individual STI
+or LTI grant amount for the month of April 2021, and thus to a total
+of 11 twenty-fourths for the entry fiscal year.
+1,688,000
+2,585,259
+2,523,162
+4,110,702
+Total remuneration
+3,566,493
+885,625
+5,145,009
+8,564,547
+750,257
+756,646
+447,629
+165,725
+98,487
+976,672
+1,636,952
+976,672
+1,636,952
+264,125
+807,250
+976,672
+1,704,922
+290,050
+1,245,951
+2,835,464
+Total variable remuneration
+1,767,364
+Performance Share Plan²
+Long-Term Incentive (LTI)
+2018-2020 tranche
+356,291
+464,916
+165,725
+756,646
+464,916
+Virtual performance
+shares outstanding
+at the beginning
+of the fiscal year
+Proceeds from hybrid capital
+340
+66
+59
+872
+950
+Other current assets
+11
+518
+288
+530
+4,443
+3,450
+Assets classified as held for sale
+9
+Long-term financial debt
+15
+Total current assets
+8,252
+Total current liabilities
+436
+815
+6517
+1,376
+Trade payables
+1,569
+1,160
+9
+1,483
+1,196
+Current provisions
+2,181
+2,052
+Current income tax payables
+57
+77
+Current leasing liabilities
+14
+Contract assets
+82
+97
+Other current liabilities
+7,179
+Pensions and similar commitments
+18
+Property, plant and equipment
+6,528
+617
+739
+324
+293
+319
+313
+265
+235
+213
+222
+Investments accounted for using the equity method
+4
+71
+87
+Non-current income tax receivables
+Deferred tax assets
+55
+1
+5,752
+2,173
+8རེད ག ཆཡ
+Other non-current liabilities
+12
+Goodwill
+Other intangible assets
+12
+Right-of-use assets
+14
+2324
+4,443
+4,110
+Deferred tax liabilities
+5,962
+5,897
+Other non-current provisions
+3,349
+3,621
+Non-current leasing liabilities
+14
+336
+286
+26
+1
+8165
+10
+1,169
+368
+Attributable to:
+Shareholders and hybrid capital investors of Infineon Technologies AG
+1,169
+368
+Basic earnings per share (in euro) attributable to
+shareholders of Infineon Technologies AG:¹
+(4)
+Basic earnings per share (in euro) from continuing operations
+0.88
+0.26
+Basic earnings (loss) per share (in euro) from discontinued operations
+7
+(0.01)
+Basic earnings per share (in euro)
+7
+0.87
+7
+(6)
+6
+Profit (loss) from discontinued operations, net of income taxes
+Profit (loss) for the period
+Share of profit (loss) of associates and joint ventures
+Attributable to:
+accounted for using the equity method
+4
+9
+(9)
+Shareholders and hybrid capital investors of Infineon Technologies AG
+1,451
+(325)
+Profit (loss) from continuing operations before income taxes
+1,319
+424
+Income tax
+5
+(144)
+(52)
+Profit (loss) from continuing operations
+1,175
+372
+0.26
+Diluted earnings per share (in euro) attributable to
+shareholders of Infineon Technologies AG:¹
+Diluted earnings per share (in euro) from continuing operations
+7
+Trade receivables
+Inventories
+Notes
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+€ in millions
+Notes
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+LIABILITIES AND EQUITY
+1,749
+1,851
+Short-term financial debt and current portion
+of long-term financial debt
+15
+833
+505
+Financial investments
+Current income tax receivables
+Cash and cash equivalents
+€ in millions
+0.88
+0.26
+Diluted earnings (loss) per share (in euro) from discontinued operations
+Diluted earnings per share (in euro)
+7
+(0.01)
+7
+0.87
+0.26
+1 The calculation of earnings per share is based on unrounded figures.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 154 >
+Consolidated Statement
+of Financial Position
+ASSETS
+Total non-current liabilities
+Total liabilities
+7,490
+8,330
+(1,268)
+(915)
+(5)
+(22)
+Proceeds from sales of property, plant and equipment and other assets
+14
+33
+4
+12
+4
+12, 13, 28
+12
+12
+Net cash used in investing activities from continuing operations
+Net cash used in investing activities from discontinued operations
+(2,284)
+(7,172)
+5
+56
+2
+(184)
+(229)
+12
+7,417
+(7,433)
+Proceeds from sales of businesses and interests in subsidiaries,
+net of cash disbursed
+13
+(1)
+12
+1,513
+1,260
+Investments in related companies
+(44)
+5
+144
+52
+Purchases of other intangible assets and other assets
+3
+150
+101
+Purchases of property, plant and equipment
+22
+Net cash used in investing activities
+(2,284)
+(7,172)
+9
+(63)
+11
+Deposits for financing-related derivatives
+3
+25
+335
+3
+17
+Proceeds from issuance of ordinary shares
+19
+1,043
+(148)
+(129)
+(180)
+3,063
+(68)
+Cash outflows due to changes of non-controlling interests
+Dividend payments
+(2)
+19
+(286)
+(76)
+3,480
+(19)
+14
+65
+(279)
+46
+10
+(121)
+124
+Net change in related party financial receivables and payables
+Proceeds from issuance of long-term financial debt
+24
+2
+15
+1,084
+9,815
+407
+(71)
+Repayments of long-term financial debt
+15
+(1,570)
+(5,372)
+16
+372
+Payments for leasing liabilities
+Acquisitions of businesses, net of cash acquired
+4
+8
+23,334
+21,999
+2,612
+2,612
+6,513
+6,462
+1,407
+435
+(306)
+(460)
+(28)
+(33)
+1,203
+1,203
+11,401
+10,219
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Total liabilities and equity
+Combined Management Report
+21,999
+Total equity
+11,933
+11,780
+695
+627
+Equity:
+19
+19
+Other non-current assets
+26
+225
+Total non-current assets
+15,082
+191
+14,820
+Ordinary share capital
+Additional paid-in capital
+Retained earnings
+Other reserves
+Total assets
+Own shares
+Hybrid capital
+23,334
+(325)
+Consolidated Financial Statements
+Q = < 155 >
+from discontinued operations
+Net cash provided by operating activities
+Infineon Technologies | Annual Report 2021
+Notes
+2021
+2020
+25
+1,169
+368
+6
+€ in millions
+Purchases of financial investments
+Notes
+2021
+2020
+8
+(4,275)
+(6,045)
+Proceeds from sales of financial investments
+Net cash provided by (used in) operating activities
+Further information
+Net cash provided by operating activities from continuing operations
+Interest paid
+Consolidated Statement of Cash Flows
+€ in millions
+Profit (loss) for the period
+Plus: profit (loss) from discontinued operations, net of income taxes
+Adjustments to reconcile profit (loss) for the period
+to net cash provided by operating activities:
+Depreciation and amortization
+Income tax
+Net interest result
+Gains on disposals of property, plant and equipment
+Dividends received
+Impairment charges/reversals of impairments
+Other non-cash result
+Change in trade receivables
+Change in inventories
+Change in trade payables
+Change in provisions
+Change in other assets and other liabilities
+Interest received
+Income tax paid
+(336)
+1,451
+(177)
+2020
+60,000
+16,667
+8,000
+84,667
+Dr. Herbert Diess¹
+2021
+Margret Suckale 2,3
+133,000
+2021
+2,500
+26,000
+118,500
+2020
+37,500
+Dr. Wolfgang Eder³
+2021
+90,000
+90,000
+18,000
+25,000
+90,000
+90,000
+12,000
+102,000
+2020
+90,000
+16,000
+106,000
+Johann Dechant
+2021
+90,000
+30,000
+36,000
+2020
+90,000
+30,000
+38,000
+156,000
+158,000
+Dr. Ulrich Spiesshofer 2,3
+2021
+90,000
+4,000
+42,000
+2020
+90,000
+Annette Engelfried
+2021
+90,000
+15,000
+30,000
+2020
+90,000
+15,000
+30,000
+Peter Gruber
+2021
+90,000
+15,000
+18,000
+2020
+90,000
+15,000
+22,000
+137,000
+84,667
+135,000
+135,000
+123,000
+127,000
+8,000
+2021
+16,667
+2020
+90,000
+30,000
+41,500
+222,000
+210,000
+2020
+60,000
+10,000
+70,000
+Dr. Eckart Sünner¹
+2021
+2020
+37,500
+10,417
+8,000
+55,917
+Dr. Friedrich Eichiner 2,3
+2021
+90,000
+25,000
+22,000
+60,000
+Diana Vitale
+Kerstin Schulzendorf
+22,000
+90,000
+15,000
+20,000
+125,000
+Géraldine Picaud 3
+2021
+90,000
+12,000
+2020
+102,000
+90,000
+10,000
+100,000
+Dr. Manfred Puffer ³
+2021
+90,000
+12,000
+102,000
+2020
+123,000
+18,000
+15,000
+Business focus and strategy
+Combined Management Report
+Corporate Governance
+Remuneration report
+Consolidated Financial Statements
+Further information
+Q =
+< 150 >
+Remuneration of the Supervisory Board for the 2021 fiscal year
+The total remuneration paid to Supervisory Board members for the 2021 fiscal year
+(including meeting attendance fees) is presented below. The amounts disclosed do
+not take into account value-added tax at 19 percent or - in the case of Supervisory
+Board members resident abroad – withholding tax, solidarity surcharges or any other
+taxes arising:
+Dr. Susanne Lachenmann
+Fiscal year
+Supervisory Board member, in €
+Fixed
+remuner-
+ation
+Allowance
+for specific
+functions
+Meeting
+attendance
+fees
+Total
+remuner-
+ation
+2021
+90,000
+Fiscal year
+Fixed
+Supervisory Board member, in €
+Peter Bauer¹
+remuner-
+ation
+14,000
+119,000
+2020
+37,500
+10,417
+6,000
+Xiaoqun Clever 2,3
+2021
+90,000
+15,000
+18,000
+2020
+60,000
+10,000
+8,000
+53,917
+123,000
+78,000
+2020
+90,000
+15,000
+15,000
+127,000
+90,000
+Jürgen Scholz
+Allowance
+for specific
+functions
+Meeting
+attendance
+fees
+Total
+2020
+90,000
+18,000
+108,000
+remuner-
+Melanie Riedl²
+2021
+90,000
+12,000
+102,000
+ation
+2020
+60,000
+16,000
+76,000
+2021
+2021
+2021
+90,000
+15,000
+Cost of goods sold
+Gross profit
+Research and development expenses
+Selling, general and administrative expenses
+Other operating income
+Other operating expenses
+Operating profit
+Financial income
+Revenue
+Notes
+2020
+€ in millions
+Notes
+2021
+2020
+3
+11,060
+8,567
+2021
+€ in millions
+of Comprehensive Income
+Consolidated Statement
+153 Consolidated Statement of Profit or Loss
+153
+154
+Consolidated Statement of Comprehensive Income
+Consolidated Statement of Financial Position
+155 Consolidated Statement of Cash Flows
+156
+158
+Consolidated Statement of Changes in Equity
+Notes to the Consolidated Financial Statements
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 153 >
+Consolidated Statement
+of Profit or Loss
+19
+3
+(6,800)
+(5,791)
+(213)
+(52)
+(116)
+Cost of hedging
+42
+1,470
+581
+Total items that may be reclassified subsequently to profit or loss
+154
+(714)
+3
+22
+29
+Other comprehensive income (loss), net of tax
+282
+(693)
+Financial expenses
+3
+(182)
+64
+Consolidated
+Financial Statements
+Net change in fair value of hedging instruments
+64
+Profit (loss) for the period
+1,169
+368
+4,260
+2,776
+Actuarial gains (losses) on pensions and similar commitments
+128
+21
+33
+(1,448)
+(1,113)
+Total items that will not be reclassified subsequently to profit or loss
+128
+21
+(1,354)
+(1,042)
+Foreign currency translation differences
+90
+(543)
+76
+Q = < 152 >
+Further information
+Consolidated Financial Statements
+Hans-Ulrich Holdenried ³
+2021
+90,000
+15,000
+30,000
+49,750
+135,000
+2020
+90,000
+15,000
+22,000
+127,000
+Prof. Dr. Renate Köcher¹
+2021
+2020
+37,500
+4,000
+41,500
+1 Joined as Supervisory Board member until 20 February 2020. The remuneration for the 2020 fiscal year therefore was awarded
+on a pro rata basis.
+2 Joined as Supervisory Board member since 20 February 2020. The remuneration for the 2020 fiscal year therefore was awarded
+on a pro rata basis.
+6,000
+3 The shareholder representatives on the Supervisory Board have waived their entitlement to attendance fees for certain meetings.
+The Company will donate the attendance fee saved to a charitable institution.
+6,250
+2020
+30,000
+135,000
+2020
+90,000
+10,000
+28,000
+128,000
+Total
+2021
+2020
+1,440,000
+1,477,500
+277,500
+350,000
+2,067,500
+275,418
+334,000
+2,086,918
+Gerhard Hobbach¹
+2021
+37,500
+Total comprehensive income (loss), net of tax
+Supervisory Board members did not receive any loans from Infineon in either the
+2021 or 2020 fiscal year.
+Management Board and
+Supervisory Board
+R06
+Based on or includes content supplied by IHS Markit, Automotive Group:
+Alternative Propulsion Forecast. August 2021;
+Strategy Analytics: Automotive Semiconductor Demand
+Forecast 2019-2028. July 2021; Infineon. | 1
+R07 Strategy Analytics: Automated Driving Semiconductor Market Estimate.
+August 2021; Infineon.
+R08
+World Semiconductor Trade Statistics (WSTS): Semiconductor
+Industry Blue Book History. October 2021.
+R09
+Based on or includes research from Omdia: Application Market
+Forecast Tool Q3 2021 Update. September 2021.
+R10
+R11
+Based on or includes research from Omdia: OEM Semiconductor
+Spend Tracker - World + Regions - H1 2021. August 2021.
+International Monetary Fund: World Economic Outlook. October 2021.
+1 Not part of the audited combined Management Report.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+ABI Research: Smart Card and Embedded Security IC Technologies.
+September 2021.
+Infineon Technologies | Annual Report 2021
+R05
+Jochen Hanebeck
+Business focus and strategy
+Combined Management Report
+List of references
+Consolidated Financial Statements
+Further information
+Q = < 151 >
+List of references
+R01
+R02
+Based on or includes research from Omdia: Annual 2001 - 2020
+Semiconductor Market Share Competitive Landscaping Tool - Q2 2021.
+August 2021.
+Strategy Analytics: Automotive Semiconductor Vendor Market Shares.
+April 2021.
+Neubiberg, 25 November 2021
+Management Board
+Dr. Reinhard Ploss
+Dr. Sven Schneider
+Dr. Helmut Gassel
+R03
+Based on or includes research from Omdia: Power Semiconductor
+Market Share Database 2020. September 2021.
+R04
+Based on or includes research from Omdia: MEMS Microphones Dice
+Market Shares 2021. July 2021.
+Constanze Hufenbecher
+1,817
+Management Board and
+Supervisory Board
+22
+(230)
+5
+S S
+27
+27
+5
+5
+5
+(230)
+24
+24
+(286)
+1,451
+39
+1,412
+282
+282
+1,169
+(286)
+39
+5
+(230)
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+11,401
+1,203
+10,198
+(230)
+(28)
+(309)
+1,407
+6,513
+2,612
+(39)
+(39)
+(39)
+(39)
+3
+1,130
+10,219
+1,203
+19
+Disposal (purchase) of own shares
+24
+21
+(286)
+19
+Share-based payment
+Dividends
+Other contributions and distributions
+Contributions by and distributions to owners
+90
+1,258
+64
+90
+128
+1,130
+(61)
+(399)
+64
+19
+27
+Total contributions by and distributions to owners
+9,016
+(33)
+AG
+hybrid capital
+investors
+Total equity
+Equity
+attributable to
+Equity
+attributable to
+shareholders
+of Infineon
+Technologies
+Own shares
+Infineon Technologies | Annual Report 2021
+Balance as of 30 September 2021
+Total transactions with hybrid capital investors
+19
+Compensations to hybrid capital investors
+Transactions with hybrid capital investors
+(286)
+51
+Total transactions with owners
+(286)
+51
+Q = < 158 >
+435
+Notes to the Consolidated Financial Statements
+Infineon Technologies AG is a listed company under German law and the ultimate
+parent company of Infineon. The principal office of the Company is Am Campeon 1–1
+-15,
+85579 Neubiberg (Germany). The Company is registered in the Commercial Register
+of the District Court of Munich (Germany) under the number HRB 126492.
+none
+1 January 2022
+1 January 2023
+none
+1 January 2021
+none
+1 January 2021
+IFRS 4
+none
+none
+1 January 2023
+IFRS 17
+1 January 2022
+Onerous contracts - costs of fulfilling a contract
+(amendments to IAS 37)
+IAS 37
+none
+1 January 2022
+References to the conceptual framework
+IFRS 3
+Insurance contracts including amendments to IFRS 17
+none
+1 January 2023
+1 January 2023
+The balance sheet effects of intragroup transactions as well as gains and losses arising
+from intragroup business relationships are eliminated on consolidation.
+The financial statements of entities included in the Consolidated Financial Statements
+are prepared using uniform valuation and accounting policies.
+Control exists when Infineon is subjected to variable returns arising from its engage-
+ment with the subsidiary or has a right to such, and has the ability to influence these
+returns as a result of its power over the subsidiary. Power means that Infineon has
+existing rights that give Infineon the ability to direct the relevant activities of the
+subsidiary, that is the activities that significantly affect the aforementioned returns.
+An entity is included in the Consolidated Financial Statements from the date on
+which Infineon acquires control. Upon first-time consolidation of an entity, the
+acquired assets and assumed liabilities are basically measured on the basis of their
+fair value at the acquisition date. Any excess of consideration paid (purchase price)
+over the share of the fair value of acquired assets, liabilities and contingent liabilities
+is recognized as goodwill. After re-examination, any excess of Infineon's share of the
+fair value of items acquired over consideration paid is recognized as a gain.
+The Consolidated Financial Statements presented here include the individual financial
+statements of Infineon Technologies AG and its direct and indirect subsidiaries on
+a consolidated basis. A subsidiary is defined as an entity which, directly or indirectly,
+is controlled by Infineon Technologies AG.
+Basis of consolidation
+2 Summary of significant accounting policies
+Definition of accounting estimates (amendments to IAS 8)
+Rent concessions related to the Coronavirus pandemic
+(amendment to IFRS 16) - extension
+Disclosure of accounting policies (amendments to IAS 1
+and IFRS Practice Statement 2)
+immaterial
+Deferred tax relating to assets and liabilities arising from
+a single transaction (amendments to IAS 12)
+Extension to the temporary exemption from
+applying IFRS 9 (amendments to IFRS 4)
+IFRS 16
+IAS 8
+IAS 1
+IAS 12
+immaterial
+1 April 2021
+none
+Interest rate benchmark reform (amendments to IFRS 9,
+IAS 39, IFRS 7, IFRS 4 and IFRS 16) - Phase 2
+Annual IFRS improvement cycle 2018-2020
+1 January 2023
+income before intended use (amendments to IAS 16)
+Classification of liabilities as current or non-current
+(amendments to IAS 1)
+IAS 1
+none
+1 January 2020
+Impact on Infineon
+Effective date
+Revision to the conceptual framework and amendments to
+references to the conceptual framework in IFRS Standards
+Definition of a business (amendments to IFRS 3)
+COVID-19-related rent concessions (amendment to IFRS 16)
+Interest rate benchmark reform (amendments to IFRS 9,
+IAS 39 and IFRS 7) - Phase 1
+Definition of material (amendments to IAS 1 and IAS 8)
+IAS 1
+and IAS 8
+IFRS 3
+IFRS 16
+1 January 2020
+1 June 2020
+1 January 2020
+Standard/amendment/interpretation
+Financial reporting rules applied for the first time
+The Company's Management Board presented the Consolidated Financial Statements
+on 25 November 2021.
+Deviations between amounts presented are possible due to rounding. Negative
+amounts are presented in parentheses.
+The Group's reporting currency is the euro ("€").
+The fiscal year-end for both Infineon and the Company is 30 September of each year.
+The Consolidated Statement of Profit or Loss is presented using the cost of sales method.
+The Consolidated Financial Statements, prepared by Infineon Technologies AG as the
+ultimate parent company for the year ended 30 September 2021, have been prepared
+in accordance with International Financial Reporting Standards ("IFRS") and related
+interpretations effective as of 30 September 2021 as issued by the International
+Accounting Standards Board (“IASB") to the extent to which the IFRS and interpretations
+have been endorsed by the European Union ("EU"). The Consolidated Financial
+Statements also comply with the supplementary requirements set out in section 315e,
+paragraph 1, of the German Commercial Code ("Handelsgesetzbuch” or “HGB”).
+The aforementioned standards were complied with in full.
+1 Basis of the Consolidated Financial Statements
+The IASB has issued the following Standards or amendments to Standards, which are
+required to be applied in the Consolidated Financial Statements for the year ended
+30 September 2021:
+1 January 2020
+none
+immaterial
+none
+1 January 2022
+IAS 16
+Effective date
+immaterial
+Impact on Infineon
+Property, plant and equipment -
+Standard/amendment/interpretation
+The following new or amended Standards have been issued by the IASB and will be
+relevant to Infineon from today's perspective. They have not been applied in the
+Consolidated Financial Statements as of 30 September 2021 since they are not yet
+mandatory or, alternatively, have not yet been endorsed by the EU. The new or
+amended Standards are applicable for fiscal years beginning on or after their respective
+effective date. As a general rule, they are not applied before their effective date, even
+if this is permitted for certain Standards.
+Financial reporting rules issued not yet applied
+Q = < 159 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+none
+none
+The Infineon Group ("Infineon"), comprising Infineon Technologies AG (hereafter
+also referred to as "the Company”) and its direct and indirect subsidiaries, design,
+develop, manufacture and market a broad range of semiconductors and related sys-
+tem solutions. The focus of activities is on applications for automotive electronics,
+industrial electronics, entertainment and household electronics, information and
+communications infrastructure as well as hardware-based security. The product
+range includes standard, application-specific and customer-specific components as
+well as system solutions for power, digital, analog, high frequency and mixed-signal
+applications. Research and development sites, manufacturing facilities, investments
+and customers are located mainly in Europe, Asia and North America.
+Infineon Technologies | Annual Report 2021
+6,462
+Cost of
+hedging
+8,633
+Total equity
+Equity
+attributable to
+hybrid capital
+investors
+8,633
+(37)
+(42)
+19
+1,184
+329
+Cash outflow to hybrid capital investors
+(39)
+(20)
+2
+3,065
+(6)
+1,811
+Net cash provided by (used in) financing activities
+from continuing operations
+(885)
+6,274
+19
+Net cash provided by (used in) financing activities
+from discontinued operations
+329
+368
+Dividends
+Contributions by and distributions to owners
+Capital increase
+Transactions with owners
+Other comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Profit (loss) for the period
+(325)
+39
+(364)
+39
+42
+(543)
+350
+(693)
+(693)
+42
+(213)
+(543)
+21
+(213)
+Net cash provided by (used in) financing activities
+(885)
+6,274
+Notes
+Share capital
+Capital
+reserves
+Retained
+earnings
+Other reserves
+Foreign
+Hedges
+Cost of
+Balance as of 1 October 2019
+currency
+translation
+differences
+2,501
+5,494
+421
+144
+152
+43
+Own shares
+hedging
+€ in millions
+for the fiscal year ended 30 September 2020
+Consolidated Statement of Changes in Equity
+Net change in cash and cash equivalents
+(104)
+913
+Effect of foreign exchange rate changes on cash and cash equivalents
+2
+(83)
+Cash and cash equivalents at beginning of period
+1,851
+1,021
+Cash and cash equivalents at end of period
+1,749
+1,851
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 156 >
+Share-based payment
+2,612
+19
+934
+10,219
+1,203
+9,016
+(33)
+(61)
+(399)
+435
+6,462
+Management Board and
+Supervisory Board
+2,612
+1,164
+(20)
+(20)
+1,184
+1,184
+747
+747
+22
+1,164
+22
+Business focus and strategy
+Consolidated Financial Statements
+currency
+translation
+differences
+Hedges
+Foreign
+Other reserves
+Retained
+earnings
+Capital
+reserves
+Share capital
+Notes
+Combined Management Report
+Transactions with owners
+Total comprehensive income (loss), net of tax
+Profit (loss) for the period
+Balance as of 1 October 2020
+€ in millions
+for the fiscal year ended 30 September 2021
+Consolidated Statement of Changes in Equity
+< 157 >
+Q =
+Further information
+Other comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+མ་ཝ
+747
+4
+111
+Total transactions with owners
+(336)
+968
+111
+Total contributions by and distributions to owners
+19
+Other contributions and distributions
+968
+19
+1
+1
+19
+Exercise of stock options
+11
+21
+(336)
+19
+Disposal (purchase) of own shares
+(336)
+Transactions with hybrid capital investors
+Emission hybrid capital
+747
+4
+4
+4
+4
+2
+2
+11
+(336)
+11
+(336)
+1,044
+1,044
+Infineon Technologies | Annual Report 2021
+Balance as of 30 September 2020
+Total transactions with hybrid capital investors
+19
+Compensations to hybrid capital investors
+19
+110
+Equity
+attributable to
+shareholders
+of Infineon
+Technologies
+AG
+Financial assets
+Remaining other liabilities
+Own shares
+Hybrid bonds
+Cash and cash equivalents
+Measurement principle
+Fair value/amortized cost
+Fair value/amortized cost
+Projected unit credit method
+Expected settlement amount
+Amortized present value of outstanding lease payments
+Fair value through profit or loss
+Fair value through other comprehensive income
+Fair value/amortized cost
+Fair value/amortized cost
+Other financial liabilities
+Acquisition cost
+Acquisition cost
+Financial instruments
+Financial instruments are initially recognized at their fair value. Transaction costs
+directly attributable to the acquisition or issuance of financial instruments are only
+included in the carrying amount if the financial instruments are not measured at
+fair value through profit or loss.
+Trade receivables are recognized based on the amount to which Infineon has an
+unconditional right to receive. With the exception of matters which result in a partial
+refund of the purchase price to the customer, this corresponds to the transaction
+price determined in accordance with IFRS 15. The subsequent measurement of trade
+receivables is carried out at amortized cost.
+Technical equipment and machinery
+Purchases and sales of financial assets are recognized on the settlement date.
+Financial assets are derecognized when the rights to receive payments from the
+investments have expired or have been transferred and Infineon has transferred all
+risks and rewards associated with ownership. Financial liabilities are derecognized
+when they are extinguished, that is when the contractual obligation is discharged,
+canceled or expired.
+Buildings
+› Classification and measurement of financial assets
+Upon initial recognition, financial assets are classified for subsequent measurement
+either as at amortized cost, fair value through other comprehensive income or fair
+value through profit or loss. This classification depends on the characteristics of the
+contractual cash flows of the financial assets and Infineon's business model for
+managing its financial assets.
+Infineon's business model for managing financial asset portfolios reflects how the
+Company controls its financial assets in order to generate cash flows. Depending
+on the business model, cash flows arise from the receipt of contractual cash flows,
+the sale of financial assets or both.
+In order for a financial asset in the form of a debt instrument to be classified and
+measured at amortized cost or at fair value through other comprehensive income,
+cash flows may only arise from the repayment of principal and interest payments on
+the outstanding principal amount. This assessment is referred to as a cash flow or
+SPPI test ("solely payments of principal and interest") and is carried out at the level
+of the individual financial instrument.
+Infineon Technologies | Annual Report 2021
+Cash and cash equivalents represent cash and all financial resources with a maturity
+at acquisition date of three months or less. Cash equivalents partly include invest-
+ments in money market funds. The valuation is recorded at amortized acquisition
+cost or at fair value through profit or loss.
+Designated hedging instruments
+Measured at fair value through profit or loss
+Other financial liabilities:
+At fair value through profit or loss
+Designated hedging instruments
+Remaining other assets
+Measurement principle
+Fair value/amortized cost
+Fair value/amortized cost
+Unconditional right to consideration/amortized cost
+Lower of acquisition or production cost
+and net realizable value
+Right to consideration/impairment
+in accordance with IFRS 9
+Amortized acquisition or production cost
+Impairment-only approach
+Amortized acquisition or production cost
+Amortized acquisition cost
+Fair value/amortized cost
+Fair value through profit or loss
+Fair value through other comprehensive income
+Amortized cost
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 161 >
+Balance sheet item
+LIABILITIES AND EQUITY
+Financial debt (short-term and long-term)
+Trade payables
+Provisions:
+Pensions
+Other provisions (current and non-current)
+Leasing liabilities (current and non-current)
+Other liabilities (current and non-current):
+Management Board and
+Supervisory Board
+At amortized cost
+Business focus and strategy
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+The effective portion of changes in the fair value of derivative financial instruments,
+determined in accordance with IFRS 9, that are designated as cash flow hedges and
+are part of hedging relationships that meet the criteria for hedge accounting is recog-
+nized directly in equity. The gain or loss relating to the ineffective portion is recognized
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 164 >
+in profit or loss. Amounts accumulated in equity are recycled in profit or loss in the
+periods in which the underlying hedged item affects profit or loss, or, if the expected
+transaction subsequently results in the recognition of a non-financial asset, included
+in the acquisition cost upon initial recognition.
+When a hedging instrument expires or is sold, or when a hedging relationship no
+longer meets the criteria for hedge accounting, any cumulative gain or loss existing at
+that time remains in equity until the underlying transaction actually occurs. When a
+forecasted transaction is no longer expected to occur, the cumulative gain or loss that
+was reported in equity is immediately transferred to profit or loss.
+Hybrid bonds
+The recognition of a hybrid bond depends on the specific form of the instrument.
+A hybrid bond is measured and recognized in equity when certain conditions are jointly
+met. These include, but are not limited to, the fact that the hybrid bond has no final
+maturity date, that investors have no rights of termination, and that distributions are
+made at Infineon's discretion. In this case, discounts, transaction costs, tax effects
+and the remuneration of hybrid investors are deducted directly from equity.
+Inventories
+Derivative financial instruments are measured at their fair value and included in
+"other current assets" or "other current liabilities".
+Inventories are measured at the lower of historical acquisition or fully absorbed
+production cost - calculated using the weighted-average method - and net realizable
+value. Net realizable value corresponds to realizable sale proceeds under normal
+business conditions less estimated expected costs to complete and sell. Production
+cost comprises costs of material, production wages and an appropriate portion of
+attributable overheads, along with attributable depreciation and amortization on
+property, plant and equipment and other intangible assets. Overhead mark-ups are
+determined on the basis of normal capacity utilization levels.
+Inventories include an asset resulting from sales with a right of return, representing
+Infineon's right to recover products from customers upon payment of the reimburse-
+ment obligation (see "Revenue recognition”, □ p. 167 f.). The valuation is made by
+reference to the previous book value of the products.
+Contract assets
+Contract assets are recognized if Infineon has fulfilled its performance obligations
+arising from contracts with customers and an unconditional entitlement to customer
+consideration does not yet exist.
+At Infineon, contract assets result from revenue arising from over-time revenue recog-
+nition for certain types of contracts, as well as from sales to some customers for
+whom Infineon maintains a consignment warehouse and where revenue is recorded
+at the time of delivery to the consignment warehouse, whereas the invoice is only
+issued at the time of withdrawal of the product by the customer.
+Valuation adjustments for expected credit losses on contract assets are determined
+in accordance with the measurement method for trade receivables (see "Financial
+instruments", ☐ p. 161 ff.).
+Property, plant and equipment
+Property, plant and equipment are measured at amortized acquisition or construction
+cost, and its value is reduced by depreciation and considering any impairment.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Write-downs to net realizable value are recorded on inventories using a consistent
+approach throughout Infineon and are determined at product level for technically
+obsolete and slow-moving inventories on the basis of the amount of revenues
+expected to be generated by the relevant product.
+Certain derivative financial instruments are used to hedge foreign currency and
+interest risks or risks of commodity price changes (such as gold prices) for firm
+commitments as well as expected and highly probable future transactions in order
+to minimize the associated risk (cash flow hedges).
+Designated hedging instruments (cash flow hedges)
+Upon acquisition, other financial liabilities are measured at fair value after deduction
+of transaction costs. In subsequent periods, they are measured at amortized cost using
+the effective interest method. The liabilities are derecognized when the contractual
+obligations are discharged, canceled or expired.
+Depreciation on property, plant and equipment is recorded using the straight-line
+method. Land, property rights and construction in progress are not depreciated on
+a scheduled basis. Depreciation on property, plant and equipment is based on the
+following useful lives, as applied consistently throughout Infineon:
+Further information
+Q =
+< 162 >
+On this basis, Infineon's financial asset measurement categories are as follows:
+Financial assets measured at amortized cost include all assets whose contractual
+provisions result in cash flows at fixed times that represent only interest and principal
+repayments of the outstanding principal amount, provided that those assets are held
+with the intention of collecting the contractual cash flows expected over their respec-
+tive duration. In subsequent periods, financial assets measured at amortized cost are
+measured using the effective interest method. Interest income, currency gains and
+losses, impairments, and gains or losses from the derecognition of such financial
+assets are recognized through profit or loss.
+At the reporting date, Infineon did not hold any financial assets with the intention to
+collect contractual cash flows and also to sell them. Therefore, there was no allocation
+of financial assets in the form of debt instruments to the category "fair value through
+other comprehensive income".
+Financial assets in the form of debt instruments that are measured at fair value
+through profit or loss include all financial assets at Infineon whose cash flows are not
+exclusively interest payments and principal repayments.
+At Infineon, financial assets in the form of equity instruments are consistently measured
+at fair value through profit or loss.
+Net gains and losses, including interest and dividend income, from financial assets
+that are measured at fair value through profit or loss (debt and equity instruments) are
+recognized in the Consolidated Statement of Profit or Loss.
+"Designated hedging instruments (cash flow hedges)" also belong to financial assets.
+> Impairment of financial assets
+Infineon determines an impairment charge for expected credit losses for financial
+assets in the form of debt instruments that are measured at amortized cost or at fair
+value through other comprehensive income. The calculation of the expected future
+credit losses is generally determined by multiplying the probability of default by the
+carrying amount of the financial asset (exposure at default) and the expected loss
+ratio (loss given default).
+Infineon determines impairments for expected credit losses primarily for cash and
+cash equivalents, financial investments, trade receivables, and contract assets. The
+expected credit losses are adjusted at each reporting date to reflect changes in credit
+risk since the instrument was first recognized.
+For cash and cash equivalents and financial investments measured at amortized cost,
+Infineon determines credit losses expected in the next twelve months (twelve-month
+credit loss) in accordance with the general approach. Due to their short-term maturity,
+this corresponds to the expected credit losses over the entire term. Infineon rates the
+credit risk for cash and cash equivalents and financial investments as low. Infineon
+assumes that a financial asset has a low credit risk if it has an investment grade rating
+or a corresponding internal investment grade rating. In order to assess whether there
+has been a significant increase in credit risk since initial recognition, Infineon considers
+appropriate and robust information that is relevant and available without dispropor-
+tionately high levels of effort. This includes both quantitative and qualitative infor-
+mation and analyses, which are based on the Company's historical experience and
+a sound credit assessment as well as forward-looking information. Macroeconomic
+information is taken into account in the internal rating model (information on Infineon's
+financial risk management is included in note 27, p. 211 ff.). Irrespective of the above
+analysis, a significant increase in credit risk is assumed if a debtor is more than 30 days
+overdue with the settlement of a contractual payment.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 163 >
+For trade receivables and contract assets, Infineon recognizes credit losses that are
+expected over the entire term using a simplified procedure. The estimate of expected
+credit losses on trade receivables and contract assets is based primarily on the analysis
+of customer financial data, ratings, credit default spreads, past payment behavior of
+customers and forward-looking Information.
+In the case of objective indications that expected future cash flows are affected, a
+financial asset is classified as impaired (with impaired creditworthiness) and adjusted
+to its individual value. As a rule, this is the case for financial assets (unless it is a
+trade receivable) no later than 90 days after the due date. For trade receivables, the
+impaired creditworthiness is not determined automatically in the event of a payment
+overdue by more than 90 days but always on the basis of the individual assessment
+of credit management.
+A default event occurs when Infineon concludes that the other party would most
+likely not be able to meet the payment obligations, or not in full.
+Financial assets are partly or completely written off, together with previously
+recognized impairments, if there is no reasonable expectation of repayment. This is
+generally the case when Infineon finds that the debtor does not have assets or revenue
+sources that could generate sufficient cash flows to repay the amounts subject to
+derecognition. Even when financial assets are written off, Infineon continues to con-
+duct enforcement measures to recover them. Amounts recovered are recognized in
+profit or loss.
+Financial liabilities
+Infineon classifies financial liabilities into the following categories: "Financial lia-
+bilities measured at fair value through profit and loss" and "Other financial liabilities”.
+Furthermore, “Designated hedging instruments (cash flow hedges)" belong to
+financial liabilities.
+Liabilities measured at fair value through profit or loss by Infineon include derivatives
+to hedge currency risks for which hedge accounting is not applied, as well as conver-
+sion rights from convertible bonds that were acquired in the course of the acquisition
+of Cypress.
+Combined Management Report
+Q =
+Other assets (current and non-current):
+Other financial assets:
+Property, plant and equipment
+Goodwill
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Infineon generates revenues mainly from the sale of semiconductor products and
+related system solutions. Revenue is recognized when control over the products is
+transferred to the customers in accordance with IFRS 15 (power of disposal), and
+where the receipt of consideration from the customer is probable. Typically, Infineon's
+customer contracts only contain one performance obligation which is fulfilled either
+over a period of time or at a specific point in time, with fulfillment at a specific point
+in time being the far more common case. For sales of customer-specific products
+with no alternative use for Infineon, for which Infineon has a legal right to payment
+for services rendered prior to delivery, revenue is recognized over time. Performance
+progress is determined using an input-based method and is based on the ratio of
+costs already incurred to the estimated total cost. If product revenue is not recognized
+over time, then it is generally recognized upon delivery. The recognition of revenue
+for deliveries into consignment warehouses depends on the individual contractual
+Revenue recognition
+Contingent liabilities are either possible obligations whose actual existence is depen-
+dent on the occurrence of one or more uncertain future events not wholly within
+Infineon's control, or they are present obligations that will probably not result in
+the outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position,
+instead they are disclosed and described in the Notes to the Consolidated Financial
+Statements (see note 22, p. 197, and note 23, □ p. 198 ff.).
+Contingent liabilities
+If the obligation decreases because of a change in the estimate, the provision is
+adjusted accordingly and the resulting income recognized in the same functional
+area of the Consolidated Statement of Profit or Loss in which the original charge
+was recognized.
+Q = < 168 >
+Where cash flows are expected to arise after the next twelve months, the expected
+settlement amount corresponds to the present value of the expected cash outflows.
+Discounting is only carried out if the interest effect is significant.
+With regard to legal proceedings and litigation, for example those connected with
+the Qimonda insolvency, Infineon regularly assesses the probability of an unfavor-
+able outcome. Infineon records provisions and liabilities, including provisions for
+significant legal costs, for those obligations and risks relating to legal disputes which
+it assesses at the relevant reporting date are likely to occur. That is where, from
+Infineon's perspective at the date of assessment, there is compelling evidence which
+indicates an obligation or risk, and the obligation or risk can be quantified with
+reasonable accuracy at the time of assessment. As soon as additional information is
+available, the affected estimates are reviewed and, where necessary, provisions for
+these proceedings are revised.
+Other provisions are recognized for present legal and/or constructive obligations
+arising from past events that are likely to result in a future outflow of resources, the
+amount of which can be reliably estimated.
+Other provisions
+< 167 >
+Other intangible assets
+Right-of-use assets
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Other provisions are measured at their expected settlement amount. The amount
+recognized for a provision is the best estimate of the expenditure required to settle
+the present obligation. Estimates of outcomes and financial effects are dependent
+upon the judgment of management, supplemented by experience gained from similar
+transactions and, where appropriate, the assessment of independent experts. If the
+circumstances to be assessed encompass a large number of possible outcomes,
+the obligation is estimated by weighting all possible outcomes by their associated
+probabilities (expected value method).
+arrangement. Revenue recognition at the point of delivery into the consignment
+warehouse takes place in cases where the customers have contractual power of con-
+trol over the products at the point of delivery. Accordingly, in such cases, a contract
+asset is recorded. Otherwise, revenue is recognized when the products are withdrawn
+by the customer.
+Invoices for sales of products are issued at the time of delivery or withdrawal by the
+customer from the consignment warehouse and have a short payment term. The
+amount of revenue corresponds to the expected transaction price to be received by
+the customer.
+The transaction price can include variable components such as rebates or discounts.
+Infineon can reliably estimate these in accordance with the contractual agreements
+and historical experience. Variable consideration is only taken into account in so far as
+it is highly probable that there will be no significant reversal of the revenue. If Infineon
+expects that the consideration received from the customer is to be reimbursed due
+to subsequent discounts, a reimbursement obligation is recognized, which is disclosed
+as other current liabilities.
+Infineon Technologies | Annual Report 2021
+Taxes are recognized in the Consolidated Statement of Profit or Loss, with the
+exception of income taxes relating to items recognized directly in equity or in other
+comprehensive income.
+Deferred tax assets and liabilities are netted to the extent they relate to the same tax
+authority and to the same taxpayer or a group of different taxpayers who are jointly
+assessed for income tax purposes.
+Deferred tax assets in respect of deductible temporary differences, tax loss carry-
+forwards and tax allowances which exceed deferred tax liabilities in respect of taxable
+temporary differences, are only recognized to the extent that it is probable that the
+relevant Group entity can generate sufficient taxable profit to realize the corresponding
+benefit. Infineon reviews deferred tax assets for impairment at every reporting date.
+The assessment requires management to make assumptions about future taxable
+profits as well as other positive and negative influencing factors. This assessment
+also takes into account insights from the Company's five-year plan as approved in the
+fiscal year just ended.
+Deferred taxes are calculated on temporary differences between the tax base and
+the book value of assets and liabilities, and on tax losses available for carry-forward
+and tax allowances. By contrast, no deferred tax is recognized on initial recognition
+of goodwill arising in connection with a business combination. Similarly, deferred
+taxes are not recognized on the initial recognition of an asset or liability in connection
+with a transaction that is not a business combination and which, at the time of the
+transaction, affects neither the pre-tax income according to IFRS nor taxable profit.
+Deferred tax assets and liabilities are measured using applicable tax rates and laws
+that have been enacted by the end of the reporting period or are about to be enacted,
+and are to be applied when the related deferred tax asset is realized or the deferred
+tax liability is settled.
+The current tax expense is calculated in accordance with taxation provisions in force
+at the end of the reporting period.
+Current and deferred taxes
+Grants that are related to expenses are presented as a reduction of the related expense
+in the Consolidated Statement of Profit or Loss (see note 3, □ p. 172).
+Grants are recognized when it is reasonably assured that Infineon will comply with the
+conditions attached to the grant, and it is reasonably assured that the grant will be
+received. Investment-related grants are deducted from the purchase and production
+cost of the related asset and thereby reduce depreciation and amortization expense
+in future periods.
+Grants
+Costs of research activities are expensed as incurred. Costs for development activities
+are capitalized if the results lead to a plan or design for the production of new or sub-
+stantially improved products or process improvements. Capitalization requires that
+the development costs can be measured reliably, the product or process is technically
+and commercially feasible, and future economic benefits are probable. In addition,
+Infineon must intend, and have sufficient resources, to complete development and use
+or sell the asset. The costs capitalized include the cost of materials, direct labor and
+directly attributable general overhead expense that serves to prepare the asset for use.
+Such capitalized costs are presented as internally generated intangible assets within
+"Other intangible assets" (see note 12, □ p. 179 f.). Development costs, which do not
+fulfill the criteria for capitalization, are expensed as incurred. Capitalized development
+costs are stated at cost less accumulated amortization and impairment charges.
+Research and development expenses
+Q = < 169 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Cost of goods sold includes the manufacturing costs of products sold during the
+reporting period. In addition, cost of goods sold contains idle costs, inventory risks,
+the cost of warranty cases, as well as the amortization of capitalized development
+costs. Recognized foreign currency effects, as well as changes in the fair value of
+undesignated derivative financial instruments that are connected to the operating
+business, are recognized in cost of goods sold.
+Cost of goods sold
+The additional costs to obtain a contract are immediately recognized as an expense
+as soon as they arise, providing the otherwise resulting depreciation period would
+not exceed one year. Costs to fulfill a contract are capitalized at the earliest when an
+expected, specifically identifiable contract exists.
+Distributors can, subject to certain conditions, return a limited amount of inventory
+(stock return) or request scrap allowances. The estimation of the transaction price
+is based on the expected stock returns in accordance with the contractual agreement,
+combined with historical experience. Distributor scrap allowances are taken into
+account when determining the transaction price based on the contractual agreement
+and, upon submission of a valid claim, are granted up to a certain maximum based
+on turnover in a given period. Infineon monitors such product returns on an ongoing
+basis and adjusts estimate assumptions accordingly. In the case of both stock return
+and scrap allowances, the consideration to be refunded to the customer is recognized
+as a reimbursement obligation within other current liabilities. Other returns are only
+permitted for quality defects within the ordinary warranty period.
+rolling historical price trends in the difference between contract prices and standard
+list prices to the distributors. The determination of the transaction price in the case
+of price protection takes into account current list prices and the relevant distributors'
+inventory on hand. The availability of detailed distributor inventory data, the trans-
+parency of pricing for standard products and the long distributor pricing history
+enable Infineon to reliably estimate the adjustments for price protection and ship
+and debit credit notes at the end of the reporting period.
+Infineon recognizes revenue for deliveries to distributors by using the "sell in" method,
+that is when a product is sold to the distributor, to the extent that revenue has not
+already been recognized on an over-time basis. The transaction price for sales to dis-
+tributors, in particular, contains variable components. Distributors can, in accordance
+with established business practices in the semiconductor industry, under certain
+circumstances apply for price protection. This allows distributors to receive a credit
+(debit) note for unsold products held in inventory, where Infineon has reduced
+(increased) the standard list price of certain products. In addition, in certain cases
+and for certain products, distributors may request a so-called ship and debit credit
+note for price adjustments. As with all product sales, Infineon recognizes revenue based
+on the transaction price and records an obligation for the estimated consideration to
+be reimbursed to the customer during the period in which the relevant revenue is
+recognized. The reimbursement obligation is reported within other current liabilities.
+The determination of the transaction price in the case of ship and debit is based on
+All items of income and expense relating to defined benefit plans, with the exception
+of the net interest result, are recognized on a net basis in the functional costs within
+the operating result. The net interest result arising from the multiplication of the
+net pension obligation (pension obligation less plan assets) by the discount rate is
+presented as a financial expense. Actuarial gains and losses arising from changes to
+actuarial assumptions and estimates as well as the difference between the normalized
+and actual return on plan assets are recognized directly in equity and recorded in the
+Consolidated Statement of Comprehensive Income in the periods in which they arise.
+Past service costs are recognized immediately in profit or loss.
+The net pension obligation recognized in respect of defined benefit pension plans
+comprises the present value of the defined benefit obligation (DBO) at the end of the
+reporting period less the fair value of the plan assets. The present value of the DBO
+and the resulting pension expense are determined annually in accordance with IAS 19
+"Employee Benefits" for each separate plan by independent, qualified actuaries
+using the projected unit credit method. The calculation is subject to, among other
+things, assumptions on increases in salaries, future developments in pensions as well
+as the life expectancy of the beneficiaries. As of the balance sheet date, the obligations
+are discounted using discount rates determined on the basis of market yields of high-
+grade, fixed-interest corporate bonds from issuers carrying a very high credit rating.
+Q =
+The costs associated with leasing agreements with a term of not more than twelve
+months (provided they do not contain an option to purchase), as well as leasing
+agreements in which the value of the underlying asset in the leasing contract is small,
+are recorded in the profit or loss on a straight-line basis in the functional costs. As a
+general rule, leased assets with a value of up to €5,000 are defined as a low-value asset.
+Amortization of other intangible assets is based on the following useful lives:
+Other intangible assets consist of capitalized development costs and purchased
+intangible assets; for example, licenses, technologies and customer relationships.
+These assets have finite useful lives and are valued at their amortized acquisition or
+production costs with amortization recorded using the straight-line method over
+their expected economic life.
+1-10
+25
+3-10
+Years
+Defined benefit pension plans
+Other plant and office equipment
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Capitalized development costs
+Further information
+A list of subsidiaries of Infineon Technologies AG is provided in note 29. p. 225 ff.
+In the absence of control over an entity, but the entity is a joint venture or an asso-
+ciated company, these are included in the consolidated financial statements using
+the equity method (see note 4, ☐ p. 173). Where objective indications of impairment
+in the carrying amount of an equity-based investment are present, an impairment test
+is carried out. If the carrying amount exceeds the recoverable amount, an impairment
+loss is recognized in financial expenses.
+Functional currency and foreign currency translation
+The functional currency of Infineon Technologies AG is the euro.
+Foreign currency transactions of subsidiaries are translated into the functional
+currency of the relevant entity using the spot rate prevailing at the transaction date.
+Monetary foreign currency assets and liabilities are translated at the spot rate prevailing
+at the reporting date. Exchange rate gains and losses from the translation of foreign
+currency transactions are recognized in the Consolidated Statement of Profit or Loss.
+The assets and liabilities of subsidiaries with functional currencies other than the
+euro are translated into euros using the spot rate at the end of the reporting period.
+Income and expenses of these entities are translated using the average spot rate of
+the reporting period. All currency translation differences resulting from the consoli-
+dation are recognized directly in equity and presented as “Other reserves”.
+Recognition and measurement principles
+The following table summarizes the main measurement principles used in the
+preparation of the Consolidated Financial Statements:
+Balance sheet item
+ASSETS
+Cash and cash equivalents
+Financial investments
+Trade receivables
+Inventories
+Contract assets
+Q = < 160 >
+Customer relationships
+Other intangible assets
+Licenses and similar rights
+are measured at the current value of the outstanding lease payments using the
+effective interest method and are presented as lease liabilities (short- and long-term).
+At the beginning of a lease, Infineon capitalizes a right of use at amortized acquisition
+cost and recognizes as a liability a corresponding leasing liability, using the present
+value of the outstanding lease payments. Rights of use are amortized on a straight-line
+basis over the expected useful life (see “Property, plant and equipment", p. 164 f.), or
+over the duration of the contract if shorter. In subsequent valuations, leasing liabilities
+IFRS 16 defines a lease as a contract that conveys the right to use an identifiable asset
+over a specified period of time in exchange for consideration.
+Leased assets
+Technologies
+If the carrying amount of the respective operating segment to which goodwill
+is allocated exceeds the recoverable amount of this CGU, the goodwill is impaired
+accordingly.
+Goodwill is impaired when the carrying amount of the operating segment to which
+goodwill is allocated exceeds the recoverable amount of that unit.
+If an asset or CGU is considered to be impaired, the impairment recognized is measured
+as the amount by which the carrying value exceeds the recoverable amount.
+Q = < 166 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+In the case of property, plant and equipment or other intangible assets, if the recov-
+erable amount of a CGU is less than the carrying value, the impairment is allocated
+pro rata to the assets recorded within the scope of IAS 36 therein. An impairment loss
+recognized in prior periods for property, plant and equipment or other intangible
+assets is reversed insofar as, since the last impairment, a change in the underlying
+assumptions has occurred, which leads to a lower impairment requirement. The
+maximum possible reversal of an impairment loss is that which would lead to the
+carrying amount that would have been determined (net of scheduled depreciation
+and amortization) if no impairment loss had been recognized for that asset in prior
+years. The reversal of impairments recognized on goodwill in subsequent periods is
+not permitted.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Other intangible assets
+Years
+3-10
+1-12
+1-12
+3-5
+3-12
+Infineon did not hold any intangible assets with indefinite useful lives in either the
+2021 or the 2020 fiscal year.
+Recoverability of property, plant and equipment and intangible assets
+(including goodwill)
+< 165 >
+The recoverability of an asset is measured by comparing its carrying amount with
+its recoverable amount. To the extent it is not possible to determine the recoverable
+amount of an individual asset, the book value of the cash generating unit to which
+the asset is allocated is compared to its recoverable amount.
+A cash generating unit (“CGU”) represents the smallest identifiable group of assets
+that generates cash inflows from continuing activities and that are largely independent
+of the cash inflows from other assets or group of assets.
+Goodwill arising in connection with a business combination is allocated to the CGUS
+or groups of CGUs that will benefit from the synergies generated by the business
+combination.
+The recoverable amount of an asset is defined as the higher of its fair value less
+costs to sell and its value in use. The value in use is calculated based on discounted
+future cash flows. Considerable management judgment is necessary to estimate
+future cash flows.
+Infineon Technologies | Annual Report 2021
+Infineon reviews non-current assets, including property, plant and equipment, good-
+will and other intangible assets for possible impairment whenever events or changes
+in circumstances indicate that the carrying amount of an asset may not be recover-
+able. Regardless of whether an indication of impairment exists, goodwill and other
+intangible assets, including capitalized development costs not yet subject to amorti-
+zation, undergo an annual impairment test (see also "Research and development
+expenses", p. 169). The impairment test for goodwill is carried out at the operating
+segment level annually on 30 June.
+and machinery
+10,328
+669
+(126)
+236
+222
+11,129
+123
+(737)
+(19)
+(8,822)
+2,307
+Other plant and office equipment
+1,349
+(8,189)
+2,139
+77
+(29)
+1
+(1)
+1,894
+1,686
+(528)
+(11)
+(7)
+(214)
+(296)
+2,214
+24
+306
+925
+(595)
+(8)
+(191)
+(396)
+1,333
+'༔ཌུ
+30
+276
+Licenses and similar rights
+2,190
+Technologies
+738
+(201)
+(29)
+(230)
+87
+Total other intangible assets
+4,925
+229
+(15)
+40
+5,179
+(1)
+(512)
+14
+(8)
+(20)
+(1,830)
+3,349
+3,621
+Infineon Technologies | Annual Report 2021
+(1)
+(9)
+(18)
+106
+1
+105
+Remaining other intangible assets
+75
+76
+12
+Technical equipment
+1,321
+640
+645
+2
+(2)
+645
+2
+(321)
+(7)
+218
+753
+construction in progress
+Payments on account and
+751
+145
+(1,279)
+(4)
+52
+(123)
+(1,204)
+1,457
+4
+37
+(53)
+120
+1,075
+178
+Total property, plant
+and equipment
+14,426
+772
+(448)
+14
+14
+(69)
+(393)
+1,220
+2
+(14)
+199
+1,033
+Capitalized development costs
+Other intangible assets
+4,110
+4,443
+(11,090)
+(27)
+6
+180
+(936)
+(10,316)
+15,533
+37
+(189)
+1,259
+Customer relationships
+(1,304)
+1,313
+Business focus and strategy
+of these insolvency proceedings have already been completed. The impacts of these
+proceedings are reported as discontinued operations in Infineon's Consolidated
+Statement of Profit or Loss and Consolidated Statement of Cash Flows, to the extent
+that the underlying events occurred before the commencement of insolvency
+proceedings.
+The current risks and provisions relating to Qimonda's insolvency are described in
+note 23 "Proceedings in relation to Qimonda”. □ p. 198 f.
+In the 2021 and 2020 fiscal years, adjustments to individual provisions as well as
+subsequent income arose as a result of recent developments in connection with the
+insolvency of Qimonda, which resulted in a loss from discontinued operations, net of
+income taxes of €6 million and €4 million, respectively.
+7 Earnings per share
+Basic earnings per share are calculated by dividing profit (loss) for the period by
+the weighted-average number of shares outstanding during the reporting period.
+The calculation of the diluted earnings per share is based on the assumption that all
+potentially dilutive instruments are converted into ordinary shares, resulting in
+a corresponding increase in the number of shares.
+The hybrid bond issued in the 2020 fiscal year is classified as equity (see note 19,
+p. 193). The related hybrid investors' remuneration entitlement (after tax) represents
+payments for a component of equity that reduces the earnings available to share-
+holders for distribution and was therefore taken into account in determining earnings
+per share (basic and diluted).
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 177 >
+Basic and diluted earnings per share are calculated as follows for the fiscal years
+ended 30 September 2021 and 2020:
+8 Financial investments
+Financial investments comprise fixed-term deposits with banks and investment funds.
+Fixed-term deposits with banks are categorized as financial assets and measured at
+amortized cost. Investment funds are categorized as financial assets and measured at
+fair value through profit or loss (see also note 2, □ p. 161 ff., and note 26, □ p. 203 ff.).
+Financial investments as of 30 September 2021 and 2020 comprised the following:
+On 23 January 2009, Qimonda AG (“Qimonda”), a majority-owned company, filed
+an application at the Munich Local Court to commence insolvency proceedings. On
+1 April 2009, the insolvency proceedings formally opened. Insolvency proceedings
+were also opened for further domestic and foreign subsidiaries of Qimonda. Some
+€ in millions (unless otherwise stated)
+Qimonda - discontinued operations
+The income taxes recognized in other comprehensive income resulted from tax effects
+of €17 million (2020: €27 million) from realized and non-realized gains and losses from
+hedges offset by taxes on actuarial gains and losses arising from pension commitments
+of €11 million (2020: increase €6 million). Income taxes recognized directly in equity
+were the result of tax effects in connection with the compensation on hybrid capital
+as well as tax effects from reversal of valuation allowances on deferred tax assets
+resulting from capital measures in prior years.
+Including the items recognized directly in equity and in other comprehensive income
+and the expense/benefit from continuing and discontinued operations, the income
+tax consisted of the following:
+€ in millions
+Income taxes from continuing operations
+Income taxes from discontinued operations
+Income taxes recognized directly in equity
+Income taxes recognized in other comprehensive income
+Income taxes
+2021
+2020
+(144)
+(52)
+1
+29
+25
+6
+21
+(108)
+(6)
+6 Disposals and discontinued operations
+Q = < 176 >
+Profit (loss) for the period - basic and diluted
+2021
+1,269.8
+- Adjustment for own shares
+Financial investments, gross
+(4.7)
+Weighted-average number of shares outstanding - basic
+Adjustments for:
+1,301.2
+(5.3)
+1,264.5
+Loss allowances
+Financial investments, net
+2.5
+1.0
+1,303.7
+1,265.5
+- Effect of share-based compensation
+Weighted-average number of shares outstanding - diluted
+Basic and diluted earnings per share² (in euro):
+Earnings per share (in euro) from continuing operations
+Earnings per share (in euro) from discontinued operations,
+net of income taxes
+Earnings per share (in euro) - basic and diluted
+1,305.9
+Remuneration entitlement of hybrid capital investors'
+- Ordinary share capital
+Fixed-term bank deposits
+2020
+1,169
+368
+26
+35
+Profit (loss) for the period attributable to shareholders
+of Infineon Technologies AG - basic and diluted
+thereof from continuing operations
+thereof from discontinued operations
+1,143
+333
+1,149
+337
+(6)
+(4)
+Weighted-average number of shares outstanding (in millions):
+€ in millions
+Investment funds
+1 Including the cumulative tax effect.
+Further information
+Combined Management Report
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 175 >
+In Germany, Infineon Technologies AG accumulated corporate income tax loss
+carry-forwards of €1.3 billion and trade tax loss carry-forwards of €2.5 billion as of
+30 September 2021 (30 September 2020: €1.5 billion and €2.7 billion, respectively).
+In other jurisdictions, corporate income tax loss carry-forwards amounted to
+€313 million (30 September 2020: €717 million) and local income tax loss carry-
+forwards amounted to €398 million (30 September 2020: €287 million). Additionally,
+there were unused tax credits of €625 million (30 September 2020: €596 million).
+Infineon assessed the need for a valuation allowance of its deferred tax assets. Based
+on the results of such assessment, considering all positive and negative factors and
+information relating to the foreseeable future based on business plans, Infineon
+recognized deferred tax assets, after netting, of €695 million as of 30 September 2021
+(30 September 2020: €627 million).
+Deferred tax assets in the amount of €447 million were recognized for legal entities
+which have incurred tax losses in the prior year. In the prior fiscal year, those entities
+recorded deferred tax assets in the amount of €408 million. Such tax losses are pri-
+marily incurred due to extraordinary items with respect to the acquisition of Cypress
+in the prior year. It is expected that these legal entities based on company forecast
+incur positive taxable results in the next years. Special considerations are given to
+unforeseen items that could impact these results.
+No deferred taxes were recorded for the following items (gross amounts):
+Of the foreign corporate tax loss carry-forwards, for which no deferred tax assets were
+recognized, €0 million (2020: €18 million), of the local income tax loss carry-forwards
+€59 million (2020: €5 million) and of tax credits €2 million (2020: €0 million) will expire
+in the next five years.
+The change in the net amount of deferred tax assets and liabilities is as follows:
+€ in millions
+Deferred taxes, net as of the end of the previous fiscal year
+Deferred tax income (expense), recognized through income statement:
+From continuing operations
+From discontinued operations
+Change of deferred taxes, recognized directly in equity:
+Infineon Technologies | Annual Report 2021
+Deferred tax arising from business acquisitions
+Deferred taxes recognized directly in equity
+42
+(293)
+37
+8
+1,430
+(1,096)
+(245)
+42
+Netting
+(767)
+767
+(803)
+803
+Total
+695
+(324)
+37
+8
+627
+(245)
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Deferred taxes recognized in other comprehensive income
+Adjustment on initial application of IFRS 9 and IFRS 15
+Deferred taxes, net as of the end of the fiscal year
+Local tax loss carry-forwards
+(particularly German trade tax and US state taxes)
+Tax credits
+Temporary differences
+Infineon Technologies | Annual Report 2021
+2021
+2020
+41
+Management Board and
+Supervisory Board
+333
+1,129
+424
+412
+464
+651
+Management Board and
+Supervisory Board
+Business focus and strategy
+Tax loss carry-forwards (domestic and foreign)
+Foreign currency translation
+€ in millions
+334
+2021
+2020
+334
+579
+8
+42
+42
+(352)
+28
+27
+6
+20
+(2)
+21
+(3)
+(3)
+371
+In connection with investments in subsidiaries, there were taxable temporary differ-
+ences of €349 million (2020: €544 million) for which no deferred taxes have been
+recognized because the timing of the reversal can be controlled, and it is not probable
+that the temporary differences will reverse in the foreseeable future.
+(1,091)
+2 The calculation of earnings per share is based on unrounded figures.
+30 Septem-
+ber 2021
+2
+3
+Other
+66
+197
+Total
+518
+530
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 179 >
+Notes to the Consolidated Financial Statements
+12 Property, plant and equipment and
+other intangible assets
+Derivative financial instruments (see note 26, p. 207 ff.)
+The development of property, plant and equipment as well as other intangible assets
+for the years ended 30 September 2021 and 2020 was as follows:
+71
+Grants receivables
+2,181
+2,052
+Cost of goods sold consisted mainly of inventory-related expenses in the 2021 and
+2020 fiscal years.
+As of 30 September 2021 and 2020, finished goods and merchandise contained
+an asset resulting from sales with a right of return of €12 million and €13 million,
+respectively.
+Inventory write-downs as of 30 September 2021 and 2020 amounted to €232 million
+and €252 million, respectively.
+11 Other current assets
+Other current assets as of 30 September 2021 and 2020 consisted of the following:
+€ in millions
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+VAT and other receivables from tax authorities
+250
+167
+Prepaid expenses
+106
+92
+94
+496
+€ in millions
+Cost
+2021
+2021
+2020
+of impair-
+ments
+Land, land rights and buildings
+1,996
+252
+(3)
+48
+9
+2,302
+(921)
+(76)
+3
+9
+(4)
+(989)
+effects
+Property, plant and equipment
+reversals
+tember
+Depreciation/amortization
+1 October
+2020
+Additions
+Disposals
+Reclassi-
+fication
+Foreign
+currency
+effects
+30 Sep-
+tember
+2021
+1 October
+2020
+Depre-
+ciation/
+amor-
+tization
+Disposals
+Carrying amount
+Impair-
+Foreign
+ments/
+currency
+30 Sep-
+tember
+30 Sep-
+30 Sep-
+tember
+Infineon Technologies | Annual Report 2021
+438
+1,464
+Allowances at end of the fiscal year
+2021
+2020
+1
+1
+1
+1
+Information on Infineon's credit risk management is contained in note 27. p. 214 ff.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 178 >
+Notes to the Consolidated Financial Statements
+9 Trade receivables
+Trade receivables result from contracts with customers that are due within one year.
+As of 30 September 2021 and 2020, they consisted of the following:
+Revaluation of allowances, net
+10 Inventories
+0.26
+Allowances at beginning of the fiscal year
+30 Septem-
+ber 2020
+1,108
+600
+1,066
+777
+2,174
+1,377
+(1)
+(1)
+2,173
+1,376
+The impairment losses on financial investments that are measured at amortized cost
+changed as follows during the 2021 and 2020 fiscal years:
+0.88
+0.26
+€ in millions
+(0.01)
+0.87
+1,341
+Inventories as of 30 September 2021 and 2020 consisted of the following:
+Trade receivables, third parties
+Allowances at beginning of the fiscal year
+Current year's allowance, net of reversals
+Usage of loss allowances, net
+Allowances at end of the fiscal year
+2021
+2020
+5
+7
+(2)
+5
+5
+Information about Infineon's credit risk management is contained in note 27. p. 214 ff.
+Infineon Technologies | Annual Report 2021
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+279
+215
+€ in millions
+€ in millions
+Changes in the allowances for trade receivables in the 2021 and 2020 fiscal year were
+as follows:
+(5)
+Trade receivables, related parties
+Trade receivables, gross
+Loss allowances
+Trade receivables, net
+€ in millions
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+Raw materials and supplies
+1,479
+9
+1,192
+Work in progress
+9
+1,488
+1,201
+Finished goods and merchandise
+Total
+(5)
+1,483
+1,196
+1,462
+58
+13
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 172 >
+Financial income and expenses
+Financial income comprised the following in the 2021 and 2020 fiscal years:
+Management Board and
+Supervisory Board
+Grants
+€ in millions
+Interest income
+€ in millions
+Included in the Consolidated Statement of Profit or Loss in:
+Cost of goods sold
+Research and development expenses
+Selling, general and administrative expenses
+Infineon has received grants from various governmental institutions under government
+business development programs, including grants for the construction of manufac-
+turing facilities, for research and development activities, and employee development.
+Grants included directly in profit or loss in the Consolidated Financial Statements
+during the 2021 and 2020 fiscal years were as follows:
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+43,800
+48,591
+12,680
+12,201
+20,457
+17,818
+2,423
+2,218
+2,086
+Total deferred taxes
+648
+432
+Americas
+5,296
+4,438
+therein: USA
+3,772
+2,877
+Total
+Total
+Gains on sales of financial assets
+Other financial income
+Total
+Other financial expenses
+2021
+2020
+(155)
+(130)
+(27)
+(47)
+(182)
+(177)
+Of the grants totaling €186 million (2020: €152 million) included in the Consolidated
+Statement of Profit or Loss in the 2021 fiscal year, €64 million (2020: €132 million)
+related to expenses from previous years.
+In the 2021 fiscal year, investment grants of €20 million (2020: €21 million) were
+deducted from acquisition or construction costs for property, plant and equipment
+and intangible assets. In the 2021 fiscal year, Infineon received investment grants
+of €12 million (2020: €30 million).
+For compliance with the conditions attached to the grants received and potential
+repayment requirements in case of nonfulfillment, see note 22. □ p. 197
+Total
+Financial expenses included other financial expenses of €3 million (2020: €25 million)
+in the 2021 fiscal year, as well as interest expenses of €5 million (2020: €1 million) in
+connection with interest rate derivatives concluded to hedge refinancing measures.
+Further information on Infineon's financial income and expenses is contained in
+note 26. p. 207
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Interest expenses
+Japan
+152
+€ in millions
+2021
+2020
+2021
+2020
+5
+29
+13
+4
+22
+29
+58
+40
+Financial expenses comprised the following in the 2021 and 2020 fiscal years:
+123
+108
+5
+4
+186
+therein: Mainland China, Hong Kong
+Asia-Pacific (excluding Japan, Greater China)
+therein: Germany
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 171 >
+3 Notes to the Consolidated Statement of Profit or Loss
+Revenue
+Breakdowns of revenue by segments, product groups and geographic areas are
+disclosed in note 28. p. 219 ff.
+The aggregate amount of the transaction prices of the unsatisfied and partially
+unsatisfied performance obligations, arising from contracts with customers within
+the meaning of IFRS 15 with expected original durations of more than one year, was
+as follows as of 30 September 2021 and 2020:
+Expenses for materials and purchased services comprised the following in the 2021
+and 2020 fiscal years:
+€ in millions
+Cost of raw materials, supplies and purchased goods
+Cost of purchased services
+Total
+2021
+2020
+Management Board and
+Supervisory Board
+1,925
+Infineon Technologies | Annual Report 2021
+> valuation of defined benefit pension plans (see "Defined benefit pension plans",
+p. 166, and note 18, ☐ p. 187 ff.).
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 170 >
+Tax liabilities are recognized as short-term in accordance with IAS 1.69(d), as they are
+due immediately, and Infineon generally has no option of deferring their due date.
+For uncertain tax positions, a current tax liability is recorded or, in case of a tax loss
+carried forward or a tax allowance, the respective deferred tax asset is reduced
+accordingly. IFRIC 23 clarifies the recognition and valuation requirements of IAS 12
+where there is uncertainty about tax treatment. Estimates and assumptions must
+be made for the recognition and valuation, for example, whether an assessment is
+made separately or together with other uncertainties, whether a probable or expected
+value is used for the uncertainty, and whether changes have occurred compared to
+the previous period. The detection risk for the recognition of uncertain tax positions
+is not relevant. Recognition assumes that the tax authorities investigate the matters
+in question and that they have all relevant information.
+Estimates and assumptions
+The preparation of financial statements in accordance with IFRS requires management
+to make estimates and assumptions that have an impact on the presented amounts
+and the associated disclosures.
+Estimates and assumptions undergo regular review and must be adjusted where
+appropriate.
+Although these estimates and assumptions are applied by management to the best
+of its knowledge based on current events and circumstances, actual events may
+result in deviations from these estimates. This applies in particular against the back-
+ground of the coronavirus pandemic, which is causing distortions in global supply
+chains, markets and general economic trends. Developments in the wake of the
+coronavirus pandemic are dynamic, so it cannot be ruled out that the actual results
+deviate significantly from the estimates and assumptions made in the preparation
+of these Consolidated Financial Statements, or that the estimates and assumptions
+made will have to be adjusted in future periods, and this will have a significant impact
+on Infineon's financial position, results of operations and cash flows.
+Areas containing estimates and assumptions and that are consequently most likely
+to be affected when actual results vary from estimates and assumptions are:
+> recognition and valuation of deferred tax assets as well as uncertain tax
+positions (see "Current and deferred taxes”, □ p. 169 f., and note 5, □ p. 173 ff.),
+> valuation of inventory (see "Inventories", p. 164, and note 10, □ p. 178),
+> revenue recognized over time as well as revenue where the transaction price
+includes a variable component (see “Revenue recognition”, p. 167 f.),
+> the recoverability of non-financial assets, in particular goodwill (see notes 12,
+p. 179 f., and 13, □ p. 181 f.),
+> recognition and valuation of provisions (see "Other provisions", p. 167, notes 16,
+p. 186, and 23, p. 198 ff.) and
+All assumptions and estimates are based on the circumstances and assessments
+as of the balance sheet date, taking into account knowledge gained up to the
+approval by the Management Board of the Consolidated Financial Statements
+on 25 November 2021.
+Combined Management Report
+1,712
+1,975
+2,476
+471
+370
+67
+70
+3,646
+2,916
+The average number of employees by geographic region was as follows for the 2021
+and 2020 fiscal years:
+In contrast, Infineon refrains from disclosing the remaining performance obligations
+arising from contracts with customers within the meaning of IFRS 15 with original
+expected durations of one year or less. Accordingly, these values are not included in
+the table above.
+Cost of materials and purchased services as well as personnel expenses
+The Consolidated Statement of Profit or Loss (continuing and discontinued operations)
+includes the following expenses for purchased services, materials and personnel.
+Europe
+Greater China'
+Infineon Technologies | Annual Report 2021
+2021
+2020
+19,767
+18,894
+3,108
+2,609
+2020
+Total
+4,534
+3,687
+Personnel expenses comprised the following in the 2021 and 2020 fiscal years:
+Revenue expected in (€ in millions)
+As of 30 September 2021
+As of 30 September 2020
+Total
+512
+Less than
+1 year
+157
+1 year
+and after
+€ in millions
+Wages and salaries
+355
+216
+55
+161
+Social insurance levies and employee benefits
+Expenses for pensions
+2021
+Consolidated Financial Statements
+1,967
+Q =
+€ in millions
+Intangible assets
+Property, plant and equipment
+tax assets
+tax liabilities
+therein through
+profit or loss
+Deferred
+tax assets
+Deferred
+Total
+therein through
+tax liabilities
+profit or loss
+35
+(727)
+9
+12
+39
+Total
+(740)
+Deferred
+Change 2020
+Change in available tax credits
+64
+47
+6
+(18)
+(144)
+(52)
+Other
+Actual income taxes
+The category "Other" includes a reduction of deferred tax liabilities of €10 million
+(2020: increase of €20 million) as a result of the recognition of deferred tax in connec-
+tion with investments of subsidiaries.
+In the 2021 fiscal year, the tax expense from the valuation allowances or non-recogni-
+tion of deferred tax assets for tax loss carry-forwards amounted to €23 million (2020:
+€1 million), for tax credits to €8 million (2020: €46 million), and from temporary differ-
+ences to €1 million (2020: €0 million). A write-up of deferred tax assets for tax loss
+carry-forwards of €77 million was recorded (2020: €37 million). With respect to the
+deferred tax assets for temporary differences, the write-up amounted to €19 million
+in the 2021 fiscal year (2020: €0 million).
+The utilization of tax loss carry-forwards, tax credits and temporary differences for
+which deferred tax assets had not previously been recorded resulted in current tax
+income of €5 million in the 2021 fiscal year (2020: €5 million).
+Deferred tax assets and liabilities as of 30 September 2021 and 2020 comprised the
+following:
+"Effects due to changes in tax rates” related to a change in the applicable tax rates in
+Singapore and the USA.
+30 September 2021
+Change 2021
+30 September 2020
+Deferred
+(10)
+(534)
+146
+213
+19
+Unused tax credits and excess foreign tax credits
+201
+17
+17
+184
+Further information
+(11)
+Other
+193
+(52)
+29
+21
+166
+(54)
+8
+606
+22
+(66)
+577
+(142)
+(29)
+(29)
+162
+(129)
+(102)
+(34)
+Provisions, pensions and similar commitments
+310
+(170)
+40
+53
+273
+(173)
+109
+33
+Tax loss carry-forwards
+(29)
+64
+61
+(23)
+Total comprehensive income (loss) for the year, net of tax
+€ in millions
+2021
+2020
+Current tax expense
+2
+(8)
+2
+(8)
+Deferred tax income
+Income tax
+2021
+2020
+(152)
+(94)
+8
+42
+(144)
+Income (loss) for the year, net of tax
+(52)
+€ in millions
+5 Income tax
+Change in valuation allowance on deferred tax assets
+< 173 >
+Notes to the Consolidated Financial Statements
+4 Investments accounted for using the equity method
+The investments accounted for using the equity method comprise shares in joint
+ventures and associated companies.
+As of 30 September 2021 and 2020, the carrying amount of joint ventures accounted
+for using the equity method was €23 million and €21 million, respectively. The pro
+rata result from joint ventures accounted for using the equity method for the 2021
+fiscal year was €2 million (2020: negative €8 million).
+For the 2021 and 2020 fiscal years, Infineon's proportion of selected items from the
+statement of comprehensive income of the joint ventures accounted for using the
+equity method were aggregated as follows:
+€ in millions
+Income (loss) for the year, net of tax
+Total comprehensive income (loss) for the year, net of tax
+2021
+2020
+7
+(1)
+7
+(1)
+The pro rata result of the associated companies accounted for using the equity method
+is not part of the Segment Result (see note 28, p. 220).
+Income tax from continuing operations for the fiscal years ending 30 September 2021
+and 2020 amounts to:
+The pro rata result of the joint ventures accounted for using the equity method is not
+part of the Segment Result (see note 28, p. 220).
+Summarized financial information for joint ventures
+As of 30 September 2021 and 2020, the carrying amount of the associated companies
+accounted for using the equity method was €48 million and €66 million, respectively.
+The pro rata result from associated companies accounted for using the equity method
+for the 2021 fiscal year was €7 million (2020: negative €1 million).
+Effects due to changes in tax rates
+(15)
+(5)
+Effects from the difference between local and functional currency
+1
+(14)
+Previous year taxes
+73
+50
+Non-deductible expenses
+(33)
+(27)
+Tax-exempt income
+33
+Change in permanent balance sheet effects
+Summarized financial information for associated companies
+(50)
+47
+Tax rate differential
+66
+(367)
+(118)
+Current tax expense included tax income of €59 million (2020: €46 million tax income)
+relating to previous fiscal years.
+Taxable income earned by foreign subsidiaries is determined on the basis of the tax
+laws applicable in the relevant countries and is taxed based on the respective country-
+specific tax rates.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+The German combined statutory tax rate for Infineon Technologies AG was 28 percent
+for the 2021 and 2020 fiscal years. This is based on a corporate income tax rate of
+15 percent, plus a solidarity surcharge of 5.5 percent and a trade tax rate of 12 percent.
+Q = < 174 >
+Expected income tax expense
+Further information
+2020
+2021
+For the 2021 and 2020 fiscal years, Infineon's proportion of selected items from the
+statement of comprehensive income of the associated companies accounted for
+using the equity method were aggregated as follows:
+33
+€ in millions
+The reconciliation of income taxes from continuing operations for the fiscal years
+ended 30 September 2021 and 2020, based on the German combined statutory
+income tax rate of 28 percent (2020: 28 percent), is as follows:
+8
+1,322
+206
+1,116
+1,277
+205
+1,072
+higher discount rate
+a 50 basis points
+113
+9
+103
+95
+Plans that are
+1,333
+104
+117
+1,153
+1,499
+wholly unfunded
+235
+1,264
+lower discount rate
+a 50 basis points
+1,325
+1,438
+221
+1,217
+1,208
+1,278
+1,381
+220
+1,161
+Total
+125
+wholly or partly funded
+Plans that are
+30 September 2020
+Present value of defined
+Sensitivity analysis
+The 2018 G mortality tables by Dr. Klaus Heubeck were used for Germany as in the
+previous year, and for Austria, the AVÖ 2018-P tables were applied.
+The funding of the defined benefit obligations as of 30 September 2021 and 2020
+was as follows:
+Since no asset ceilings applied, the funded status of the Infineon pension plans
+corresponded to the amounts reported in the Consolidated Statement of Financial
+Position as of 30 September 2021 and 2020.
+Pension obligations are reported in the Consolidated Statement of Financial Position
+under "Pensions and similar commitments”. □ p. 154
+Q = < 189 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+(64)
+236
+(64)
+The following sensitivity analysis table shows how the present value of all defined
+benefit pension obligations would be affected by changes in the aforementioned
+actuarial assumptions. In each case, they reflect the effect of changes in one actuarial
+assumption while all other assumptions remain constant.
+benefit pension plans with:
+30 September 2021
+€ in millions
+Total
+Foreign
+plans
+plans
+Domestic
+Total
+Foreign
+plans
+plans
+€ in millions
+Domestic
+Total
+30 September 2020
+Foreign
+plans
+Domestic
+plans
+Total
+Foreign
+plans
+Domestic
+plans
+30 September 2021
+1,569
+lower expected rate
+higher expected rate
+2.0
+1.0
+2.4
+1.3
+Projected future pension increases
+Rate of salary increase
+Increase in life expectancy
+Discount rate at the end of the fiscal year
+218
+1,169
+1,335
+214
+1,121
+of pension increase
+1,387
+2.0
+4.3
+2.0
+(58)
+Infineon Technologies | Annual Report 2021
+In order to determine the present value as of the balance sheet date, the Willis Towers
+Watson RATE:Link approach was applied, which is based on high-grade fixed-interest
+corporate bonds from issuers carrying a very high credit rating, with the same maturity
+and in the same currency as the pension obligations to be assessed.
+2.1
+1.8
+2.8
+1.8
+1,482
+224
+1,258
+1,422
+224
+1,198
+by one year
+4.6
+plans
+plans
+a 50 basis points
+Foreign
+1,369
+215
+1,154
+of salary increase
+lower expected rate
+a 50 basis points
+The weighted-average assumptions used in calculating the actuarial values for the
+pension plans were as follows:
+1,452
+228
+1,224
+1,395
+225
+1,170
+of salary increase
+Actuarial assumptions
+1,206
+a 50 basis points
+217
+a 50 basis points
+Domestic
+Foreign
+plans
+plans
+in %
+Domestic
+1,494
+228
+1,266
+1,432
+225
+1,207
+of pension increase
+30 September 2020
+30 September 2021
+higher expected rate
+1,423
+(58)
+1 This is a variable-interest financial liability.
+(552)
+In addition, as of the reporting date, there was no indication that the recoverable
+amount of an operating segment to which goodwill had been allocated could have
+fallen below the book value.
+were carried out at operating segment level, taking into account changes considered
+possible in the main assumptions. Even taking these changes into account, no impair-
+ment on goodwill was observed as a result of the sensitivity analyses at operating
+segment level.
+Business planning is affected, among other things, by uncertainties regarding the
+assessment of markets and the macroeconomic environment and is based to a large
+extent on the assumption that the revenue and cost synergies expected from the
+acquisition of Cypress will be successfully realized. Therefore, sensitivity analyses
+As a result of the impairment tests carried out, Infineon concluded that none of the
+operating segments gave rise to an impairment of goodwill in the year under report.
+1.5
+1.5
+8.7
+8.7
+1.5
+1.5
+1.5
+1.5
+9.1
+9.5
+9.5
+8.9
+1.5
+1.5
+8.6
+8.6
+5,897
+5,962
+2
+2
+10.7
+Infineon Technologies | Annual Report 2021
+10.8
+Management Board and
+Supervisory Board
+Combined Management Report
+Technical equipment
+110
+267
+and buildings
+Land, land rights
+€ in millions
+nations
+combi-
+business
+ber 2021
+changes¹
+through
+30 Septem-
+Other
+Depreciation
+Additions
+Additions
+1 October
+2020
+The changes in the rights of use in the 2021 and 2020 fiscal year were as follows:
+14 Leases
+Q = < 183 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Business focus and strategy
+2,588
+2,617
+12.3
+Industrial Power Control
+Automotive
+Operating segment
+The following table shows the allocation of the carrying amount of goodwill to the
+segments, as well as the valuation parameters used:
+Q = < 182 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+The discount rate for future cash flows is based on the after-tax weighted-average cost
+of capital ("WACC") for the CGU in question. The Capital Asset Pricing Model ("CAPM")
+is used to calculate the cost of equity. The relevant pre-tax WACC used to discount
+future pre-tax cash flows in line with IAS 36, is derived from estimated future after-tax
+cash flows and the after-tax WACC using a typical tax rate for each operating segment.
+The risk-free interest rate is derived using the Svensson method, taking into account
+risk premiums, the beta factor and debt ratio are derived from a group of companies
+comparable to the operating segment. In this way, the discount rate derived reflects
+the current market rate of return as well as the specific risks attached to the respective
+operating segment.
+Cash flows, including the underlying parameters such as revenue growth and margins,
+are projected based on past experience, current operating results and the business
+plan approved in the fiscal year just ended, which is calculated bottom-up based on
+certain central assumptions applied consistently throughout Infineon. Cash flows over
+a five-year period are used to derive the value in use. The derivation of the terminal
+value is based on a stable business state, reflecting synergies resulting from the
+acquisition of Cypress. The average revenue growth rates over the planning period
+are between 8.7 percent and 12.4 percent, which is in part higher than the average
+historical growth rates of the sectors in which the relevant segments operate, mainly
+because the segments benefit to varying degrees from the businesses acquired with
+Cypress and the related revenue and costs synergies. Investments to increase capacity
+for which no cash outflow has taken place are not taken into account. Cash flows for
+periods beyond the planning horizon are estimated using a terminal value.
+Infineon determines the recoverable amount of a particular cash generating unit to
+which goodwill has been allocated on the basis of its value in use. The value in use is
+measured by estimating the present value of future cash flows that will be generated
+by the continuing operations of the CGU discounted using an appropriate discount rate.
+Infineon carried out the annual goodwill impairment test at the operating segment
+level as of 30 June 2021.
+The amounts shown in the 2020 fiscal year under "Additions through business
+combinations" resulted exclusively from the acquisition of Cypress.
+5,897
+909
+5,897
+5,962
+(442)
+5,897
+909
+5,430
+5,962
+65
+Power & Sensor Systems
+Connected Secure Systems
+Corporate
+Total
+1 Valuation parameters as of 30 June 2021 and 2020.
+12.5
+1,679
+1,697
+11.9
+11.9
+228
+10.9
+11.1
+1,402
+1,418
+2021
+and machinery
+2020
+0000
+2020
+2021
+Terminal growth rate¹
+in %
+2020
+2021
+After-tax WACC¹
+in %
+2020
+Pre-tax WACC1
+in %
+2021
+Book value of allocated goodwill
+€ in millions
+226
+9
+1
+Other plant and
+10
+office equipment
+Other plant and
+5
+and machinery
+Technical equipment
+240
+and buildings
+Land, land rights
+€ in millions
+combi-
+5
+4
+Interest expenses
+business
+11
+(6)
+Impairment (Reversal of impairment)
+ber 2020
+30 Septem-
+Other
+changes 2
+Depreciation
+Additions
+through
+Total
+nations¹
+Expenses for short-term leases with a term of twelve months or less
+Expenses for low-value leases
+6
+10
+(3)
+(6)
+39
+75
+9
+255
+10
+9
+(1)
+(2)
+2019
+7
+72
+Total
+267
+(23)
+(48)
+32
+66
+99
+1
+3
+1
+74
+5,897
+Additions
+56
+126
+172
+159
+145
+139
+60
+59
+68
+66
+Undiscounted
+lease liabilities
+Discounted lease
+liabilities
+Undiscounted
+lease liabilities
+lease liabilities
+30 September 2020
+30 September 2021
+Discounted
+Due after one year to five years
+Due within one year
+€ in millions
+The allocation of discounted and undiscounted lease liabilities by maturity as of
+30 September 2021 and 2020 was as follows:
+6
+117
+10
+286
+Total
+office equipment
+133
+76
+85
+331
+65
+Depreciation
+2020
+2021
+€ in millions
+1 Other changes for land, land rights and buildings include reversals of impairments amounting to €6 million.
+The Consolidated Statement of Profit or Loss includes the following amounts in the
+2021 and 2020 fiscal year, which are attributable to leases:
+336
+(2)
+(65)
+9
+1 October
+(1)
+8
+1
+(3)
+Total
+319
+(2)
+(56)
+Due after more than five years
+317
+294
+346
+(6)
+2020
+2021
+Balance at the end of the fiscal year
+(50)
+2,050
+2,139
+(8,189)
+27
+27
+84
+(698)
+(7,602)
+10,328
+(52)
+228
+(84)
+66
+78
+1,311
+Other plant and office equipment
+299
+285
+9,652
+and machinery
+Technical equipment
+775
+19
+(9)
+1,349
+(1,151)
+588
+924
+13,148
+and equipment
+Total property, plant
+525
+751
+(2)
+(2)
+753
+(6)
+1,075
+(283)
+11
+507
+525
+construction in progress
+Payments on account and
+160
+145
+(1,204)
+7
+50
+(110)
+(1)
+(136)
+(921)
+11
+amor-
+Disposals
+Depre-
+ciation/
+1 October
+2019
+30 Sep-
+tember
+2020
+Foreign
+currency
+effects
+business
+fication
+Disposals Reclassi-
+Additions
+through
+2019
+Additions
+1 October
+Depreciation/amortization
+Cost
+€ in millions
+Notes to the Consolidated Financial Statements
+Q = < 180 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+combi-
+tization
+nations
+Impair-
+ments/
+1
+(55)
+(885)
+1,996
+(31)
+36
+(1)
+278
+54
+1,660
+Land, land rights and buildings
+7
+Property, plant and equipment
+2020
+tember
+tember
+30 Sep-
+30 Sep-
+Carrying amount
+30 Sep-
+tember
+2020
+of impair-
+ments
+currency
+effects
+reversals
+Foreign
+2019
+The Consolidated Statement of Cash Flows includes the following amounts in the
+2021 and 2020 fiscal year, which are attributable to leases:
+(98)
+(9,638)
+(4)
+30
+(341)
+(1,020)
+4,925
+(253)
+(30)
+3,108
+184
+1,916
+Total other intangible assets
+87
+(18)
+1
+68
+75
+(201)
+2
+150
+1,894
+(296)
+17
+130
+31
+(1,304)
+3,621
+896
+Balance at the beginning of the fiscal year
+Carrying amount
+Balance at the end of the fiscal year
+Foreign currency effects
+Disposals
+Impairments
+Balance at the beginning of the fiscal year
+Balance at the end of the fiscal year
+Accumulated impairments and other changes
+Foreign currency effects
+Balance at the beginning of the fiscal year
+Additions through business combinations
+925
+Cost
+Changes in goodwill during the 2021 and 2020 fiscal years were as follows:
+13 Goodwill
+Q = < 181 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Property, plant and equipment of €13 million as of 30 September 2021 (30 Septem-
+ber 2020: €182 million) was assigned as security.
+Depreciation on property, plant and equipment is presented in the Consolidated
+Statement of Profit or Loss mainly in cost of goods sold. Amortization of intangible
+assets is mainly presented in cost of goods sold or selling, general and administrative
+expenses. Impairments on property, plant and equipment and other intangible
+assets are reported under other operating expenses.
+€ in millions
+14,426
+(396)
+(6)
+406
+Customer relationships
+543
+640
+(393)
+(4)
+18
+(56)
+(351)
+1,033
+(1)
+(18)
+158
+894
+Capitalized development costs
+Other intangible assets
+3,510
+4,110
+(10,316)
+41
+9
+135
+(863)
+998
+(83)
+1,321
+(276)
+(13)
+105
+(9)
+96
+18
+Remaining other intangible assets
+(23)
+(192)
+276
+(1)
+(12)
+יצויי
+3
+260
+Licenses and similar rights
+(125)
+(188)
+2,190
+(159)
+2,011
+338
+Technologies
+11
+(131)
+26
+thereof: Infineon Technologies Austria AG
+(56)
+286
+Foreign plans
+Domestic plans
+2020
+2021
+Adjustments to demographic assumptions
+Experience adjustments
+Actuarial gains (losses) for:
+Interest cost
+Past service income (cost)
+Current service cost
+Present value at beginning of year
+Change in defined benefit obligations taking into account future salary increases:
+€ in millions
+The development of Infineon's German (domestic) and non-German (foreign)
+pension plans and the plan assets as of 30 September 2021 and 2020 is presented
+in the following table:
+Notes to the Consolidated Financial Statements
+Q = < 188 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+The Group-defined benefit pension plans are exposed to risks arising from changes
+to actuarial assumptions such as interest rates, salary and pension trends, investment
+risks and longevity risks. A lower discount rate leads to higher pension liabilities.
+Equally, lower than expected growth in plan assets could lead to a deterioration of
+the funded status, or require the payment of additional contributions.
+Total
+The valuation date of both the German and foreign pension plans is 30 September.
+Domestic plans
+Total
+19
+(1)
+20
+(11)
+(4)
+(7)
+(15)
+(4)
+(11)
+1
+1
+(38)
+(6)
+(32)
+(39)
+(8)
+(31)
+(1,416)
+(197)
+(1,219)
+(1,438)
+(221)
+(1,217)
+Foreign plans
+The benefit obligation of some foreign plans is measured according to the income
+in the last month or year of service; others are dependent on average income over
+the service period. Foreign pension plans are managed by country-specific external
+pension funds or other pension schemes. The obligation arising from foreign defined
+benefit pension plans are partly covered by plan assets. The management of existing
+foreign plan assets is performed by the respective pension scheme.
+In Germany, Infineon primarily offers defined contribution benefits which provide
+for the employees when they reach retirement age, or in the event of disability or
+death. The statutory framework is provided by the Company Pension Act (in German:
+Betriebsrentengesetz or "BetrAVG") and by employment law in general. With the
+Infineon pension plan, new entrants receive a defined contribution benefit, which is
+funded by Infineon. Payments by the Infineon pension plan are generally made in
+twelve annual installments. For active employees who were entitled to benefits in
+the form of an annuity before the Infineon Pension Plan came into force, this commit-
+ment was transferred into the Infineon Pension Plan and thereby the possibility of
+an annuity is guaranteed. Together with former employees whose pension benefit
+obligations were not transferred into the Infineon Pension Plan, this group makes up
+the largest part of the obligation at this time. A corresponding provision is recorded
+for the German defined benefit pension plans, which are partly backed by plan assets.
+Individual agreements are in place for the members of the Management Board, which
+are backed by plan assets (see detailed in the chapter "Remuneration report" in
+the Combined Management Report, p. 145 f.). The major portion of the plan assets is
+managed by a pension trust in the legal form of a registered association. This is
+composed of executives of Infineon Technologies AG, and the investment strategy is
+defined by Infineon Technologies AG.
+Infineon's employee benefit plans consist of domestic and foreign defined benefit
+and defined contribution pension plans providing retirement, disability and sur-
+viving dependents' benefits. For Infineon, the significant benefit plans in Germany
+pertain to Infineon Technologies AG, and are among the foreign benefit plans to
+Infineon Technologies Austria AG.
+Other
+of refinancing measures (see note 26, p. 208 f.)
+Contract liabilities
+Other financial liabilities relating to interest hedging
+Accrued interest expense
+Payroll and similar obligations to employees
+Reimbursement obligations
+Other provisions comprised provisions for litigations (other than those relating
+to Qimonda), restructuring, asset retirement obligations and miscellaneous other
+liabilities.
+Provisions for warranties mainly represented the estimated future cost of fulfilling
+contractual requirements associated with products sold.
+Obligations to employees included, among others, costs of variable remuneration,
+outstanding vacation and flextime, service anniversary awards, other personnel costs
+and social security costs.
+319
+313
+€ in millions
+815
+436
+1,134
+(33)
+(334)
+752
+749
+93
+(5)
+(13)
+28
+Total
+30 Septem-
+ber 2021
+30 Septem-
+ber 2020
+Defined benefit pension plans
+18 Pension plans
+< 187 >
+Q =
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Contract liabilities amounted to €25 million as of 30 September 2021 and 2020,
+respectively. Of this amount, €13 million (30 September 2020: €21 million) related to
+non-current contract liabilities reported under other non-current liabilities.
+(58)
+950
+158
+155
+4
+12
+66
+96
+104
+221
+206
+405
+395
+872
+(5)
+(63)
+Adjustments to financial assumptions
+4
+4
+4
+26
+8
+18
+28
+8
+20
+3
+3
+11
+1
+10
+54
+5
+49
+6
+2
+4
+8
+2
+6
+4
+(22)
+(9)
+(31)
+(552)
+(447)
+(447)
+thereof: Infineon Technologies AG
+(739)
+(136)
+(603)
+(617)
+(127)
+(490)
+Net pension liability
+683
+699
+614
+764
+93
+671
+(3)
+(3)
+2
+2
+(31)
+(9)
+(22)
+85
+83
+83
+699
+@ - ཎྜ8 ་ སྐཝེ°
+1
+(4)
+(4)
+(4)
+Employee contributions
+9
+22
+31
+9
+22
+Benefits paid
+3
+3
+(20)
+(20)
+76
+81
+66
+6
+60
+Plan settlements
+Effects from acquisitions
+(5)
+5150
+31
+(4)
+85
+614
+Fair value of plan assets at end of year
+Foreign currency effects
+Benefits paid
+Employee contributions
+Contributions from Infineon
+Acquisitions
+Actuarial gains (losses)
+Expected return on plan assets
+Fair value of plan assets at beginning of year
+600
+Change in fair value of plan assets:
+(221)
+(1,217)
+(1,381)
+(220)
+(1,161)
+Present value of defined benefit obligation at end of year
+6
+6
+(5)
+(5)
+Foreign currency effects
+(1,438)
+40
+(9)
+(8)
+6
+3
+505
+833
+329
+330
+500
+176
+3
+ber 2020
+ber 2021
+30 Septem-
+30 Septem-
+Convertible bonds, weighted average interest rate 4.50% (2020: 4.50%)
+Short-term financial debt and current portion of long-term financial debt
+Unsecured loans, weighted average interest rate 0.87% (2020: 1.06%), due 2023
+Bond €500 million, coupon 1.50%, due 2022
+Bond €750 million, coupon 0.75%, due 2023
+Bond €750 million, coupon 1.125%, due 2026
+Bond €750 million, coupon 1.625%, due 2029
+Bond €650 million, coupon 2.00%, due 2032
+Bond €500 million, coupon 1.50%, due 2022
+Short-term financial debt and current portion of long-term financial debt,
+weighted average interest rate: 1.25% (2020: 2.01%)
+€ in millions
+Financial debt as of 30 September 2021 and 2020 consisted of the following:
+The expected future minimum non-discounted lease payments from operating
+leases for land and buildings owned by Infineon and in which Infineon acts as lessor
+are as follows:
+The leasing contracts, in which Infineon subleases and acts as a lessor, are not material
+from the Group's point of view.
+Infineon's leases have no material impact on covenants connected to debt financing
+instruments. In addition, lease liabilities are not part of the net cash position measure
+used for capital market reporting purposes.
+The leasing contracts concluded relate mainly to the rental of office and storage
+space, IT equipment, other operating and office equipment as well as vehicles for
+selected employees.
+In addition, there are future payment obligations for leases that have not been started
+but have already been contracted, as well as for short-term leases with a term of
+twelve months or less, which are immaterial.
+499
+747
+746
+744
+Business focus and strategy
+Management Board and
+Supervisory Board
+7,033
+6,585
+Total
+Infineon Technologies | Annual Report 2021
+797
+806
+USPP notes US$1,300 million,
+6,528
+5,752
+60
+1,119
+weighted average interest rate 4.09%, due 2024-2028
+USPP notes US$935 million,
+2,361
+954
+weighted average interest rate 1.04% (2020: 1.66%), due 20241
+Term loan US$1,110 million,
+636
+638
+740
+741
+743
+weighted average interest rate 2.88%, due 2027-2033
+Long-term financial debt
+Combined Management Report
+2
+60
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+69
+89
+4
+4
+63
+76
+2
+9
+2020
+2021
+Total
+Interest payments
+Payments for leasing liabilities
+Payments for short-term leases and low-value leases
+€ in millions
+Infineon Technologies | Annual Report 2021
+2 Other changes for land, land rights and buildings include impairments amounting to €11 million.
+1 The amounts shown under "Additions through business combinations" resulted in the 2020 fiscal year exclusively
+from the acquisition of Cypress.
+Q =
+< 184 >
+Due to the requirements of IFRS 16, the following future lease payments have not
+been included in the valuation of lease liabilities:
+€ in millions
+39
+19
+20
+30 Septem-
+ber 2020
+ber 2021
+30 Septem-
+70
+92
+15 Financial debt
+58
+88
+1
+11
+1
+Due after more than five years
+Total
+2020
+2021
+Due after one year to five years
+Due within one year
+Due after more than five years
+Total
+Due after one year to five years
+Due within one year
+Payments for not reasonably certain renewal options
+€ in millions
+4
+(27)
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Q = < 185 >
+Usage
+Addition
+1 October
+Current and non-current provisions as of 30 September 2021 consisted of the following:
+16 Provisions
+< 186 >
+Q =
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+654
+7,080
+783
+6,625
+Total
+203
+2,650
+261
+2,726
+Due after more than five years
+330
+Reversal
+€ in millions
+Obligations to employees
+2020
+17
+40
+211
+(4)
+9
+206
+thereof non-current
+thereof current
+Total provisions
+Other
+Warranties
+3,925
+and note 23, p. 198 f.)
+(see note 6, p. 176,
+Other current liabilities as of 30 September 2021 and 2020 consisted of the following:
+17 Other current liabilities
+Of the total provisions as of 30 September 2021 and 2020, a cash outflow of €815 mil-
+lion and €436 million, respectively, was expected to occur within one year. For the
+non-current provisions, a cash outflow was expected to occur after more than one
+year. Besides the provisions in connection with Qimonda, €42 million and €44 million
+as of 30 September 2021 and 2020, respectively, of non-current provisions were
+attributable to length-of-service related anniversary awards.
+Provisions related to Qimonda
+790
+(19)
+(309)
+698
+420
+30 Septem-
+ber 2021
+四
+Further information
+397
+Due after one year to five years
+176
+245
+69
+3
+72
+Available
+Drawn
+Aggregate
+facility
+Available
+Drawn
+Aggregate
+facility
+30 September 2020
+30 September 2021
+Term, € in millions
+Short-term
+Long-term
+Total
+The total lines of credit as of 30 September 2021 and 2020 are summarized in the
+following table:
+Financial debt, with the exception of conversion rights on outstanding convertible
+bonds, are recognized at amortized cost after deduction of directly attributable
+transaction costs. The conversion rights, which can only be exercised against cash
+payment after the acquisition of Cypress, are measured at fair value through profit
+or loss (see note 26, p. 206).
+On 16 October 2020, the MoTo Objekt CAMPEON GmbH & Co. KG secured loans in the
+amount of €171 million were repaid.
+> Notes with a nominal value of US$350 million due in 2027,
+Infineon signed a US private placement of notes (USPP) with a nominal value of
+US$1,300 million in April 2021. The unsubordinated, unsecured USPP notes, which
+bear an average interest rate of 2.88 percent per annum, were broken down as follows:
+The bridge financing was fully repaid in the previous year as a result of various equity
+and debt measures. In addition, a portion of the term loan maturing in 2022 in the
+amount of US$555 million was repaid in the previous year.
+> three term loan tranches, each amounting to US$1,110 million, with maturities of
+three, four and five years.
+> a bridge facility of €6,600 million with a maturity of up to two years and nine months
+from the date of the loan commitment, and
+In June 2019 Infineon Technologies AG concluded unsecured, non-subordinated
+financing for the acquisition of Cypress with various national and international banks
+comprising:
+69
+962
+962
+2,376
+121
+505
+125
+833
+debt
+Interest
+Financial
+Interest
+Financial
+debt
+30 September 2020
+30 September 2021
+3,066
+Infineon Technologies | Annual Report 2021
+Following completion of the transaction on 16 June 2021, parts of the existing term
+loans in the amount of US$1,300 million were repaid. In addition, Infineon repaid term
+loans of US$365 million in the 2021 fiscal year. As a result, the term loans maturing in
+2022 and 2023, respectively, were repaid in full. As of 30 September 2021, only one
+term loan in the amount of US$1,110 million maturing in 2024 remained outstanding.
+> Notes with a nominal value of US$350 million due in 2031,
+> Notes with a nominal value of US$250 million due in 2033.
+Amounts of financial debt and interest maturing in the coming years were as follows:
+> Notes with a nominal value of US$350 million due in 2029,
+69
+2,552
+2,621
+69
+965
+1,034
+2,376
+€ in millions
+Due within one year
+5
+81
+Consolidated Financial Statements
+Management Board and
+Supervisory Board
+The Management Board
+Chief Operations Officer
+Chief Digital Transformation Officer
+Chief Executive Officer
+Chief Financial Officer
+Jochen Hanebeck
+Constanze Hufenbecher
+Dr. Reinhard Ploss
+Dr. Sven Schneider
+The changes to Supervisory Board remuneration, which were approved by a large
+majority at the Annual General Meeting held in February 2021, took effect at the
+beginning of the 2022 fiscal year, i.e., on 1 October 2021.
+Infineon Technologies | Annual Report 2021
+Chairman of the Supervisory Board
+Dr. Wolfgang Eder
+Wallory hum
+Weekery
+лиш
+On behalf of the
+Supervisory Board
+Neubiberg, November 2021
+The Supervisory Board wishes to thank the entire staff and the Management Board of
+Infineon once again for their tremendous commitment and outstanding achievements
+during a fiscal year that has been a challenging one in every respect.
+The Investment, Finance and Audit Committee and the full Supervisory Board also
+deliberated on the combined separate Non-Financial Report for the year ended
+30 September 2021 drawn up by the Management Board. KPMG performed a “limited
+assurance“ engagement for the report that was extended to a “reasonable assurance”
+engagement in regards to specific aspects. KPMG issued an unqualified opinion theron.
+The documents were carefully examined by the Investment, Finance and Audit
+Committee at its meeting held on 8 November 2021, which was continued in a con-
+ference call on 18 November 2021, and by the Supervisory Board at its meeting held
+on 25 November 2021. The Supervisory Board positively acknowledged the combined
+separate Non-Financial Report drawn up by the Management Board.
+The Supervisory Board concluded that it has no objections to the financial statements
+and the audits performed by the auditor. In its opinion, the Combined Management
+Report complies with all legal requirements. The Supervisory Board also concurs with
+the assertions regarding Infineon's future development contained therein as well as
+with the results of the audit of the financial statements. It therefore approved the
+Separate Financial Statements of Infineon Technologies AG and the Consolidated
+Financial Statements of the Infineon Group for the 2021 fiscal year. The Separate
+Financial Statements were accordingly adopted. The Supervisory Board also approved
+the Management Board's proposal for the appropriation of unappropriated profit.
+The Separate Financial Statements, the Consolidated Financial Statements, the
+Combined Management Report, the Management Board's proposal for the appro-
+priation of unappropriated profit (all prepared by the Management Board) and
+KPMG's long-form audit reports were all made available to the Supervisory Board
+at the meeting held on 25 November 2021. At this meeting, the Chairman of the
+Investment, Finance and Audit Committee reported in depth on the corresponding
+recommendations of the Committee. In addition, all material issues relevant to the
+financial statements and the audit, including key audit matters, were exhaustively
+discussed with the auditor and closely examined by the Supervisory Board. The
+examination also covered the proposal to pay a dividend of €0.27 per entitled share.
+Business focus and strategy
+Combined Management Report
+The Management Board
+Further information
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Jochen Hanebeck was born in 1968
+in Dortmund, Germany. Hereceived
+a degree in electrical engineering
+from RWTH Aachen University,
+Germany. He has been with Infineon
+since 1994 (Siemens AG until 1999).
+Jochen Hanebeck has been a
+member of the Management Board
+of Infineon Technologies AG and
+Chief Operations Officer since 2016
+(mandated until 30 June 2024).
+He is responsible for Operations,
+including Manufacturing, Logistics,
+Quality, Customs and Procurement.
+Constanze Hufenbecher was born
+in 1970 in Ebingen (now Albstadt),
+Germany. She received her degree
+in business administration from the
+University of Tübingen, Germany.
+She began her career in 1994 at
+VIAG AG in Munich, Germany.
+Constanze Hufenbecher has been
+a member of the Management
+Board of Infineon Technologies AG
+and Chief Digital Transformation
+Officer since 2021 (appointed until
+14 April 2024). She is responsible for
+Information Technology, Business
+Continuity, Export Control, Business
+Excellence, and Sales & Marketing
+Transformation, as well as the
+cross-functional tasks of digitaliza-
+tion, process optimization, basic
+data architecture and implement-
+ing major projects.
+At the meeting of the Investment, Finance and Audit Committee held on 8 November
+2021 and continued in a conference call on 18 November 2021, thorough discussions
+were held with the auditor regarding the Separate Financial Statements, the Consoli-
+dated Financial Statements, the Combined Management Report, the appropriation
+of profit, and the auditor's findings. The Committee deliberated at length on the key
+audit matters as well as on the related audit procedures performed by the auditor.
+Based on the insights gained in the course of these deliberations, the Investment,
+Finance and Audit Committee resolved to suggest to the Supervisory Board that the
+financial statements drawn up and presented by the Management Board be approved
+and the proposed appropriation of profit agreed to.
+Reinhard Ploss was born in 1955
+in Bamberg, Germany. He studied
+process engineering at the Technical
+University of Munich, Germany,
+and received his doctorate in 1990.
+He began his career at Infineon
+(Siemens AG until 1999) in 1986.
+Sven Schneider was born in 1966 in
+Berlin, Germany. After completing
+his studies in business administra-
+tion (Diplom-Kaufmann), he received
+his doctorate in business adminis-
+tration from the University of Trier,
+Germany. From 1995 to 2019, he
+held several positions at Linde AG,
+most recently as Spokesman of the
+Executive Board, Chief Financial
+Officer and Labor Director.
+Sven Schneider has been a member
+of the Management Board and
+Chief Financial Officer at Infineon
+Technologies AG since 2019
+(mandated until 30 April 2027).
+He is responsible for Accounting &
+Reporting, Financial Controlling,
+Financial Planning, Investor
+Relations, Tax, Treasury, Audit,
+Compliance, Risk Management.
+Helmut Gassel was born in 1964 in
+Dortmund, Germany. He holds a
+Diploma in Physics from the Ruhr-
+University in Bochum, Germany.
+He received his PhD in Electrical
+Engineering from the University
+Duisburg, Germany. He joined
+Infineon (Siemens AG until 1999)
+in 1995.
+Helmut Gassel has been a member
+of the Management Board and
+Chief Marketing Officer of Infineon
+Technologies AG since 2016
+(mandated until 30 June 2024).
+He is responsible for Sales &
+Marketing, Regions, Strategy Devel-
+opment, Mergers & Acquisitions
+and Intellectual Property.
+Jochen Hanebeck
+Chief Operations Officer
+Constanze Hufenbecher
+Chief Digital
+Transformation Officer
+Dr. Reinhard Ploss
+Chief Executive Officer
+Dr. Sven Schneider
+Chief Financial Officer
+Dr. Helmut Gassel
+Chief Marketing Officer
+Q = < 11 >
+Reinhard Ploss has been a member
+of the Management Board of
+Infineon Technologies AG since
+2007. He has been Chief Executive
+Officer since 1 October 2012
+(mandated until 31 December 2022).
+He is responsible for Divisions,
+Group Strategy, Communications
+& Public Policy, Human Resources
+(Labor Director), Legal, Research &
+Development.
+← Q = < 12 >
+Report of the Supervisory Board
+← Q = < 19 >
+All rules of procedure are available on the Infineon website.
+www.infineon.com/cms/en/about-infineon/investor/corporate-governance/articles-of-association/
+Rules of procedure for the Supervisory Board and
+the Management Board
+Further information on the topic of corporate governance is available in the Statement
+on Corporate Governance, which also includes the Corporate Governance Report.
+www.infineon.com/declaration-on-corporate-governance
+Prior to members of the Management Board assuming sideline activities, particularly
+supervisory board mandates outside the Company, the DCGK requires that permission
+be granted by the Supervisory Board. No conflicts of interest were discernible in any
+of the sideline activities performed. In fact, they were all in the best interest of Infineon.
+The members of the Management Board and the Supervisory Board are required to
+disclose any conflicts of interest to the Supervisory Board without delay. No situations
+occurred during the 2021 fiscal year involving conflicts of interest.
+Examination of potential conflicts of interest
+The Supervisory Board regularly assesses how effectively it, as a corporate body, and
+its related committees perform their duties. An internal self-assessment was performed
+in summer 2021, based primarily on a questionnaire, the results of which were dis-
+cussed by the Supervisory Board. The next assessment is scheduled for 2022 and will
+be supported by an external consultant - as was the case most recently in 2017.
+Self-assessment by the Supervisory Board
+The actual wording of the Declaration of Compliance 2021, as well as all previous
+Declarations of Compliance, are available on Infineon's website.
+www.infineon.com/declaration-of-compliance
+In the Declaration of Compliance dated November 2021, the Management Board and
+the Supervisory Board jointly declared that all the recommendations of the German
+Corporate Governance Code (DCGK) contained in the version dated 16 December 2019
+have been complied with and will continue to be complied with in the future.
+Declaration of Compliance 2021
+Corporate Governance
+Infineon Technologies | Annual Report 2021
+Chief Marketing Officer
+Dr. Helmut Gassel
+The Management Board
+Q = < 10 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Infineon Technologies | Annual Report 2021
+Management Board and
+Business focus and strategy
+Combined Management Report
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Infineon Technologies | Annual Report 2021
+KPMG has audited the Separate Financial Statements of Infineon Technologies AG
+and the Consolidated Financial Statements of the Group and reviewed the Interim
+Financial Statements of the Group since the 1999 fiscal year (short fiscal year from
+1 April 1999 to 30 September 1999). Mr. Pritzer, the auditor responsible for the
+engagement, signed the auditors' report for the first time for the 2017 fiscal year
+(1 October 2016 to 30 September 2017), and Mr. Schmitt, as co-signatory, for the
+first time for the 2021 fiscal year (1 October 2020 to 30 September 2021).
+The Half-Year Financial Report was also reviewed by KPMG. No issues were identified
+that might indicate that the condensed Interim Group Financial Statements and
+Interim Group Management Report were not prepared in accordance with the appli-
+cable provisions in all material respects.
+KPMG audited the Separate Financial Statements of Infineon Technologies AG and
+the Consolidated Financial Statements as of 30 September 2021, as well as the
+Combined Management Report for Infineon Technologies AG and the Infineon Group,
+and issued unqualified audit opinions thereon.
+Separate and Consolidated Financial Statements
+Supervisory Board
+In addition, the agendas of all Supervisory Board and committee meetings at which
+the auditor is either involved or (partially) present will in future include a discussion
+between the Supervisory Board and the auditor without the presence of the Manage-
+ment Board as a standard agenda item.
+Section 109, paragraph 1, sentence 3 of the German Stock Corporation Act (Aktien-
+gesetz) now stipulates that the Management Board is generally not permitted to attend
+meetings of the Supervisory Board and its committees in the event that the auditor
+is called upon to attend these meetings as an expert, unless the Supervisory Board or
+the committee concerned deems the Management Board's attendance to be neces-
+sary. The Supervisory Board is of the opinion that the attendance of the Management
+Board and its involvement in any discussions with the auditor is beneficial for all
+parties concerned, including the Supervisory Board and its committees in the perfor-
+mance of their (audit-related) activities, not least with regard to the specialized
+expertise of the Chief Financial Officer. The Supervisory Board therefore considers it
+necessary for the Management Board to continue attending such meetings in the
+future and until further notice, in particular the meetings of the Investment, Finance
+and Audit Committee as well as the meeting of the full Supervisory Board at which
+The Act to Strengthen Financial Market Integrity (Finanzmarktintegritätsstärkungs-
+gesetz - "FISG"), which for the most part came into force at the beginning of July 2021,
+has resulted in various regulatory changes, including some affecting the corporate
+governance of companies. Most of the new requirements now enacted in legislation
+had already been standard practice at Infineon for some time. For this reason, action
+was only needed in a few areas.
+Act to Strengthen Financial Market Integrity (FISG)
+Publicly listed companies such as Infineon require the approval of the Supervisory
+Board or one of its committees before entering into certain transactions with related
+parties. In order to identify related party transactions that require approval and to
+treat them in compliance with the law, Infineon has implemented a procedure based
+on guidelines that apply across the Group. The Supervisory Board has delegated
+responsibility in this area to the Investment, Finance and Audit Committee, particu-
+larly for resolutions requiring approval. As in the previous fiscal year, there were no
+related party transactions requiring approval during the twelve-month period under
+report.
+Related party transactions
+Report of the Supervisory Board
+Supervisory Board
+← Q = < 18 >
+Further information
+Consolidated Financial Statements
+the financial statements are deliberated upon. If a Supervisory Board or committee
+member wishes to discuss a particular matter with the auditor at a specific meeting
+without the Management Board being present, the Chairman of the Supervisory
+Board or relevant committee is required to take this request into account by dealing
+with the relevant agenda item either in full or temporarily without the presence of
+the Management Board.
+Report of the Supervisory Board
+Management Board and
+Supervisory Board
+Ladies and Gentlemen,
+In addition to remuneration matters, the main topic of the extraordinary meetings
+was the aforementioned succession planning for the Management Board.
+At the ordinary meetings, the Executive Committee focused primarily on preparing
+the Supervisory Board's resolution to determine the level of variable remuneration to
+be paid to Management Board members. This included, firstly, determining the target
+achievement levels for the 2020 fiscal year and setting new target values for the 2021
+fiscal year, and secondly - for the first time - determining the STI modifier criteria,
+confirming the ESG targets for limiting carbon emissions and increasing diversity
+relevant for the LTI, and confirming the composition of the TSR peer group.
+The Executive Committee held two ordinary and seven extraordinary meetings
+during the fiscal year under report.
+The Executive Committee faced a number of challenging tasks during the 2021 fiscal
+year and will continue to do so going forward. Over the twelve-month period under
+report, it was closely involved in implementing new requirements relating to Manage-
+ment Board and Supervisory Board remuneration as well as creating the new
+Management Board function responsible for digital transformation and appointing
+Ms. Hufenbecher to the post. In the course of the current fiscal year, the Supervisory
+Board will continue to deal with the topic of succession planning for the Management
+Board. In view of the workload involved, on 6 August 2021, the Supervisory Board
+resolved to temporarily enlarge the Executive Committee from four to six members
+until 30 September 2022 and therefore elected Ms. Engelfried and Ms. Suckale as
+new Committee members.
+Executive Committee
+The Nomination Committee did not convene during the 2021 fiscal year.
+Nomination Committee
+The Mediation Committee did not need to convene during the 2021 fiscal year.
+Mediation Committee
+The Supervisory Board's various committees are responsible for drawing up resolutions
+and preparing other major topics that need to be dealt with by the full Supervisory
+Board. Moreover, the Supervisory Board has delegated certain decision-making powers
+to its committees, to the extent permitted by German law. The chairpersons of each
+committee are required to report on committee meetings at the next relevant full
+Supervisory Board meeting.
+Committee work
+Supervisory Board members are responsible for undertaking any basic and ongoing
+training measures considered necessary to perform their duties and receive appropri-
+ate support from Infineon to do so. In-house information events are held to provide
+targeted training as the need arises. As part of the onboarding process for new Super-
+visory Board members, Infineon offers a series of workshops covering a broad range
+of topics, including the individual operating segments, the underlying elements of
+Infineon's corporate strategy, the target business model and investment planning as
+well as manufacturing strategy and life cycle management. In addition, Supervisory
+Board members are regularly provided with information on the regulatory environment
+relevant to their work as well as any other legal developments that may affect them.
+Basic and ongoing training
+Supervisory Board topics
+The Supervisory Board was regularly provided with in-depth information regarding
+major legal disputes during the 2021 fiscal year, which it then discussed at length
+with the Management Board. These included, in particular, the appeal brought by
+Infineon before European courts (which has meanwhile been resolved) regarding an
+antitrust fine imposed by the EU Commission in 2014 and the related follow-up pro-
+ceedings, as well as the legal dispute with the insolvency administrator of Qimonda AG
+pertaining to alleged residual liability claims, which has been ongoing for years.
+Report of the Supervisory Board
+to the Annual General Meeting
+Report of the Supervisory Board
+Supervisory Board
+← Q = < 15 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Infineon Technologies | Annual Report 2021
+Further information on Management Board remuneration – particularly the amounts
+paid to individual members in or for the 2021 fiscal year - is available in the detailed
+remuneration report. ☐ p. 132 ff.
+The changes relating to the short-term incentive (STI) variable remuneration compo-
+nent do not become relevant until the 2022 fiscal year. However, in view of the changes
+to be made to the STI going forward - including the introduction of a criteria-based
+modifier and the addition of the Segment Result Margin to financial targets - it was
+necessary to make some related decisions during the 2021 fiscal year. The purpose of
+the criteria-based modifier is to enable the Supervisory Board to assess the Manage-
+ment Board's collective performance as well as the impact of any extraordinary that
+were not adequately reflected in targets set at an earlier stage. The collective perfor-
+mance assessment is meant to reward the extent to which the Management Board in
+its entirety contributes to the sustainable development of the Company - in strategic,
+technical and structural terms. Prior to the beginning of each fiscal year, the Super-
+visory Board selects the criteria that it has determined are relevant for the fiscal year
+in question. At the recommendation of the Executive Committee, the Supervisory
+Board has defined two specific criteria for the 2022 fiscal year. Based on these criteria,
+the Management Board's performance will therefore be measured firstly in terms of
+its success in implementing Infineon's digital transformation strategy and secondly in
+terms of its ability to develop key technologies and innovative solutions or, expressed
+more specifically, by its ability to grow business with SiC and GaN products on this
+strategically important market for Infineon.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Business focus and strategy
+Combined Management Report
+Supervisory Board remuneration
+The Supervisory Board's Strategy and Technology Committee convened three times
+during the fiscal year under report. The topics covered included detailed reports it
+received from the Management Board regarding the current market situation, com-
+petitors, the headway being made in terms of synergies and the progress of integration
+following the acquisition of Cypress, as well as the annual strategy and technology
+plan. Other topics of focus included new technologies such as SiC and GaN, the long-
+term development of key markets, developments relating to software applications,
+and preparations for the Supervisory Board's Strategy Day. A new framework for future
+M&A activities was also discussed.
+Strategy and Technology Committee
+Report of the Supervisory Board
+Supervisory Board
+← Q = < 17 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Infineon Technologies | Annual Report 2021
+The high opinion in which Infineon is held by investors and analysts alike was also
+evident on the occasion of Capital Markets Day. This event took place most recently
+in 2018 and was again a great success when held in a virtual format at the beginning
+of October.
+> Secondly, the Supervisory Board has set a diversity target with a specific focus on
+gender diversity, namely to increase the proportion of women in management
+positions.
+One special topic that the Investment, Finance and Audit Committee dealt with during
+the 2021 fiscal year was the private placement of notes with a volume of US$1.3 billion
+at very attractive conditions. The considerable over-subscription of the transaction was
+once again clear evidence of the confidence of capital markets in Infineon's economic
+prospects, underlining the Group's ability to access all relevant sources of funding.
+The placement has also improved the maturity profile of Infineon's debt and success-
+fully rounds off the various capital market transactions undertaken during the past
+two years in conjunction with the refinancing of the acquisition of Cypress.
+In light of the legal provisions governing the regular rotation of external auditors, the
+Investment, Finance and Audit Committee intensified its involvement with this topic
+and the corresponding requirements of the tender process.
+The representatives of the auditor attended all meetings of the Investment, Finance
+and Audit Committee and reported in detail on the audit procedures performed.
+not apply to Infineon until the 2023 fiscal year, the Investment, Finance and Audit
+Committee has elected to comply with the new rules as of the 2022 fiscal year and
+accordingly resolved to reduce the scope of services that may be performed by the
+external auditor.
+The Act to Strengthen Financial Market Integrity (Finanzmarktintegritätsstärkungs-
+gesetz –“FISG”) – key parts of which came into force on 1 July 2021 – significantly
+restricts the permitted scope of non-audit services. Although these restrictions do
+The Committee's recommendation to the full Supervisory Board to propose to share-
+holders at the Annual General Meeting that KPMG AG Wirtschaftsprüfungsgesellschaft,
+Munich, (KPMG) be elected as Company and Group auditor was based on a Declara-
+tion of Independence obtained from KPMG as well as an analysis of the non-audit
+services provided by KPMG. There were no indications of conflicts of interest, grounds
+for exclusion, or other lack of independence on the part of the auditor. The recom-
+mendation was also based on the Committee's confirmation that it is free from undue
+influence by third parties and that it has not been subject to any restriction regarding
+the selection of auditors within the meaning of section 16, paragraph 6 of the EU
+Statutory Audit Regulation. The Committee also considered the fee arrangements
+and issued contracts for the relevant audit engagements. Supplementary areas for
+audit emphasis were also defined.
+Its activities centered on monitoring the financial reporting process, reviewing the
+half-year and quarterly financial statements, conducting the preliminary audit of the
+Separate Financial Statements, Consolidated Financial Statements and Combined
+Management Report for Infineon Technologies AG and the Infineon Group, and
+discussing the audit reports with the auditor. In addition, the Committee examined
+Infineon's financial and investment budget. It also received regular reports on the
+internal control, internal audit, risk management and compliance management
+systems and deliberated on their effectiveness. The Committee was also provided
+with continuous updates concerning significant legal disputes.
+The Investment, Finance and Audit Committee convened for five ordinary meetings
+during the 2021 fiscal year.
+Investment, Finance and Audit Committee
+Report of the Supervisory Board
+Supervisory Board
+← Q = < 16 >
+Further information
+Consolidated Financial Statements
+The Committee also devoted time to considering the Group's Non-Financial Report
+and, in this context, took a close look at other sustainability issues, including the
+EU taxonomy.
+> Firstly, the Supervisory Board has set a sustainability target derived from Infineon's
+strategic focus on sustainability. Infineon has long been one of the world's most
+sustainable companies and is a well-established member of the Dow Jones Sustain-
+ability Index. Among other things, Infineon has committed to becoming carbon-
+neutral by 2030. Forward-thinking corporate governance, ecological action and
+social commitment are indispensable prerequisites for Infineon's resilience and
+long-term corporate success. The current sustainability target is to achieve 50 per-
+cent carbon neutrality by the end of the 2024 fiscal year.
+Litigation
+Report of the Supervisory Board
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Infineon Technologies | Annual Report 2021
+Furthermore, during the year under report, the Supervisory Board extended the
+mandate and service contract of Dr. Sven Schneider (CFO) by a further five years with
+effect from the end of his first term of office in April 2022. Over the past two-and-a-half
+years, Dr. Schneider has repeatedly demonstrated his wide-ranging capabilities,
+such as with the highly acclaimed refinancing concept he developed for the acquisi-
+tion of Cypress. We are therefore extremely pleased that Dr. Schneider will remain
+with the Infineon Management Board as CFO in the long term.
+In light of these and other considerations, the Supervisory Board enlarged the Manage-
+ment Board with effect from 15 April 2021 by creating the new position of Chief Digital
+Transformation Officer (CDTO). With the appointment of Constanze Hufenbecher,
+we were able to secure the services of an excellent manager to take up this key role.
+Ms. Hufenbecher has extensive experience in the relevant fields, particularly with
+transformation management and the development and establishment of consistent
+processes across organizations. Ms. Hufenbecher has been very involved since taking
+office and is already an integral part of the Management Board team.
+Personnel matters relating to the Management Board
+The Infineon Supervisory Board remains fully committed to providing the Management
+Board with support in the task of developing and implementing corporate strategy.
+For this reason, in addition to the regular meetings of the Strategy and Technology
+Committee, a meeting of the full Supervisory Board was again held during the fiscal
+year under report with the primary aim of discussing strategic topics. At this strategy
+meeting, Infineon's growth opportunities, corporate strategy, business model and
+financial targets were deliberated upon as a coherent whole, also taking into account
+the fact that semiconductors have increasingly become part of the political agenda in
+the context of geopolitical tensions and the impact they could have on Infineon. The
+strategy meeting also focused on digital transformation - a complex range of topics
+that both the Supervisory Board and the Management Board view as particularly
+relevant for the future development of the Group.
+Supervisory Board
+Corporate strategy
+In the 2021 fiscal year, the full Supervisory Board convened six times, holding five
+ordinary meetings and one extraordinary meeting during that period. One resolution
+was also passed on the basis of written communication. The attendance rate at
+Supervisory Board meetings was close to 100 percent; Mr. Scholz was excused from
+attending two meetings. The attendance rate at the Supervisory Board's committee
+meetings was 100 percent in all cases. Details of the individual attendance record of
+Supervisory Board members are provided in the Statement on Corporate Governance
+www.infineon.com/declaration-on-corporate-governance. Due to pandemic-related restric-
+tions, some of the meetings were held either fully or partially using a virtual format.
+As Chairman of the Supervisory Board, I was also in regular contact with both the
+Chairman (CEO) and the other members of the Management Board between meetings,
+focusing for the most part on Infineon's corporate strategy, business performance
+and financial position. Either at or in the context of regular Supervisory Board meet-
+ings, the CEO also kept me well informed at all times of other key events - several of
+which occurred over the course of the challenging twelve-month period under report.
+was always given ample opportunity to thoroughly examine the reports presented
+by the Management Board and was thus able to satisfy itself that the governance of
+Infineon's corporate affairs was lawful, compliant and appropriate in every respect.
+The Supervisory Board was provided with written quarterly reports on Infineon's
+business performance, key financial data, risks and opportunities and major areas of
+litigation as well as other specific topics of relevance. Between quarterly reports, the
+Management Board also provided the Supervisory Board with additional information
+in the form of monthly reports on current business performance and developments.
+The new Management Board remuneration system decided upon by the Supervisory
+Board in November 2020 was approved by a large majority at the Annual General
+Meeting held in February 2021, and the new rules were fully incorporated into the ser-
+vice contracts of all Management Board members, effective 1 October 2021. Some of
+these rules were, however, already relevant for the 2021 fiscal year. In particular, the
+tranche allocated on 1 April 2021 (for the 2021 fiscal year) for the long-term incentive
+(LTI) variable remuneration component is already covered by the new remuneration
+regime. As in the previous system, the LTI continues to be based on a four-year per-
+formance period and is geared towards settlement in the form of shares. The target
+structure, however, has been significantly changed, the most notable difference
+being that it now includes ESG targets for the first time alongside financial targets.
+Supervisory Board
+← Q = < 13 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+In preparation for ordinary Supervisory Board meetings, separate preliminary meetings
+were held for both the shareholder representatives and the employee representatives.
+The Supervisory Board also convened regularly without the presence of Management
+Board members.
+Report of the Supervisory Board
+← Q = < 14 >
+Management Board remuneration
+Dr. Wolfgang Eder
+Chairman of the
+Supervisory Board
+One year ago, I expressed my conviction in this report that Infineon was extremely
+well positioned to meet the challenges of the coronavirus pandemic and would
+emerge even stronger from the global health and economic crisis.
+Today we can safely state that Infineon can look back upon a highly successful year.
+An increasing number of global megatrends are being driven by microelectronics
+technologies, particularly future-critical areas such as electrification and digitalization.
+Infineon focuses its strategy precisely on these trends and thus continues to tread
+the path of profitable growth and sustainable value creation. The fact that this develop-
+ment has not escaped the notice of the capital market is underlined not only by
+the outstanding performance of the Infineon share, but also by its inclusion in the
+EURO STOXX 50 index.
+The huge demand for microchips will continue to influence how Infineon performs
+in the current fiscal year. Last summer, our most recently constructed fabrication
+plant went into operation in Villach (Austria). Built at a cost of €1.6 billion, the new
+plant was the culmination of one of the largest investment projects ever undertaken
+in the European microelectronics industry. In view of the rapidly growing global
+demand for power semiconductors, our timing could not have been better. At the
+time when Infineon took this investment decision, the massive upswing in demand
+was not in the least foreseeable, but now means that the Group has an advantage
+over its competitors. This is not only good news for our customers, it also helps
+Infineon to continue generating a solid return for you, our shareholders. Against
+this backdrop, the Management Board and the Supervisory Board jointly propose
+to increase the dividend for the 2021 fiscal year to €0.27 per share.
+The market environment remains dynamic, and although that can entail uncertainties
+going forward, it also gives rise to opportunities, which our management team con-
+tinues to leverage with great determination. Last but not least, agility is one of the
+core strengths of Infineon as a high-tech company - true to the motto adopted for the
+opening of the plant in Villach: "Ready for Mission Future".
+Main activities of the Supervisory Board
+During the 2021 fiscal year, the Supervisory Board once again performed its duties
+with the utmost diligence in accordance with the law, Infineon's statutes and the
+Supervisory Board's own terms of reference. It advised and monitored the Manage-
+ment Board in equal measure, based on detailed written and oral reports presented
+by the Management Board at Supervisory Board and committee meetings regarding
+all issues relevant to the Company, focusing for the most part on corporate strategy
+and planning, current business performance, financial position and risk profile as
+well as matters relating to risk management and compliance. The Supervisory Board
+Infineon Technologies | Annual Report 2021
+Management Board and
+With the mandate of Infineon's long-serving CEO Dr. Reinhard Ploss due to expire at
+the end of 2022, both the Executive Committee and the full Supervisory Board have
+been working on a suitable succession plan for some time now. During the fiscal
+year under report, the Supervisory Board engaged a well-known external personnel
+consultant who has helped create a role profile for the position of Chair of the
+Management Board.
+< 195 >
+been included in the EBITDA of the 2020 fiscal year since 16 April 2020. Infineon con-
+tinues to have sufficient financial flexibility to ensure that, in addition to financing its
+planned investments, it is also able to pay regular dividends (see note 19, p. 193 f.).
+The USPP notes totaling US$2,235 million issued in April 2016 and June 2021 contain
+a number of standard covenants, including a debt coverage ratio, which provides
+for a certain relationship between the size of debt (adjusted) and earnings (adjusted).
+In the 2021 fiscal year, Infineon had met the minimum requirements of all covenants.
+Should Infineon not comply with the covenants attached to the USPP notes, then
+all USPP notes outstanding as of 30 September 2021 amounting to US$2,235 million
+(see note 15, p. 184) could become immediately repayable.
+shares
+outstanding
+as of 30 Sep-
+tember 2021
+Fiscal year 2020: Employees
+Tranche
+The following is an overview of the allocations made:
+The fair value of the performance shares at the date of allocation was determined by
+an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model for the prediction of share price and index developments). The fair
+value of the instruments granted was determined, taking into account future dividends
+as well as the payment cap.
+For the tranches up to and including 1 March 2020, the performance shares were
+split between 50 percent performance-related shares and 50 percent that were not
+dependent on performance. The performance-related shares were finally granted only
+when the Infineon share outperformed the Philadelphia Semiconductor Index (SOX)
+during the period between the date of the provisional allocation and the end of the
+vesting period. If at the end of the vesting period the requirements for an allocation
+of performance shares - either all or only those that are not performance-related -
+were fulfilled, then entitlement to the transfer of the corresponding number of (real)
+Infineon shares was acquired. The value of the performance shares ultimately assigned
+to members of the Management Board could not exceed 250 percent of the respective
+LTI grant amount; above this cap, performance shares lapse.
+With the granting of a virtual performance share, the participants in the plan acquire
+the right to receive (real) Infineon shares once a personal investment in Infineon
+shares - depending on position and LTI grant amount - has reached a four-year
+holding period.
+Plan conditions for tranches up to and including 1 March 2020
+Under this plan, (virtual) performance shares are initially provisionally granted on
+1 April (up to the 2020 fiscal year: 1 March) of the fiscal year according to a predeter-
+mined LTI grant amount in euros.
+A Long-Term Incentive (LTI) Plan, the so-called Performance Share Plan, was developed
+for the Management Board and selected senior executives.
+Performance share plan
+The Company makes use of the Performance Share Plan and, since the 2017 fiscal year,
+the Restricted Stock Unit Plan, in order to provide share-based payments.
+Q =
+21 Share-based payment
+Number of
+performance
+Further information
+Capital management, as well as the corresponding targets and definitions, are based
+on indicators determined on the basis of the consolidated IFRS financial statements.
+Gross cash is defined as the total of cash, cash equivalents and financial investments.
+Gross financial debt comprises short-term and long-term financial debt. Infineon
+defines EBITDA as earnings (loss) from continuing operations before interest, taxes
+and depreciation and amortization.
+Combined Management Report
+Infineon is not subject to any statutory capital requirements, nor are any such defined
+in the Articles of Association.
+Based on these principles and the intention to retain its investment grade rating,
+Infineon has derived medium- and long-term key objectives for capital management.
+For liquidity, the gross cash should amount to €1 billion plus at least 10 percent of
+revenue. Infineon's gross financial debt is capped at a maximum of two times EBITDA.
+As a result of the acquisition of Cypress, Infineon has exceeded its gross debt target
+but only to an extent that was still compatible with maintaining the investment grade
+rating. The originally medium-term objective of Infineon to reduce its debt level
+to or below the maximum target value after the closing of the Cypress transaction is
+expected to be achieved already in the 2022 fiscal year.
+Infineon's main capital management objective is to ensure financial flexibility on the
+basis of a solid capital structure. It is of prime importance that sufficient cash funds
+are available to finance operating activities and planned investments throughout all
+phases of the business cycle. On the other hand, debt should only constitute a modest
+portion of the financing mix.
+20 Capital management
+(714)
+28
+(742)
+154
+17
+137
+42
+42
+(142)
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+28
+65
+(71)
+(543)
+ㄖˋˊ
+(71)
+69
+(1)
+(543)
+The gross cash position increased from €3,227 million as of 30 September 2020,
+to €3,922 million as of 30 September 2021 (for details, see the chapter "Review of
+liquidity" in the Combined Management Report, p. 107). Based on revenues of
+€11,060 million, the ratio of gross cash to revenue as of 30 September 2021 was
+€1 billion, plus an additional 26.4 percent of revenue (previous year: €1 billion plus
+26.0 percent of revenue). Cypress has been included in the revenues of the 2020 fiscal
+year since 16 April 2020.
+With gross financial debt of €6,585 million as of 30 September 2021 (30 September
+2020: €7,033 million) following the financing of the acquisition of Cypress, and EBITDA
+of €2,982 million for the 2021 fiscal year (2020: €1,785 million), the gross debt to
+EBITDA ratio was 2.2 as of 30 September 2021 (30 September 2020: 3.9). Cypress has
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+(170)
+Management Board and
+Supervisory Board
+The tranche is granted on 1 April in the first fiscal year of the performance period
+(allocation day). The vesting period begins on the allocation day. In contrast to the
+performance period, the vesting period ends four years after the allocation day, i.e.,
+on 31 March. At the end of the four-year performance period, the target achievement
+is determined.
+End of the
+waiting period
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 196 >
+Plan conditions for tranches from 1 April 2021
+With the granting of a virtual performance share, the participant in the plan acquires
+the right to receive (real) Infineon shares once a personal investment in Infineon
+shares - depending on position and LTI grant amount – has reached a four-year hold-
+ing period. The number of real Infineon shares to be transferred depends on the
+achievement of targets during the performance period.
+The performance period begins on 1 October of the first fiscal year of the performance
+period and ends four years later on 30 September. Performance during the perfor-
+mance period is measured using the relative total shareholder return (TSR) financial
+performance criterion compared to companies in a selected industry peer group,
+together with non-financial performance criterion comprising strategy-derived
+environmental, social & governance (ESG) objectives. The TSR target accounts for
+80 percent and the ESG 20 percent of the overall target achievement. TSR and the
+ESG target achievements can be between 0 percent and 150 percent.
+90
+The final number of performance shares to be allocated after the expiry of the vesting
+period is determined by multiplying the number of provisionally allocated performance
+shares by the overall target achievement of the two performance criteria during the
+performance period. The final allocation of the performance shares within an LTI
+tranche may not result in a profit (before tax) of more than 250 percent of the respective
+LTI grant amount; above this cap, all performance shares still to be allocated lapse.
+The fair value of the performance shares at the date of allocation was determined by
+an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model for the prediction of the TSR target achievements). The fair value of
+the instruments granted is determined taking into account future dividends as well as
+the payment cap.
+The following is an overview of the allocations made:
+Tranche
+Fiscal year 2021: Employees
+Fiscal year 2021: Management Board
+Restricted Stock Unit Plan
+End of the
+waiting period
+Average share
+price in the
+60 trading
+days before
+the start of the
+performance
+period in €
+Number of
+performance
+shares
+outstanding
+as of 30 Sep-
+tember 2021
+Fair value per
+performance
+share in €
+31 March 2025
+31 March 2025
+22.82
+572,631
+178,213
+28.87
+28.87
+The Restricted Stock Unit Plan (RSUP) was introduced in the 2017 fiscal year.
+Under this plan, (virtual) restricted stock units are initially provisionally granted
+on 1 April (up to the 2020 fiscal year: 1 March) of the fiscal year according to a pre-
+determined LTI grant amount in euros. With the allocation of a (virtual) restricted stock
+unit, the plan participant acquires the right to receive a (real) Infineon share after the
+expiry of the vesting period, provided that the employee is still employed by Infineon
+at this time. The final allocation is made in stages (each representing 25 percent of
+the provisionally allocated restricted stock units) after the expiry of the vesting period
+of one year following allocation.
+The fair value of the restricted stock units at the date of allocation was determined by
+an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model for the prediction of share price developments). The fair value of
+the instruments granted is determined, taking into account future dividends.
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+15.25
+Average
+share price
+in the
+nine months
+before grant
+in €
+29 February 2024
+18.10
+1,007,326
+12.95
+Fiscal year 2020: Management Board
+Fiscal year 2019: Employees
+29 February 2024
+18.10
+70,850
+12.50
+28 February 2023
+20.02
+Fair value per
+performance
+share in €
+713,184
+Fiscal year 2019: Management Board
+Fiscal year 2018: Employees
+28 February 2023
+20.02
+44,954
+13.79
+28 February 2022
+21.48
+646,882
+15.76
+Fiscal year 2018: Management Board
+28 February 2022
+21.48
+41,896
+14.20
+Total
+282
+17
+1,300,669,746
+1,244,684,071
+55,000,000
+237,066
+705,789
+1,301,375,535
+4,545,602
+1,305,921,137
+748,609
+1,300,669,746
+5,251,391
+1,305,921,137
+As of 30 September 2021, the ordinary share capital amounted to €2,611,842,274 and
+was fully paid up. It was divided into 1,305,921,137 no par value registered shares,
+each representing €2 of the Company's ordinary share capital. Each share grants the
+holder one vote and an equal portion of the profits in the form of a dividend as resolved
+by the Annual General Meeting. Own shares held by the Company as of the date of
+the Annual General Meeting carry no voting rights and are not entitled to a dividend.
+Additional paid-in capital
+The pro rata expense for share-based payment resulted in an increase in additional
+paid-in capital of €27 million in the 2021 fiscal year (2020: €14 million). Due to the
+transfer of own shares to employees and members of the Management Board, addi-
+tional paid-in capital, as well as the line item for own shares, decreased by €5 million
+(2020: €4 million). Tax effects totaling €29 million (2020: €22 million) increased the
+additional paid-in capital. In the previous year, the issue of 55,000,000 new shares
+resulted in a significant increase in additional paid-in capital of €934 million.
+Authorized share capital
+As of 30 September 2021, the Company's Articles of Associations provided for two
+authorized share capitals amounting to up to €670,000,000:
+> Section 4 paragraph 4 of the Articles of Association provides that the Management
+Board is authorized, with the approval of the Supervisory Board, to increase the
+share capital in the period until 19 February 2025 once or in several partial amounts
+by a total of up to €640,000,000 through the issue of new no par value registered
+shares, against contributions in cash or in kind (Authorized Capital 2020/1). The
+new shares participate in profits from the beginning of the fiscal year of their issue.
+To the extent legally permissible, the Management Board may, with the approval of
+the Supervisory Board, and contrary to section 60 paragraph 2 of the German Stock
+Corporation Act, stipulate that the new shares participate in the profits from the
+beginning of an already ended fiscal year for which no resolution of the Annual
+General Meeting on the use of the distributable profit has yet been made at the
+time of their issue. The originally authorized capital 2020/1, of €750,000,000 was
+reduced to €640,000,000 by the capital increase of €110,000,000 as decided by the
+Management Board and the Supervisory Board on 26 May 2020 and entered in
+the Commercial Register on 27 May 2020. Within the framework of the Authorized
+Capital 2020/1, the Management Board is authorized, with the approval of the
+Supervisory Board, to exclude the subscription rights of the shareholders in certain
+cases. Cash capital increases with subscription rights excluded pursuant to section
+186, paragraph 3, sentence 4, of the German Stock Corporation Act, are not per-
+mitted to exceed 10 percent of a company's share capital – neither at the time of the
+resolution of the authorization in the Annual General Meeting, nor at the effective
+date of the authorization, or its exercise. The capital increase of 26/27 May 2020
+utilized around 4 percent of this framework. For share capital increases against
+contributions in kind or a combination of cash contributions and contributions in
+kind, the authorization further provides an upper limit of 10 percent of the share
+capital in place at the date of the authorization in the Annual General Meeting.
+> Section 4, paragraph 7, of the Articles of Association provides that the Manage-
+ment Board is authorized, with the approval of the Supervisory Board, to increase
+the share capital in the period up to 24 February 2026 - either once or in partial
+amounts - by a total of up to €30,000,000 by issuing new no par value registered
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 193 >
+shares against contributions in cash for the purpose of increasing the issue to
+employees and members of the Executive Board of the Company or its Group
+companies. The subscription rights of the shareholders are excluded in relation to
+these shares. The shares may be issued to employees in such a manner that the
+contribution to be paid on such shares is covered by the portion of the profit for
+the year that the Management Board and Supervisory Board could transfer to
+retained earnings in accordance with section 58, paragraph 2 of the German Stock
+Corporation Act. The Management Board, with the approval of the Supervisory
+Board, decides on the additional content of the share rights and the conditions of
+share issue (Authorized Capital 2021/I).
+Conditional capital
+As of 30 September 2021, the Company's Articles of Associations provided for a con-
+ditional capital amounting to up to €260,000,000:
+> Pursuant to section 4, paragraph 6, of the Articles of Association the share capital is
+conditionally increased by up to €260,000,000 through the issue of up to 130,000,000
+new no par value registered shares for the granting of shares to creditors or the
+holders of warrants or convertible bonds, which due to the authorization by the
+Annual General Meeting on 20 February 2020 are issued by the Company or a sub-
+sidiary company (Conditional Capital 2020/1).
+2020
+Hybrid capital
+2021
+177
+Repurchased own shares
+Shares outstanding at the end of the fiscal year
+and Restricted Stock Unit Plans (see note 21, p. 195 ff.)
+Transfer of own shares under the Performance Share
+option rights under stock option plans
+Creation of new shares through capital increase from authorized capital
+Creation of new shares through the exercise of
+Shares outstanding at the beginning of the fiscal year
+quantity
+The following table shows a reconciliation of the number of ordinary shares issued as
+of 30 September 2021 and 2020:
+Ordinary share capital
+19 Equity
+Notes to the Consolidated Financial Statements
+Q = < 192 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+In connection with defined contribution plans, fixed contributions are made to exter-
+nal insurance providers or funds. Infineon has no further performance obligations
+or risks with regard to these pension plans in excess of the fixed contributions paid.
+Additionally, the Group makes contributions to government pension schemes.
+Expenses for defined contribution plans amounted to €234 million and €212 million
+in the 2021 and 2020 fiscal years.
+520
+492
+Business focus and strategy
+303
+Infineon Technologies | Annual Report 2021
+Shares issued at the end of the fiscal year
+Cost of hedging
+Infineon Technologies AG issued a perpetual hybrid bond on 1 October 2019 to
+refinance the acquisition of Cypress, which is an equity instrument under IAS 32.
+The term is not contractually limited; the bond has no final maturity date. The hybrid
+bond can only be canceled by Infineon subject to certain conditions. The investors
+have no cancellation rights and cannot trigger a premature repayment liability for
+Infineon. Distributions are at Infineon's sole discretion.
+was reduced by compensation to the hybrid capital investors of €26 million (2020:
+€35 million; net of tax), to €1,143 million (2020: €333 million) (see note 7, ☐ p. 176 f.).
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 194 >
+With regard to the 2021 fiscal year, a dividend of €0.27 for each share entitled to a
+dividend shall be proposed to be paid from the €353 million of distributable profits
+of Infineon Technologies AG. This would result in an expected distribution of approxi-
+mately €351 million. The payment of this dividend depends on the approval of the
+Annual General Meeting on 17 February 2022.
+Other reserves
+Changes in other reserves during the 2021 and 2020 fiscal years were as follows:
+€ in millions
+Foreign currency translation
+differences
+2021
+2020
+Pre-tax
+Tax
+Net of tax
+Pre-tax
+Tax
+Net of tax
+90
+Unrealized gains (losses)
+resulting from hedge
+accounting
+(1)
+Realized gains (losses)
+resulting from hedge
+accounting
+48
+Combined Management Report
+In the 2021 fiscal year, €39 million (2020: €39 million) was recognized in equity as
+compensation to hybrid capital investors. For the purpose of calculating earnings
+per share, the profit (loss) for the period attributable to the shareholders and hybrid
+capital investors of Infineon Technologies AG of €1,169 million (2020: €368 million)
+Business focus and strategy
+Infineon Technologies | Annual Report 2021
+The hybrid capital investors' compensation is paid annually in arrears on 1 April of
+each year, subject to repayment or redemption. On 1 April 2021, €39 million (2020:
+€20 million) was paid out to the hybrid capital investors.
+Retained earnings
+The following table shows a reconciliation of retained earnings as of 30 Septem-
+ber 2021 and 2020:
+€ in millions
+As of 1 October 2019
+Profit (loss) for the period attributable to shareholders
+and hybrid capital investors of Infineon Technologies AG
+Dividends to shareholders of Infineon Technologies AG
+Compensation of hybrid capital investors
+Actuarial gains on pensions and similar commitments net of tax of €6 million
+As of 30 September 2020
+Profit (loss) for the period attributable to shareholders
+and hybrid capital investors of Infineon Technologies AG
+Dividends to shareholders of Infineon Technologies AG
+Compensation of hybrid capital investors
+Actuarial gains on pensions and similar commitments net of tax of €11 million
+As of 30 September 2021
+421
+368
+(336)
+(39)
+21
+435
+1,169
+(286)
+(39)
+128
+1,407
+"Actuarial gains on pensions and similar commitments" contain the share of profit
+(loss) of associates and joint ventures accounted for using the equity method in the
+2021 fiscal year of €0 million (2020: losses €0 million).
+Dividends
+For the 2020 fiscal year, a cash dividend of €0.22 per share (total amount: €286 million)
+was paid. For the 2019 fiscal year, a cash dividend of €0.27 per share (total amount:
+€336 million) was paid.
+Management Board and
+Supervisory Board
+Management Board and
+Supervisory Board
+22.82
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+The actual return on plan assets in the fiscal year ended 30 September 2021 was
+€61 million (30 September 2020: €17 million).
+The market value of the land and real estate leased to Group companies by the legally
+independent pension trust amounted to €30 million as of both 30 September 2021
+and 2020.
+Government and corporate bonds are traded in liquid markets and the majority of
+them have an investment grade rating. The geographical allocation of the equity
+component of plan assets is predominantly based on the MSCI World Index. As a mat-
+ter of policy Infineon's pension plans do not invest in shares or debt instruments of
+Infineon. The position "Other" in the table above comprises exchange-traded com-
+modities (ETC) and other investment funds. The market value of the ETC held domes-
+tically was €31 million as of 30 September 2021 (previous year: €33 million).
+Infineon Technologies | Annual Report 2021
+93
+606
+92
+672
+26
+44
+24
+32
+30
+5
+30
+3
+36
+37
+19
+8
+213
+Further information
+275
+Q =
+Amounts recognized in the Consolidated Statement of Profit or Loss
+and in the Consolidated Statement of Comprehensive Income
+(15)
+(4)
+(11)
+Interest cost
+1
+1
+Past service (cost) benefit
+(38)
+(6)
+(32)
+(39)
+(8)
+(31)
+Current service cost
+Total
+Foreign
+plans
+Domestic
+plans
+Total
+Foreign
+plans
+plans
+Domestic
+2020
+2021
+€ in millions
+The expenses and income of defined benefit plans for the 2021 and 2020 fiscal years
+comprised the following:
+< 191 >
+117
+236
+1
+Any further statements about this matter by the Company could seriously compromise
+the Company's position in this dispute.
+Proceedings in relation to Qimonda
+All significant assets, liabilities and business activities attributable to the memory
+business (Memory Products) were carved out from Infineon and transferred to Qimonda
+in the form of a contribution in kind with economic effect from 1 May 2006. Qimonda
+filed an application at the Munich Local Court to commence insolvency proceedings
+on 23 January 2009. On 1 April 2009, the insolvency proceedings formally opened.
+The insolvency of Qimonda has given rise to various disputes between the insolvency
+administrator and Infineon.
+Alleged activation of a shell company and liability for impairment of capital
+The insolvency administrator filed a request for declaratory judgment in an unspecified
+amount against Infineon Technologies AG and, by way of third-party notice, Infineon
+Technologies Holding B.V. and Infineon Technologies Investment B.V., at Regional
+Court Munich I in November 2010. This requested that Infineon be deemed liable
+to make good the deficit balance of Qimonda as it stood when the insolvency
+proceedings in respect of the assets of Qimonda began, i.e., to refund to Qimonda the
+difference between the latter's actual business assets when the insolvency proceed-
+ings began and its share capital (in German: “Unterbilanzhaftung”). The insolvency
+administrator contended that the commencement of operating activities by Qimonda
+amounted to what is considered in case law to be the activation of a shell company
+(in German: "Wirtschaftliche Neugründung"), and that this activation of a shell company
+was not disclosed in the correct manner. On 6 March 2012, with respect to another
+matter, the German Federal High Court issued a ruling on principle that any liability
+resulting from the activation of a shell company only depends on the situation at the
+date of the activation of a shell company and not, as asserted by the insolvency admin-
+istrator, on the situation at the date on which insolvency proceedings are opened.
+In addition to the request for declaratory judgment against Infineon in an unspecified
+amount, on 14 February 2012 the insolvency administrator also lodged a request for
+payment based on an alternative claim (in German: "Hilfsantrag"), as well as making
+other additional claims. In conjunction with this alternative claim, the insolvency
+administrator has requested the payment of at least €1.71 billion plus interest in con-
+nection with the alleged activation of a shell company. On 15 June 2012, the insolvency
+administrator increased his request for the payment of 14 February 2012 on the grounds
+of activation of a shell company to at least approximately €3.35 billion plus interest.
+Furthermore, the insolvency administrator continues to base a substantial part of his
+alleged payment claims, as already asserted out of court against Infineon in August
+2011 for an unspecified amount, on liability for impairment of capital (in German:
+"Differenzhaftung”). This claim is based on the allegation that, from the very begin-
+ning, the carved-out memory products business had a negative billion euro value.
+The insolvency administrator therefore asserts that Infineon is obliged to make good
+the difference between this negative value and the lowest issue price (in German:
+"geringster Ausgabebetrag") of the subscribed stock. Additionally, the insolvency
+administrator has asserted a claim for repayment of allegedly unjustly charged consul-
+tancy fees in an amount of €10 million in connection with the flotation of Qimonda.
+The alleged impairment of capital runs contrary to two valuations prepared as part
+of the preparatory documentation for the capital increase by independent auditing
+companies, one of which had been engaged by Infineon and the other of which was
+acting in the capacity of a court-appointed auditor of contributions in kind and
+post-formation acquisitions. The auditing company engaged by Infineon concluded
+in its valuation that the business area contributed had a value of several times the
+lowest issue price of the shares issued, while the court-appointed auditor of contribu-
+tions in kind and post-formation acquisitions confirmed to the court that the lowest
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 199 >
+issue price of the shares issued was covered - as legally required – by the value of the
+contributions in kind. Additionally, in the course of its defense against the claims
+asserted by the insolvency administrator, Infineon has commissioned several expert
+opinions, all of which arrived at the same conclusion that the objections raised by the
+insolvency administrator against the valuation of the contribution in kind are not valid.
+The legal dispute has, in the meantime, focused on the claims asserted for alleged
+lack of value. On 29 August 2013, the court appointed an independent expert to
+clarify the valuation issues raised by the insolvency administrator and to address
+technical matters.
+The legal dispute is being pursued with great effort by both parties, and many extensive
+written submissions have already been exchanged between the parties. Both sides
+have engaged numerous specialists and experts who are supporting the respective
+parties with assessments and opinions.
+On 21 September 2018, in consultation with the parties, the independent expert
+appointed by the court presented an interim report on his preliminary assessment
+of the value of the contribution in kind. The Company is in principle prepared to
+conduct discussions about an out-of-court settlement of the legal dispute on the
+basis of the interim report.
+The parties are exchanging further written submissions. It is not clear at this stage
+if the legal dispute can be resolved with an out-of-court settlement, and, if this is not
+the case,
+when a first-instance court decision would be reached.
+Residual liability of Infineon as former shareholder
+of Qimonda Dresden GmbH & Co. OHG
+Infineon was a shareholder with personal liability of Qimonda Dresden until the
+carve-out of the memory business; as a result, certain long-standing creditors have
+residual liability claims against Infineon. These claims can only be exercised by the
+insolvency administrator acting in the name of the creditors concerned. In the mean-
+time, settlements have been concluded with most of the major liability creditors.
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Infineon recognizes provisions and liabilities for such obligations and risks, which it
+assesses at the end of each reporting period, are more likely than not to be incurred
+(that is where, from Infineon's perspective at the end of each reporting period, the
+probability of having to settle an obligation or risk is greater than the probability of
+not having to) and the obligation or risk can be estimated with reasonable accuracy
+at this time.
+Business focus and strategy
+Infineon Technologies | Annual Report 2021
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+208
+1
+118
+in an active
+market
+market
+in an active
+in an active
+market
+in an active
+market
+Not quoted
+Quoted
+Not quoted
+Quoted
+(7)
+30 September 2020
+Other
+Total
+Property
+Cash and cash equivalents
+Reinsurance policies
+Equity securities
+Corporate bonds
+€ in millions
+Government bonds
+As of 30 September 2021 and 2020, the allocation of invested plan assets to the major
+asset categories was as follows:
+Plan asset allocation
+The pension plans' assets are invested with several fund managers. The investment
+guidelines require a mix of active and passive investment management programs
+covering different asset classes. Taking the duration of the underlying liabilities into
+account, a portfolio of investments of plan assets in equity, debt and other securities,
+as well as real estate and reinsurance policies, is targeted to maximize the total long-
+term return on assets for a given level of risk. Investment risk is monitored on an
+ongoing basis through periodic portfolio reviews, by coordination with investment
+managers and annual liability measurements. Investment policies and strategies are
+periodically reviewed as part of detailed studies of assets and liabilities by indepen-
+dent investment advisors and actuaries to ensure the objectives of the plans are met,
+taking into account any changes in benefit plan structure, market conditions or other
+material items. The aim is to optimize the risk-return profile of plan assets against
+the liabilities using a diversified portfolio of investments within a defined risk budget
+and to thereby increase the funding ratio in the long term.
+Investment strategy
+Notes to the Consolidated Financial Statements
+< 190 >
+30 September 2021
+(4)
+As described above, Infineon faces certain risks in connection with the insolvency
+proceedings relating to the assets of Qimonda and that entity's subsidiaries. In con-
+sideration of the interim report from the court-appointed expert, Infineon recorded
+provisions relating to Qimonda of €211 million in total as of 30 September 2021. This
+comprises mainly provisions for the still pending legal dispute over the alleged acti-
+vation of a shell company and liability for impairment of capital, including legal costs.
+As of 30 September 2020, provisions relating to Qimonda amounted to €206 million.
+There can be no certainty that the provisions recorded for Qimonda will be suffi-
+cient to cover all of the liabilities that could ultimately be incurred in relation to the
+insolvency of Qimonda and, in particular, the matters discussed above. In addition,
+it is possible that liabilities and risks materialize that are currently considered to be
+unlikely to do so and, accordingly, represent contingent liabilities that are not included
+in provisions. Should the alleged claims relating to the activation of a shell company
+and liability for impairment of capital prove to be valid, substantial financial obliga-
+tions above the provisions already recorded could arise for Infineon, which could have
+a material adverse effect on its business and its financial condition, liquidity position
+and results of operations.
+Expected return
+35.29
+34.87
+3rd tranche
+4th tranche
+Fiscal year 2020:
+2nd tranche
+28 February 2022
+18.62
+79,043
+3rd tranche
+28 February 2023
+18.62
+79,043
+4th tranche
+29 February 2024
+18.62
+79,043
+17.98
+17.65
+17.31
+Fiscal year 2019:
+3rd tranche
+28 February 2022
+19.66
+4th tranche
+28 February 2023
+19.66
+58,765
+58,765
+346,715
+18.84
+18.58
+36.16
+346,715
+(11)
+Consolidated Financial Statements
+Q =
+< 197 >
+Notes to the Consolidated Financial Statements
+The following is an overview of the allocations made:
+Tranche
+2nd tranche
+End of the
+waiting period
+Price of an
+Infineon share
+at grant date
+in €
+Number of
+restricted
+stock units
+as of 30 Sep-
+tember 2021
+Fair value
+per restricted
+stock unit
+in €
+Fiscal year 2021:
+1st tranche
+31 March 2022
+36.16
+346,715
+35.90
+31 March 2023
+36.16
+346,715
+35.60
+31 March 2024
+36.16
+31 March 2025
+Fiscal year 2018:
+Further information
+28 February 2022
+Defined contribution plans
+Due after more than five years up to ten years
+Total
+Due after more than one year to five years
+Actuarial gains before taxes of €139 million and €25 million for the 2021 and 2020
+fiscal years, respectively, had been recognized outside profit (loss) for the period in
+other comprehensive income.
+Service costs were recorded within cost of goods sold to the extent that they relate
+to production employees; otherwise they are recorded as research and development
+or selling, general and administrative expenses. Interest costs and expected return
+on plan assets were recorded net as part of financial expenses.
+Due within one year
+€ in millions
+(43)
+(8)
+(35)
+(9)
+(36)
+6
+2
+4
+8
+2
+6
+Pension cost
+on plan assets
+The following table shows the expected disbursements for defined benefit plans for
+the next ten fiscal years as of 30 September 2021 and 2020:
+The weighted-average duration of defined benefit plans was around 17 and 18 years
+as of 30 September 2021 and 2020, respectively.
+As of 30 September 2021 and 2020, cumulative actuarial losses amounted to
+€403 million and €542 million, respectively.
+In the 2022 fiscal year, payments of €30 million are expected to be made to plan
+assets, of which €27 million relate to benefits paid directly to pension recipients by
+the Group companies.
+4th tranche
+30 Septem-
+ber 2021
+30 Septem-
+(45)
+38
+21.80
+41,953
+ber 2020
+The tranches due in February and March 2021, respectively, were fulfilled in shares.
+244,804 Infineon shares were issued to eligible employees from the holding of
+own shares.
+Costs for share-based payment
+The costs for share-based payment amounted to €27 million in the 2021 fiscal year
+(2020: ���14 million).
+22 Other financial commitments
+In addition to provisions and liabilities, there were other financial obligations that
+were not recognized in the Consolidated Statement of Financial Position. These
+result, in particular, from unconditional purchase commitments, which are explained
+in more detail below.
+Contracts already entered into for commenced or planned investments in property,
+plant and equipment (purchase commitments) as of 30 September 2021 amounted
+to €894 million (30 September 2020: €435 million).
+In the course of its investing activities, Infineon also receives government grants
+related to the construction and financing of certain of its manufacturing facilities.
+Grants are also received for selected research and development projects. Certain
+grants have been received contingent upon Infineon complying with particular
+project-related requirements, such as creating a specified number of jobs over a
+defined period of time. From today's perspective, Infineon expects to comply with
+these requirements. Nevertheless, should such requirements not be met, as of
+30 September 2021, a maximum of €236 million (30 September 2020: €200 million)
+of subsidies already received could be refundable.
+Through certain sales and other agreements, Infineon may be obligated in the nor-
+mal course of business to indemnify its counterparties under certain conditions for
+warranties, patent infringement or other matters. The maximum amount of potential
+future payments under these types of agreements is not predictable with any degree
+of certainty, since the potential obligations are contingent on events that may or
+may not occur in the future and depend on certain facts and circumstances specific
+to each agreement. Historically, payments made by Infineon under these types of
+agreements have not had a material adverse effect on Infineon's financial condition,
+liquidity position and results of operations.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+20.87
+172
+Combined Management Report
+40
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q =
+< 198 >
+23 Legal risks
+Litigation and government inquiries
+Smart card chips antitrust litigation
+In October 2008, the EU Commission initiated an investigation into the Company and
+other manufacturers of chips for smart cards for alleged violations of antitrust laws.
+In September 2014, the EU Commission imposed a fine of €83 million on Infineon, which
+in July 2020 was reduced to €76.9 million by the General Court of the European Union.
+In July 2019, a direct customer filed a lawsuit against Infineon Technologies UK
+Limited and several Renesas entities in London (United Kingdom) relating to the
+aforementioned EU antitrust case.
+Business focus and strategy
+72
+72
+72
+265
+366
+1,160
+265
+5,752
+5,752
+9,308
+6,049
+148
+Current liabilities:
+1
+331
+9,281
+As of 30 September 2020
+Short-term financial debt and current portion
+of long-term financial debt
+505
+139
+Trade payables
+1,160
+Total
+8,828
+Other non-current liabilities
+Designated hedging
+1
+Other
+financial liabilities
+(amortized cost)
+Others
+instruments
+(cash flow hedges)
+Fair value
+As of 30 September 2021
+Current liabilities:
+Short-term financial debt and current portion
+of long-term financial debt
+833
+143
+690
+Trade payables
+1,569
+1,569
+840
+1,569
+Current leasing liabilities
+Other current liabilities
+Non-current liabilities:
+Long-term financial debt
+Non-current leasing liabilities
+66
+66
+751
+5
+745
+751
+509
+1,160
+294
+59
+Further information
+Q = < 205 >
+Within financial assets measured at amortized cost, financial assets with a carrying
+amount of €12 million (previous year: €2 million) were included as of 30 September
+2021, which Infineon has pledged as collateral for liabilities or contingent liabilities.
+In addition, €0 million (previous year: €1 million) relating to an agreement in connec-
+tion with the subsequent liability as shareholder with personal liability of Qimonda
+Dresden GmbH & Co. OHG (see note 23, p. 199) was deposited in an escrow account
+as security against potential claims against Infineon.
+In the 2021 and 2020 fiscal years, there were no reclassifications between the categories
+of financial instruments.
+Disclosures about fair value
+Financial instruments at amortized cost
+For assets allocated to the category "At amortized cost", it is assumed that the
+fair values correspond to their carrying amounts. The same assumption applies to
+liabilities resulting from trade payables and other current liabilities categorized as
+"Other financial liabilities (amortized cost)".
+The fair value of current and non-current financial debt that is measured at amortized
+cost is based either on quoted prices as of the reporting date (level 1) or is determined
+based on expected future cash flows discounted using a current market interest rate
+(level 2). As of 30 September 2021, short-term financial debt and current portion of
+long-term financial debt was assigned to level 1 with a fair value of €504 million (pre-
+vious year: €0 million) and to level 2 with a fair value of €193 million (previous year:
+€139 million). As of 30 September 2021, fair values of non-current financial debt which
+were allocated to level 1, amounted to €3,077 million (previous year: €3,521 million).
+As of 30 September 2021, fair values for level 2 amounted to €2,972 million (previous
+year: €3,262 million).
+Financial instruments at fair value
+Financial instruments measured at fair value are allocated to the following measure-
+ment levels in accordance with IFRS 13. The allocation to the different levels is based
+on the market proximity of the valuation parameters used in the determination of the
+fair values:
+› Level 1: quoted prices (unadjusted) in active markets for identical assets and
+liabilities,
+> Level 2: valuation parameters whose prices are not the ones considered in Level 1,
+but which can be observed either directly or indirectly for the assets
+or liabilities,
+> Level 3: valuation parameters for assets and liabilities, which are not based on
+observable market data.
+The allocation to the levels as of 30 September 2021 and 2020 was as follows:
+€ in millions
+30 September 2021
+Current assets:
+Fair value
+Fair value by category
+Level 1
+Level 2
+Level 3
+114
+94
+profit or loss
+2,638
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Current leasing liabilities
+Combined Management Report
+Management Board and
+Supervisory Board
+59
+845
+2
+777
+66
+845
+Other current liabilities
+Non-current liabilities:
+Long-term financial debt
+Non-current leasing liabilities
+Other non-current liabilities
+Total
+Infineon Technologies | Annual Report 2021
+6,528
+6,528
+235
+6,783
+235
+77
+77
+77
+9,409
+141
+8,908
+66
+9,374
+Business focus and strategy
+At fair value through
+Other non-current assets
+Categories of financial liabilities
+As of 30 September 2021
+Current assets:
+Cash and cash equivalents
+Financial investments
+Trade receivables
+Carrying amount
+Categories of financial assets
+At fair value through
+profit or loss
+At amortized cost
+1,749
+1,456
+293
+1,066
+1,107
+1,483
+1,483
+156
+2
+154
+Not assignable to any IFRS 9
+measurement category
+Fair value
+Designated hedging
+instruments
+(cash flow hedges)
+1,749
+2,173
+Financial assets, € in millions
+1,483
+The following tables present the carrying amounts and the fair values of financial
+instruments by their respective classes and a breakdown by category of financial
+instruments as of 30 September 2021 and 2020 according to IFRS 9:
+26 Additional disclosures on financial instruments
+2,616
+1
+Short-term and long-term leasing liabilities
+262
+(63)
+40
+(8)
+63
+294
+Total
+1,818
+4,381
+1,375
+(314)
+63
+5
+7,328
+1 Amounts shown for the 2020 fiscal year as "Acquisitions" related to financial debt acquired in connection with the acquisition of Cypress.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 203 >
+Categories of financial instruments
+Not assignable to any
+IFRS 9 measurement category
+156
+Non-current assets:
+1
+257
+Non-current assets:
+Other non-current assets
+154
+98
+56
+154
+Total
+4,834
+2,401
+2,432
+1
+4,834
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 204 >
+Notes to the Consolidated Financial Statements
+Financial liabilities, € in millions
+Carrying amount
+254
+Other current assets
+2
+Other current assets
+193
+114
+79
+193
+Total
+5,754
+2,638
+3,116
+5,754
+As of 30 September 2020
+Current assets:
+Cash and cash equivalents
+1,851
+1,524
+327
+1,851
+Financial investments
+1,376
+777
+599
+1,376
+Trade receivables
+1,196
+1,196
+1,196
+257
+46
+2,173
+1,456
+10
+6,918
+The 2020 fiscal year
+Short-term and long-term financial debt
+Related party financial payables
+1,556
+4,443
+1,335
+(306)
+110
+5
+1
+Infineon Technologies | Annual Report 2021
+In the 2021 and 2020 fiscal years, no balances remained in other comprehensive
+income for which hedge accounting was no longer applied.
+(97)
+(1)
+(98)
+99
+(98)
+(75)
+(50)
+7,033
+(1)
+32
+110
+Cash-effective
+Non-cash effective changes
+Ending balance
+changes
+Acquisitions¹
+Currency effects
+New leases
+Other changes
+7,033
+331
+(487)
+1
+294
+7,328
+(76)
+(562)
+29
+10
+6,585
+2
+3
+1
+1
+(49)
+19
+Reversal through profit or loss in the period
+Addition from new transactions
+Day one losses at beginning of the fiscal year
+€ in millions
+The development of the day one losses was as follows:
+Notes to the Consolidated Financial Statements
+Q = < 209 >
+Further information
+Consolidated Financial Statements
+Day one losses at end of the fiscal year
+Combined Management Report
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Interest rate swaps with a nominal volume of €2,025 million already matured in the
+2020 fiscal year. In the course of the US private placement of the notes in April 2021
+(see note 15, p. 184 f.), the remaining interest rate swaps with a nominal volume of
+US$750 million matured on 26 March 2021, resulting in a cash outflow of €23 million.
+The amounts from this hedging relationship that continue to be recognized in other
+reserves amounting to negative €19 million will be recognized in interest expense over
+the term of the individual tranches of the notes. Ineffectiveness of €2 million from
+the interest rate swaps was recognized in the Consolidated Statement of Profit or
+Loss in the 2021 fiscal year. This arose as a result of a deviation between the actual
+and planned credit terms. A further €2 million was related to the transaction-related
+premium implicit in the swap rates. Of this, €1 million had already been recognized
+in profit or loss in the previous year.
+In view of future refinancing measures, in December 2019, Infineon partially hedged
+against the risk of rising interest rates with transaction-dependent interest rate hedging
+transactions with a total nominal volume of €2,025 million and US$750 million, which
+were accounted for as cash flow hedges. For the aforementioned hedging relation-
+ships, there was at all times an economic relationship between the hedged item
+and the hedging instrument (critical term). The hedging ratio was 1:1. As part of the
+hedging, the swap rates were designated in their volume to 100 percent. On the other
+hand, the transaction-dependent premium implicit in the swap rates was excluded
+from the designation of the hedging instrument. The resulting market price deviations
+from the respective transaction price were capitalized as so-called day one losses
+and were recognized directly in the Consolidated Statement of Profit or Loss over the
+term of the hedges until the date of the refinancing measures.
+Hedging of interest risks
+Foreign exchange derivatives are entered into by Infineon to offset the exchange
+risk from anticipated cash receipts from operating activities. In the 2021 fiscal year,
+no foreign exchange derivatives were designated as cash flow hedges to hedge the
+operating activities. In connection with the acquisition of Cypress, foreign exchange
+derivatives were acquired in the previous year to hedge the operating activities,
+which were redesignated as cash flow hedges. These foreign currency derivatives
+expired in full in the previous year.
+1,765
+15
+1.9548%
+Business focus and strategy
+Effects from derivative financial instruments designated
+as a hedging relationship
+The amounts related to positions designated as hedged items were as follows as of
+30 September 2021 and 2020:
+2021
+Hedging of commodity price risks
+Total
+Interest rate swaps
+Deal Contingent Forward
+Deal Contingent Option
+Hedging of interest risks
+Hedging of foreign exchange risk
+30 September 2020
+Hedging of commodity price risks
+Total
+Interest rate swaps
+Hedging of interest risks
+30 September 2021
+To hedge the price risks of highly probable gold purchases in the 2022 fiscal year,
+Infineon entered into swaps, which are designated as cash flow hedges. The desig-
+nated hedged items and the hedging instruments were subject to the same risk.
+The economic connection was proven by means of a regression analysis. Due to the
+execution of only highly effective hedging transactions, Infineon assumes that signifi-
+cant ineffective elements will normally not be generated. Infineon applies a hedging
+ratio of 1:1. Ineffectiveness can be caused mainly from the impact of the credit risks
+arising from the counterparty and the Company on the fair value of the swap, that
+is not reflected in the change in the fair value of hedged cash flows attributable to
+changes in raw material prices. As in the previous year, no hedge ineffectiveness was
+recorded in the Consolidated Statement of Profit or Loss for these hedging relation-
+ships. As in the previous year, no gains or losses were transferred from other reserves
+to profit or loss as a result of cash flow hedges for future raw material purchases
+being canceled following the decision that the occurrence of the hedged transaction
+had become unlikely.
+Hedging of other risks
+Hedge reserve
+(before taxes)
+of the hedged item
+used to determine
+ineffectiveness
+Change in the value
+€ in millions
+1
+(10)
+(1)
+11
+1
+2020
+Starting balance
+Total
+Short-term and long-term leasing liabilities
+Related party financial payables
+Infineon purchases certain raw materials and services from and sells certain products
+and services to related companies. These purchases from and sales to related com-
+panies are generally effected at arm's length.
+Related companies receivables and payables as of 30 September 2021 and 2020
+consisted of the following:
+€ in millions
+Trade and other receivables
+Joint
+ventures
+Associates
+30 September 2021
+Other
+related
+companies
+30 September 2020
+Related companies
+Joint
+ventures
+6
+3
+4
+5
+Financial receivables
+33
+1
+32
+Trade and other payables
+Financial payables
+Associates
+Q = < 201 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 200 >
+Other
+Infineon is also involved in various other legal disputes and proceedings in connection
+with its existing or previous business activities. These can relate, in particular, to
+products, services, patents, export control and environmental issues and other matters.
+Based on its current knowledge, Infineon does not believe that the ultimate resolution
+of these other pending legal disputes and proceedings will have a material adverse
+effect on Infineon's financial condition, liquidity position and results of operations.
+However, future revisions to this assessment cannot be ruled out, and any reassess-
+ment of the miscellaneous legal disputes and proceedings could have a material
+adverse effect on the financial condition, liquidity position and results of operations,
+particularly in the period in which reassessment is made.
+Furthermore, in connection with its existing or previous business operations, Infineon
+is also exposed to numerous legal risks, which have until now not resulted in legal
+disputes. These include risks related to product liability, environment, capital market,
+anti-corruption, competition and antitrust legislation as well as export control and
+other compliance regulations. Claims could also be made against Infineon in connec-
+tion with these matters in the event of breaches of law committed by individual
+employees or third parties.
+As part of an audit finding relating to the tax treatment of losses from the repurchase
+of convertible bonds in the 2011 and 2012 fiscal years, as of 30 September 2021
+and 2020, there was a contingent liability of €55 million for withholding tax payables
+plus interest. Suspension of enforcement has been granted under the current appeal
+procedure. Infineon expects that there is a sufficient likelihood of winning any potential
+appeal or legal action.
+Provisions and contingent liabilities for legal proceedings and
+other uncertain legal issues
+Provisions relating to legal proceedings and other uncertain legal issues are recorded
+when it is probable that a liability has been incurred and the associated amount can
+be reasonably estimated. To the extent that liabilities arising from legal disputes and
+other uncertain legal positions are not probable or cannot be reliably estimated, then
+they qualify as contingent liabilities.
+Any potential liability is reviewed again as soon as additional information becomes
+available and the estimates are revised if necessary. Provisions with respect to these
+matters are subject to future developments or changes in circumstances in each of
+the matters, which could have a material adverse effect on Infineon's financial condi-
+tion, liquidity position and results of operations.
+A settlement or adverse judicial decision in any of the matters described above
+could result in significant financial liabilities for Infineon and other adverse effects,
+and these in turn could have a material adverse effect on its business and financial
+condition, liquidity position and results of operations. Irrespective of the validity
+of the allegations and the success of the aforementioned claims and other matters
+described above, Infineon could incur significant costs in the defense of these matters.
+24 Transactions with related companies and persons
+Infineon has transactions in the normal course of business with joint ventures, asso-
+ciates and other related companies (collectively "related companies”). The related
+companies are disclosed in note 29, □ p. 225 ff. Related persons are persons in key
+management positions, in particular members of the Management and Supervisory
+Board (see note 29, □ p. 222 f.) and their close relatives (collectively "related persons”).
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+7
+750
+2
+2
+Other
+related
+companies
+Infineon Technologies | Annual Report 2021
+80
+20
+75
+17
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+services received
+Further information
+< 202 >
+Disclosure of the individual remuneration of the members of the Management Board
+and the Supervisory Board as required by section 315e, paragraph 1, in connection
+with section 314, paragraph 1, no. 6a, sentences 5 to 8, of the German Commercial Code
+(version before ARUG II), is provided in the remuneration report which is part of the
+Combined Management Report. p. 132 ff.
+In the 2021 and 2020 fiscal years, there were no significant transactions between
+Infineon and related persons which fall outside of the scope of the existing employ-
+ment, service or appointment terms, or of the contractual arrangements for their
+remuneration.
+25 Supplemental cash flow information
+Cash and cash equivalents reported as of 30 September 2021 and 2020 totaling
+€1,749 million and €1,851 million, respectively, included €104 million and €77 million,
+respectively, which were subject to legal transfer restrictions and so were not avail-
+able for general use by Infineon. This amount represented cash and cash equivalents
+of consolidated companies located in countries where the transfer of cash is legally
+restricted, for example China.
+The reconciliation below shows changes in those financial liabilities and hedging
+transactions for which payments received and made are shown under cash flows from
+financing activities in the statement of cash flows.
+€ in millions
+The 2021 fiscal year
+Short-term and long-term financial debt
+Q =
+Products and
+As of 30 September 2021, pension obligations for former members amounted to
+€72.4 million (30 September 2020: €76.6 million).
+Former members of the Management Board received payments (in particular pension
+payments) of €2.6 million in the 2021 fiscal year (2020: €2.2 million).
+1
+1
+1
+Sales and service charges to and products and services received from related com-
+panies in the 2021 and 2020 fiscal years consisted of the following:
+€ in millions
+Sales and service charges
+2021
+2020
+Joint Associates
+ventures
+Other
+related
+companies
+Joint Associates
+ventures
+Other
+related
+companies
+75
+18
+3
+29
+5
+2
+As of 30 September 2021, sales and services relationships with related companies
+resulted in purchase commitments of €22 million (30 September 2020: €4 million).
+Related persons
+Members of the Management Board active in the 2021 fiscal year received fixed
+non-performance-related remuneration for their services of €4.1 million (2020:
+€3.8 million). In addition, the members of the Management Board received variable
+performance-related remuneration for their services in the 2021 fiscal year of
+€8.6 million (2020: €3.6 million). This comprised a Short-Term Incentive of €3.4 mil-
+lion (2020: €1.4 million), and a Mid-Term Incentive of €0 million (2020: €1.3 million).
+Furthermore, the Management Board received a Long-Term Incentive (LTI) which,
+since 2014, takes the form of performance shares. The expense resulting from the LTI
+amounted to €5.1 million (2020: €0.9 million). The remuneration granted to active
+members of the Management Board amounted to €12.7 million in the 2021 fiscal year
+(2020: €7.3 million).
+The remuneration of the members of the Supervisory Board of Infineon Technologies
+AG in the 2021 fiscal year, including attendance fees, amounted to €2.1 million (2020:
+€2.1 million). Employee representatives in the Supervisory Board who are employed
+by Infineon also receive a salary for their activities as employees.
+9
+Cash and cash equivalents
+Financial investments
+Other current assets
+1,813
+Short term
+The following table shows the reconciliation of financial instruments classified as
+level 3 (before tax):
+Short-term financial debt included the conversion rights from convertible bonds
+acquired in the course of the acquisition of Cypress (see note 15, □ p. 184 f.), which can be
+exercised against cash payment by bondholders until the maturity of the instruments.
+The fair value of the conversion rights was determined by discounting future cash
+flows according to the discounted cash flow method. Valuation parameters observed
+on the reporting date in the relevant markets, such as interest rates and US dollar spot
+rates drawn from reliable external market data providers, were used (level 2).
+instruments whose fair value was calculated using recognized financial-mathematical
+models, with only observable input parameters included in the measurement (level 2).
+For equity investments where no market price from an active market is available, the
+fair value was determined by considering existing contractual arrangements based
+on externally observable dividend policy (level 3).
+Other non-current assets included equity investments and investments in funds. Where
+these are traded on an active market, the fair value was based on the actual market
+price (level 1). In addition, other non-current assets included derivative financial
+Other current assets and other current liabilities contained derivative financial
+instruments (including cash flow hedges to hedge planned raw material purchases).
+Their fair value was determined by discounting future cash flows according to the
+discounted cash flow method. Where possible, valuation parameters observed on
+the reporting date in the relevant markets (such as currency rates, interest rates,
+or commodity prices) drawn from reliable external market data providers were used
+(level 2).
+Cash equivalents and financial investments included investments in money market
+funds and investment funds (level 1).
+207
+139
+68
+207
+€ in millions
+139
+68
+3
+2,382
+2,402
+17
+81
+98
+Total
+Other current liabilities
+Short-term financial debt and current portion
+of long-term financial debt
+17
+Current liabilities:
+Equity investments
+Total
+30 Sep-
+tember
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+A hypothetical change in the material non-observable valuation parameters at the
+balance sheet date of ± 10 percent would have resulted in a theoretical reduction
+in fair values of €1 million or an increase of €1 million (previous year: both €1 million).
+1 This relates to gains recognized in financial income or losses recognized in financial expenses.
+2 This relates to the sale of an investment acquired in the course of the acquisition of Cypress.
+16
+13
+(1)
+16
+Realized
+gains
+recognized
+13
+(13)
+(13)
+17
+17
+or loss 1,2
+in profit
+Unrealized
+losses
+recognized in
+profit
+or loss¹
+Sales
+(including
+disposals)
+30 Sep-
+tember
+2020
+2021
+(1)
+Total
+Other non-current assets
+Non-current assets:
+16
+16
+149
+149
+Total
+6
+143
+6
+Other current liabilities
+Infineon Technologies | Annual Report 2021
+143
+Current liabilities:
+Total
+Other non-current assets
+Non-current assets:
+2
+2
+1,066
+1,066
+1,456
+Short-term financial debt and current portion
+of long-term financial debt
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+3
+3
+Other current assets
+777
+777
+1,524
+1,524
+Cash and cash equivalents
+Level 3
+Level 2
+Fair value by category
+Level 1
+Fair value
+Financial investments
+Current assets:
+30 September 2020
+€ in millions
+< 206 >
+Q =
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Q = < 207 >
+Interest expense on financial liabilities measured at amortized cost mainly included
+interest on financial debt and effects from using the effective interest method.
+2
+151
+2
+236
+Forward exchange contracts purchased
+(2)
+144
+(5)
+Total
+280
+(118)
+(139)
+Total
+value
+value
+value
+value
+€ in millions
+Fair
+Forward exchange contracts sold
+(3)
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Hedging of foreign exchange risk
+Average price (US dollar/ounce)
+Nominal value (€ in millions)
+Commodity swaps
+Hedging of other risks
+Average interest rate
+Nominal value (US$ in millions)
+Interest rate swaps
+Hedging of interest risks
+30 September 2020
+Average price (US dollar/ounce)
+Nominal value (€ in millions)
+Commodity swaps
+Hedging of other risks
+30 September 2021
+Derivative financial instruments designated as a hedging relationship
+As of 30 September 2021 and 2020, Infineon held the following instruments, which
+were designated as cash flow hedges and were used to hedge against interest rate
+and commodity price changes:
+Q = < 208 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Nominal
+21
+Fair
+(40)
+(120)
+(139)
+therein interest expenses
+(18)
+(177)
+Financial liabilities measured at amortized cost
+(15)
+13
+Financial assets measured at fair value through profit and loss
+therein foreign currency exchange
+(70)
+therein foreign currency exchange
+(1)
+therein impairment losses
+28
+5
+(42)
+24
+2020
+2021
+19
+(36)
+107
+therein other financial expenses
+3
+therein foreign currency exchange
+30 September 2020
+30 September 2021
+(40)
+3
+Financial assets or liabilities measured at fair value
+through profit and loss - held for trading
+(3)
+(2)
+Financial liabilities at fair value through profit or loss
+The nominal values and fair values of Infineon's derivative instruments as of 30 Sep-
+tember 2021 and 2020 that were not designated as cash flow hedges were as follows:
+Derivative financial instruments not designated as a hedging relationship
+Infineon holds derivative financial instruments exclusively for hedging purposes. This
+includes the use of forward exchange contracts, foreign currency options, interest- and
+commodity swaps. The objective is to reduce the impact of exchange rate, interest
+rate and commodity price fluctuations on future net cash flows.
+Derivative financial instruments and hedging activities
+Infineon does not net financial instruments. Infineon conducts derivative transactions
+according to the global netting agreement (Master Agreement) of the International
+Swaps and Derivatives Association (ISDA) and other comparable national framework
+agreements. Under the terms of these agreements, any netting arising from the
+occurrence of certain future events would have had no material effect on the balance
+sheet presentation of these financial instruments.
+therein interest income
+Financial assets measured at amortized cost
+€ in millions
+The net gain or loss on financial instruments (including interest income and expense)
+within continuing operations in the Consolidated Statement of Profit or Loss
+amounted to the following as of 30 September 2021 and 2020:
+Gains and losses in relation to financial instruments
+(5)
+(2)
+Nominal
+1
+1
+(2)
+(5)
+6
+Euro/Singapore dollar
+4
+(5)
+Euro/Malaysian ringgit
+(1)
+1
+30 September 2020
+Euro/US dollar
+Euro/Japanese yen
+Euro/Singapore dollar
+18
+(22)
+6
+10
+(12)
+6
+བྱེསྱེ
+(7)
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+(46)
+1
+Euro/Malaysian ringgit
+(5)
+4
+(6)
+5
+(7)
+(1)
+38
+(44)
+36
+31
+37
+116
+(144)
+(280)
+(177)
+24
+(318)
+(48)
+(42)
+(70)
+(74)
+(86)
+(64)
+(7)
+Q = < 213 >
+48
+7
+minus 10%
+plus 10%
+minus 10%
+plus 10%
+Equity
+Profit or Loss
+57
+30 September 2021
+Euro/US dollar
+Euro/Japanese yen
+The following table shows the effects on profit or loss for the 2021 and 2020 fiscal
+year and equity as of 30 September 2021 and 2020 of a ±10 percent shift in exchange
+rates. The assumed exchange rate changes relate only to financial instruments within
+the meaning of IAS 32.
+(194)
+(396)
+(17)
+(78)
+9
+€ in millions
+Interest rate risk
+In accordance with IFRS 7, interest rate risk is defined as the risk that the fair value
+or future cash flows of a financial instrument will fluctuate because of changes in
+interest rates.
+Infineon is exposed to interest rate risk through its financial investment instruments
+and financial debt resulting from bond issuances and debt financing. Due to the cycli-
+cal nature of its core business and the need to maintain high operational flexibility,
+Infineon holds a relatively high level of liquid financial assets that are invested in
+short-term fixed-interest instruments. These financial assets generally are invested
+with contract duration of between one and twelve months at interest rates that can
+be achieved in the short-term. The risk to these assets of changing interest rates is
+not material in the current period of low or zero interest rates.
+(59)
+53
+641
+(2)
+2
+(139)
+As in the previous year, Infineon did not hold any fixed-rate financial assets that are
+measured at fair value through profit or loss. Furthermore, as in the previous year,
+Infineon did not hold any fixed-interest financial assets that were measured at fair
+value through other comprehensive income.
+Designated interest rate
+hedging instruments
+(cash flow hedging relationships)
+(59)
+53
+(18)
+(22)
+6
+(24)
+(2,369)
+Variable-interest financial liabilities
+Fixed-interest financial liabilities
+measured at fair value through
+profit or loss
+22
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+Commodity swaps
+30 September 2021
+€ in millions
+The following table presents the effect on equity of a change in the relevant market
+prices by ± 10 percent as of 30 September 2021 and 2020.
+Additionally, Infineon is exposed to price risks with respect to raw materials upon
+which it is dependent. Infineon seeks to minimize these risks through its procure-
+ment policy (including the use of multiple sources, where possible) and its operating
+procedures. In line with these measures, Infineon concluded additional financial
+derivative contracts for certain commodity supplies (gold) for the following fiscal year
+in order to mitigate the remaining risk arising from the fluctuation of commodity
+prices (see note 26, □ p. 209 ff.).
+In the 2021 fiscal year, Infineon held financial instruments that are exposed to market
+price risks. A change in the relevant market prices would have had no significant
+impact on the result of the 2021 and 2020 fiscal years.
+Management Board and
+Supervisory Board
+According to IFRS 7, other price risk is defined as the risk that the fair value or future
+cash flows of a financial instrument could fluctuate because of changes in market
+prices (other than those arising from interest rate risk or exchange rate risk), irrespec-
+tive of whether those changes are caused by factors specific to the individual financial
+instrument or its issuer, or by factors affecting all similar financial instruments traded
+in the market.
+Notes to the Consolidated Financial Statements
+< 214 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Other price risk
+34
+2,220
+353
+minus
+plus
+100 basis
+points
+minus
+100 basis
+points
+plus
+100 basis
+points
+Equity
+Profit or Loss
+100 basis
+points
+Nominal
+value
+€ in millions
+The following table shows the effects on profit or loss for the 2021 and 2020 fiscal
+year and equity as of 30 September 2021 and 2020 of a ± 100 basis points shift in
+market interest rates:
+Changes in market interest rates affect interest income and expenses from variable-
+yield financial instruments as well as from fixed-yield financial instruments that are
+measured at fair value through profit or loss, and also affect equity due to the hedge
+accounting designated interest rate hedging instruments.
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market
+interest rates on profit or loss and equity. Infineon prepares this using the iteration
+method.
+Interest rate risks related to refinancing measures were partially hedged by interest
+rate derivatives designated as cash flow hedges in the previous year. These interest
+rate derivatives matured in the 2021 fiscal year (see note 26, ☐ p. 208 ff.).
+To reduce the net remaining risks caused by changes in interest rates, Infineon is able
+to make use of interest rate derivatives in order to align the fixed interest periods of
+assets and liabilities.
+30 September 2021
+Variable-interest financial assets
+1,356
+(24)
+(143)
+སྶ$
+30 September 2020
+profit or loss
+measured at fair value through
+Fixed-interest financial liabilities
+15
+1
+(959)
+Variable-interest financial liabilities
+(25)
+25
+2,458
+Variable-interest financial assets
+(10)
+(138)
+ber 2021
+30 Septem-
+Hedging of interest risks
+Other current liabilities:
+Inventories
+(5)
+Goodwill
+Goodwill
+28
+(142)
+Total
+181
+(2)
+1
+1
+Hedging of commodity price risks
+77
+(84)
+70
+39
+Financial
+(99)
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+(114)
+246
+(11)
+expenses
+66
+(11)
+42
+(240)
+39
+67
+1
+(98)
+EE
+Business focus and strategy
+Deal Contingent Option
+(56)
+44
+(21)
+Hedging of interest risks
+Other current liabilities:
+Line item of
+the Statement of
+Financial Position
+or the Statement
+of Profit or Loss
+affected by the
+reclassification
+assets
+5
+Amount reclassified
+from the cost of
+hedging reserve
+to the cost of
+non-financial
+Amount reclassified
+from the hedge
+reserve to the State-
+ment of Profit or
+Loss from hedging
+relationships for
+which the underlying
+transaction is no
+longer expected
+to the Statement
+of Profit or Loss
+Amount
+reclassified from
+hedge reserve
+income
+fair value of
+cost of hedging
+recognized in other
+comprehensive
+Changes in
+Amount reclassified
+from the hedge
+reserve to the cost
+of non-financial
+assets
+(35)
+Hedging of commodity price risks
+(1)
+98
+Deal Contingent Forward
+Hedging of foreign exchange risks
+Other current assets:
+30 September 2020
+Inventories
+1
+Financial
+expenses
+5
+43
+(22)
+1
+Total
+(1)
+(1)
+(1)
+30 September 2020
+Combined Management Report
+Further information
+Foreign exchange risk
+Infineon is exposed to various market risks in the ordinary course of business, primarily
+resulting from changes in foreign exchange rates and interest rates. Infineon enters
+into a range of derivative financial transactions with various counterparties to limit
+such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+Market risk is defined as the risk of losses resulting from adverse changes in the market
+prices of financial instruments, including those related to foreign exchange rates,
+interest rates and other price risks.
+Infineon's activities are exposed to a variety of financial risks: market risk (including
+foreign exchange risk, interest rate risk and price risk), credit risk, financing and
+liquidity risk. Infineon's financial risk management seeks to minimize potential
+adverse effects on its profitability and liquidity. Infineon uses derivative financial
+instruments to hedge certain risks to which it is exposed. Financial risk management
+is carried out by the central Finance & Treasury (FT) department in accordance
+with policies approved by the Chief Financial Officer. The FT department identifies,
+evaluates and hedges financial risks in close cooperation with the operating units.
+(50)
+(1)
+Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes
+to foreign exchange rates. Accordingly, foreign exchange risks are associated with
+financial instruments that are denominated in a foreign currency that does not corre-
+spond to the functional currency, and the foreign currency represents the relevant
+risk variable. Risks arising from the translation into Infineon's reporting currency are
+not risks within the meaning of IFRS 7.
+(49)
+(1)
+5
+EE
+5
+27 Financial risk management
+30 September 2021
+(1)
+cost of non-financial items
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+30 Septem-
+ber 2020
+Forward exchange contracts
+Net exposure
+Financial position exposure
+Euro/US dollar
+Euro/Japanese yen
+Euro/Singapore dollar
+Euro/Malaysian ringgit
+Euro/British pound
+Euro/Singapore dollar
+Euro/Malaysian ringgit
+Euro/British pound
+Euro/US dollar
+Euro/Japanese yen
+€ in millions
+Management Board and
+Supervisory Board
+Foreign exchange risk at Infineon arises predominantly from main foreign currency
+positions. The following table shows the net exposure as of 30 September 2021
+and 2020:
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying
+but significant portion of its revenue, as well as cost of goods sold, research and
+development and product distribution costs, are denominated in currencies other
+than the euro, primarily the US dollar. Fluctuations in the exchange rates of these
+currencies compared to the euro had an effect on the results of Infineon in the 2021
+and 2020 fiscal years.
+< 212 >
+Q =
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+The Management Board has established policies that require Infineon's individual legal
+entities to manage the foreign exchange risk with respect to their functional currency.
+Group entities prepare a monthly rolling cash flow forecast by currency in order to
+determine foreign exchange risks. The net foreign exchange positions determined in
+these forecasts are required to be hedged, usually by entering into internal hedging
+contracts. Infineon's policy with respect to limiting short-term foreign currency expo-
+sure is to hedge at least 75 percent of its estimated net cash flow for the following
+two months, at least 50 percent of its estimated net cash flow for the third month and,
+depending on the nature of the underlying transactions, a certain additional portion
+for the periods thereafter. Part of the foreign currency risk cannot be mitigated due to
+differences between actual and forecasted amounts. Infineon calculates this remaining
+risk based on net cash flows considering items in the Statement of Financial Position,
+actual orders received or placed and all other planned cash receipts and payments.
+For the net result related to foreign currency hedging transactions and foreign
+currency transactions included within profit (loss) for the period see note 26. ☐ p. 207
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Amounts reclassified to the
+Market risk
+39
+101
+3
+98
+Total
+Hedging of
+commodity
+price risks
+(99)
+Hedging of
+interest risks
+Amount reclassified to the
+Statement of Profit or Loss
+Change in fair value
+30 September 2019
+€ in millions
+The following table shows the reconciliation for the reserve for cash flow hedges
+(before taxes) by risk category:
+Q = < 211 >
+Hedging of
+foreign
+exchange risks
+Statement of Profit or Loss
+3
+1
+Amount reclassified to the
+43
+(1)
+44
+(97)
+1
+1
+(98)
+(142)
+(5)
+(137)
+Amounts reclassified to the
+cost of non-financial items
+The coronavirus pandemic and the related measures to contain the virus can have a
+direct and indirect effect on financial risks. The course of the spread of the coronavirus
+and the impact on Infineon's risk position is continually monitored and is taken into
+account in the methods, models and processes used to control financial risks. Possible
+longer-term effects on Infineon as a consequence of the spread of the coronavirus
+and the associated volatility in the financial markets cannot actually be estimated
+more precisely.
+The FT department's policies contain principles for overall risk management as well
+as guidance covering specific areas such as foreign exchange risk, interest rate risk,
+credit risk, the use of derivative and non-derivative financial instruments, and the
+investment of excess liquidity.
+30 September 2020
+Change in fair value
+Commodity swaps
+Nominal
+value
+Equity
+Power & Sensor Systems
+The Industrial Power Control segment designs, develops, manufactures and markets
+semiconductor products for the conversion of electrical energy for small, medium
+and high-power applications. The products are used in the manufacturing, the low-loss
+transmission, the storage and the efficient use of electrical energy.
+Industrial Power Control
+The Automotive segment designs, develops, manufactures and markets semiconductor
+products used in the automotive industry (powertrain, driver assistance and safety
+systems, information security, infotainment and comfort electronics), and also memory
+products for specific applications.
+Automotive
+The basis for identifying the reporting segments is the differences between the
+products and applications. In the 2021 fiscal year, Infineon's business was structured
+into the four operating segments Automotive, Industrial Power Control, Power &
+Sensor Systems and Connected Secure Systems. In addition, Infineon differentiates
+Other Operating Segments as well as Corporate and Eliminations.
+The Power & Sensor Systems segment designs, develops, manufactures and markets
+semiconductors for energy-efficient power supplies, mobile devices, mobile phone
+network infrastructures, human-machine interaction as well as applications with
+special demands on their robustness and reliability.
+Identification of segments
+Q = < 218 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+28 Segment reporting
+Infineon Technologies | Annual Report 2021
+Connected Secure Systems
+Other Operating Segments
+The Management Board, as joint Chief Operating Decision Maker, decides how
+resources are allocated to the segments.
+Chief Operating Decision Maker, definition of Segment Result and allocation
+of assets and liabilities to the individual segments
+Q = < 219 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+The Connected Secure Systems segment designs, develops, manufactures and
+markets semiconductor-based security solutions for networked devices, card-based
+applications, and government documents, on the one hand, and microcontrollers for
+industrial, entertainment, and household applications, components for connectivity
+solutions; and a customer support ecosystem consisting of software, services, and
+development platforms, on the other.
+Business focus and strategy
+Infineon Technologies | Annual Report 2021
+Furthermore, raw materials and supplies are mostly not under the control or
+responsibility of the operating segment management and are therefore allocated
+to corporate functions. Work in progress and finished goods are allocated to the
+operating segments.
+Similarly, certain items are included in Corporate and Eliminations, which are not
+allocated to the other segments. These include certain corporate headquarters costs
+and selected topics, which are not allocated to the segments since they arise from
+corporate decisions and are not within the direct control of segment management.
+Corporate and Eliminations reflects the elimination of intragroup revenue and profits/
+losses to the extent that these arise between the segments.
+Corporate and Eliminations
+Other Operating Segments comprise the remaining activities of divested businesses
+and other business activities. Since the sale of the Wireless mobile phone business,
+supplies to Intel Mobile Communications and MaxLinear are included in this segment.
+Also included are supplies of LDMOS wafers and related components to Wolfspeed, Inc.
+(formerly Cree, Inc.), since the sale of the major part of Infineon's Radio Frequency
+Power Components business.
+Management Board and
+Supervisory Board
+Based on revenue and Segment Result, the Management Board assesses performance
+and defines operating targets and budgets for the segments.
+Future cash flows from derivative financial instruments (see note 26, ☐ p. 207 ff.) may
+differ from the amounts shown in the table, since exchange rates or relevant factors
+are subject to change.
+92
+2025
+2024
+2023
+2022
+2021
+Total
+Beyond 2025
+3,108
+1,207
+133
+1,424
+940
+3,314
+10,126
+3,108
+2,965
+10,054
+1,165
+1,362
+1,846
+1,165
+2,692
+10,122
+(161)
+2,624
+(161)
+229
+2,965
+92
+92
+1,362
+1,846
+229
+(301)
+Segment Result is defined as operating profit excluding certain net impairments
+and reversal of impairments (in particular on goodwill), the impact on earnings of
+restructuring and closures, share-based payment, acquisition-related depreciation/
+amortization and other expense, impact on earnings of sales of businesses or interests
+in subsidiaries, and other income (expense).
+Neither assets, liabilities nor cash flows per segment are reported to the Management
+Board on a regular basis, nor is segment performance assessed on this basis.
+1,397
+Other Operating Segments
+Corporate and Eliminations
+Total
+Connected Secure Systems
+Subtotal
+630
+704
+99
+974
+265
+2,299
+2,650
+3,268
+Power & Sensor Systems
+1,406
+1,542
+1,921
+1,406
+1,397
+11,048
+Infineon Technologies | Annual Report 2021
+8,567
+11,060
+16
+12
+251
+974
+601
+1,352
+1,928
+2,890
+5,191
+6,205
+8,551
+1,181
+Decisions relating to financing and the investment of cash funds are taken at a Group
+level and not at a segment level. For this reason, financial income and financial
+expense (including interest income and expense) are not allocated to the segments.
+1,542
+251
+Memory ICs for
+specific applications
+2021
+2020
+2021
+2020
+Connectivity
+2020
+RF & sensors
+Product category
+Power semiconductors
+Total
+The XMCTM family of industrial microcontrollers business was transferred from the
+Automotive segment to the Connected Secure Systems segment with effect from
+1 October 2020. The previous year's figures have been adjusted accordingly.
+Segment information
+The exception to this approach is certain inventory information which is regularly
+analyzed at a segment level. Infineon also allocates depreciation and amortization
+expense to the operating segments based on production volume and products
+produced using standard costs.
+Embedded Control &
+Industrial Power Control
+2021
+€ in millions
+601
+551
+648
+855
+1,228
+1,864
+2020
+2,364
+4,841
+Automotive
+Revenue from contracts with customers:
+2021
+2020
+2021
+3,521
+income
+(301)
+307
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Infineon assigns trade receivables to different risk classes based on external ratings,
+the analysis of customer balance sheet figures, default probabilities (credit default
+swaps), customer payment behavior and country risks. The simplified method is used
+to determine the expected losses from trade receivables. The expected losses over
+the entire term of the trade receivables are determined. The allowance is calculated
+for each customer using a weighted-probability method. In calculating the expected
+credit losses, for each customer, Infineon takes into account a forward-looking
+probability of default provided by a credit rating agency. Individual allowances are
+recorded based on case-by-case facts or other risk indicators.
+Further information
+Infineon manages the credit risk with respect to trade receivables through a com-
+prehensive credit evaluation for all major customers, the use of credit limits and
+monitoring procedures. New customers are evaluated for creditworthiness in accor-
+dance with Infineon guidelines. Credit limits are also in place for individual customers
+and creditworthiness and credit limits are constantly monitored. A further measure
+taken to reduce credit risk is the use of reservation of title clauses. However, despite
+continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising
+from the default of one of its contract parties.
+As in the previous year, Infineon had no financial assets that were overdue or impaired
+as of 30 September 2021. There was no reclassification between the impairment
+levels in the 2021 and 2020 fiscal years.
+Expected lifetime
+credit loss
+non-credit-impaired
+1
+926
+1
+1,401
+As in the previous year, Infineon spread its cash investments over more than ten banks
+as of 30 September 2021. As of 30 September 2021, no financial institution was respon-
+sible for more than 18 percent (30 September 2020: 22 percent) of Infineon's cash
+investments. This gave rise to a maximum risk of €220 million (30 September 2020:
+€160 million) in the event of the default of a single financial institution assuming no
+deposit insurance scheme is in place. In addition, to spread the risk of investment,
+investments were made in money market funds with the best rating, and in money
+market investment funds. Infineon also held derivative financial instruments with a
+positive fair value of €2 million as of 30 September 2021 (30 September 2020: €2 million).
+1
+Q =
+The following table provides information about the credit risk for trade receivables
+from third parties as of 30 September 2021 and 2020:
+high risk
+5
+increased risk
+4
+3
+2
+< 216 >
+1
+average risk
+low risk
+External credit rating
+Risk class
+Infineon rating
+€ in millions
+above average risk
+individual
+926
+30 September 2020
+Holding Quality 1
+Holding Quality 0
+Total
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Infineon applies the general impairment model in accordance with IFRS 9 for cash and
+cash equivalents as well as financial investments. Since Infineon invests exclusively
+in high-quality financial assets from issuers with a rating of at least investment grade
+in order to minimize default risk, Infineon assumes that its financial assets carry low
+credit risk arising from the creditworthiness of its contract parties, so that any impair-
+ment loss recorded at first-time recognition is limited to the twelve-month expected
+credit losses. Infineon considers low credit risk to be an internal credit rating "Hold-
+ing Quality 1". A change in the internal rating from "Holding Quality 1" to "Holding
+Quality 0" indicates a significant increase in credit risk. The impairment is calculated
+Credit risk arises when a customer or other counterparty of a financial instrument
+fails to discharge its contractual obligations. Infineon is exposed to this risk as a con-
+sequence of its ongoing operations, its financial investments and certain financing
+activities. Infineon's credit risk arises primarily from cash and cash equivalents, finan-
+cial investments, trade receivables and derivative financial instruments. Excluding the
+impact of any collateral received, the carrying amount of financial investments, cash
+and cash equivalents and trade receivables corresponds to the maximum credit risk.
+Foreign exchange and interest hedging contracts as well as the investment of liquid
+assets in cash equivalents and financial investments are entered into with major
+financial institutions worldwide that have high credit ratings. Infineon assesses the
+creditworthiness of banks using a methodology that establishes investment limits
+for individual banks that are updated on a daily basis based on current ratings (S&P,
+Moody's or Fitch) and credit default swap premiums. Possible breaches of stipulated
+investment thresholds result in immediate notification and the requirement to reduce
+the risk. This methodology is also used to identify a significant increase in credit risk
+in the context of the recognition of expected credit losses within the meaning of
+IFRS 9 at the balance sheet date.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Credit risk
+2
+15
+2
+21
+minus 10%
+plus 10%
+(2)
+A to BBB
+Further information
+using a weighted-probability method. This impairment is calculated as a measure
+of the probability of default based on the exposure at the balance sheet date, the loss
+ratio for that exposure, and the credit default swap spread.
+Holding Quality 0
+Total
+AA- to BBB
+Holding Quality 1
+30 September 2021
+Basis for the
+determination of
+the loss allowance
+External rating
+Q = < 215 >
+-
+Expected
+12-month
+credit loss
+At amortized cost
+1,401
+Infineon rating
+€ in millions
+The following table provides information on the credit risk for cash and cash
+equivalents measured at amortized cost, as well as financial investments as of
+30 September 2021 and 2020:
+1
+307
+others
+A- to AAA
+30 September 2021
+Beyond 2026
+2026
+2025
+2024
+2023
+Non-derivative financial liabilities
+2022
+Due in the fiscal year
+€ in millions
+Notes to the Consolidated Financial Statements
+< 217 >
+Q =
+Further information
+Total
+Consolidated Financial Statements
+10,120
+940
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+Total
+Cash inflow'
+Cash outflow
+Derivative financial liabilities:
+Non-derivative financial liabilities
+3,308
+30 September 2020
+Cash inflow¹
+Cash outflow
+Derivative financial liabilities:
+1,207
+133
+1,424
+Total
+Total
+Combined Management Report
+Management Board and
+Supervisory Board
+418
+470
+489
+30 September 2020
+256
+406
+30 September 2021
+296
+Basis for the determination
+of the loss allowance
+none
+none
+C to B+
+BB- to BB
+BB+ to BBB-
+BBB to BBB+
+At amortized cost
+Business focus and strategy
+73
+43
+Infineon Technologies | Annual Report 2021
+The following table discloses the maturity profile for non-derivative financial liabilities
+and a cash flow analysis for derivative financial instruments with negative fair values.
+The table shows the undiscounted contractually agreed cash flows that result from
+the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign cur-
+rencies were translated using the closing rate at the reporting date. The value of
+financial instruments with variable interest payments is determined using the interest
+rate from the last interest fixing date before 30 September 2021 and 2020. The cash
+outflows of financial liabilities that can be repaid at any time are assigned to the
+period in which the earliest redemption is possible.
+Liquidity risk could arise from a potential inability of Infineon to meet maturing
+financial obligations. Infineon's liquidity management provides that sufficient levels
+of cash and other liquid assets are available as well as ensuring the availability of
+funding through adequate levels of committed credit facilities.
+Financing and liquidity risk is the risk that an entity will encounter difficulties in
+meeting obligations associated with financial liabilities.
+Financing and liquidity risk
+9
+109
+Developments in the wake of the coronavirus pandemic are very dynamic, so it can-
+not be ruled out that the actual credit losses deviate significantly from the expected
+credit losses recognized based on current estimates and assumptions or that the
+affected estimates and assumptions will have to be adjusted in future periods and
+this could have a significant impact on Infineon's expected credit losses.
+1,192
+1,479
+46
+4
+4
+48
+As of 30 September 2021, expected credit losses on trade receivables (see note 9,
+p. 178) amounted to €1 million for all risk classes (30 September 2020: €1 million).
+The individual allowances on trade receivables (no rating) amounted to €4 million
+in the 2021 fiscal year (2020: €4 million).
+Changes in
+fair value of the
+hedging instrument
+recognized in other
+comprehensive
+(57)
+fair value for the
+measurement
+of the ineffective-
+ness in the
+reporting period
+Management Board and
+Supervisory Board
+Business focus and strategy
+Consolidated Financial Statements
+Further information
+Q =
+Combined Management Report
+Notes to the Consolidated Financial Statements
+The relevant amounts of the derivative financial instruments designated as hedging
+instruments as of 30 September 2021 and 2020 (before taxes) were as follows:
+€ in millions
+30 September 2021
+Carrying amount
+Changes in
+< 210 >
+> Infineon Technologies Austria AG, Austria
+(Chairman)
+> Infineon Technologies China Co., Ltd.,
+Member of the Board of Directors
+> Infineon Technologies Austria AG, Austria
+Supervisory Board member
+> Infineon Technologies Americas Corp., USA
+Member of the Board of Directors
+> Futurium gGmbH, Germany
+Supervisory Board member
+Chief Marketing Officer
+Membership of Supervisory Boards
+Chief Digital
+Transformation Officer
+Chief Operations Officer
+Constanze Hufenbecher
+Jochen Hanebeck
+People's Republic of China
+Dr. Helmut Gassel
+Chief Financial Officer
+Dr. Sven Schneider
+and other comparable governing bodies of domestic
+and foreign companies (as of 30 September 2021)
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+Singapore
+(Chairman)
+> Infineon Technologies Asia Pacific Pte., Ltd.,
+Singapore (Chairman)
+< 223 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+> Voith Management GmbH, Germany
+Member of the Shareholders' Committee
+> Voith GmbH & Co. KGaA, Germany
+Supervisory Board member
+> Infineon Technologies Austria AG, Austria
+Supervisory Board member
+Chief Executive Officer,
+Labor Director
+> Infineon Technologies Americas Corp., USA
+People's Republic of China
+> Infineon Technologies China Co., Ltd.,
+> Infineon Technologies Japan K.K., Japan (Chairman)
+> Infineon Technologies Americas Corp., USA
+Member of the Board of Directors
+Position
+Fees of €0.1 million were charged by KPMG to the Company in the 2021 fiscal year for
+other services. These mainly included quality assurance during the implementation
+of regulatory requirements.
+Name
+Infineon Technologies | Annual Report 2021
+The allocation of revenues from external customers to geographic areas is based
+on the customers' locations. The average number of employees by geographic region
+is provided in note 3. p. 171
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+8,567
+11,060
+845
+1,027
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+1,015
+1,254
+Total
+therein: USA
+Americas
+765
+1,094
+Japan
+14,033
+14,188
+Total
+Non-current assets do not include financial instruments, deferred tax assets and
+assets from employee benefits.
+Dr. Reinhard Ploss
+Management Board and
+Supervisory Board
+Combined Management Report
+The Management Board members during the 2021 fiscal year were as follows:
+Management Board
+As required by section 314, paragraph 1, no. 6a, sentences 5 to 8, HGB (version before
+ARUG II), the remuneration of the individual members of the Management Board and
+the Supervisory Board is disclosed in the remuneration report, p. 132 ff., which is
+part of the Combined Management Report.
+Management Board and Supervisory Board
+Management remuneration in the 2021 fiscal year
+Notes to the Consolidated Financial Statements
+Fees for other services
+In addition to the amounts described above, KPMG charged €29 thousand in the
+2021 fiscal year for tax consulting services in connection with the assessment of
+individual items.
+Fees for tax advisory services
+In addition to the amounts described above, KPMG charged an aggregate of €0.3 mil-
+lion in the 2021 fiscal year for other audit services which mainly included the provision
+of a comfort letter as well as the audit of the disclosures in the Sustainability Report.
+Fees for other advisory services
+At the Annual General Meeting held on 25 February 2021, the shareholders elected
+KPMG AG Wirtschaftsprüfungsgesellschaft (“KPMG”), Munich, as auditor for the 2021
+Separate Financial Statements and the Consolidated Financial Statements of Infineon
+Technologies AG. The audit fees charged by KPMG in the 2021 fiscal year amounted
+to €3.7 million for the audit of the Consolidated Financial Statements and various
+annual audits, including an audit review of the Interim Financial Statements.
+Year-end audit fees
+Fees for audit and advisory services pursuant to section 314,
+paragraph 1, no. 9 HGB
+www.infineon.com/cms/en/about-infineon/investor/corporate-governance/#corporate-governance
+Information pursuant to section 161 Stock Corporation Act (AktG)
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the
+Management Board and the Supervisory Board and made permanently available to
+the public on Infineon's website.
+29 Additional information in accordance with HGB
+Q = < 222 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Business focus and strategy
+The Supervisory Board
+Position
+Name
+248.35
+9
+Singapore, Singapore
+100
+0
+639.88
+128.42
+9
+Blackburn, Australia
+100
+0
+1.40
+0.08
+Villach, Austria
+100
+0.004
+1,186.02
+163.15
+Melanie Riedl¹
+9, 30
+Dr. Manfred Puffer
+2,563.29
+100
+Infineon Technologies Australia Pty Limited
+Infineon Technologies Austria AG
+Infineon Technologies Cegléd Kft.
+Infineon Technologies Center of Competence (Shanghai) Co., Ltd.
+Infineon Technologies China Co., Ltd.
+Xi'an, People's Republic of China
+17
+100
+0
+8.31
+0.37
+Infineon Technologies 2. Vermögensverwaltungsgesellschaft mbH
+Neubiberg, Germany
+100
+0
+0.01
+(0.02)
+9
+Wilmington, Delaware, USA
+0
+The Supervisory Board members during the 2021 fiscal year, the Supervisory Board
+position held by them, their occupation, and their membership of other supervisory
+and governing bodies are as follows:
+Chief Financial Officer,
+Holcim Ltd., Switzerland
+Position
+and other comparable governing bodies of domestic
+and foreign companies (as of 30 September 2021)
+Membership of other Supervisory Boards
+Dr. Susanne Lachenmann' Principal Engineer
+Management Consultant
+9
+Independent
+Infineon Technologies AG
+Chief Financial Officer
+Operations,
+Labor union secretary
+IG Metall district
+management, Berlin-
+Brandenburg-Saxony
+Peter Gruber¹
+Representative of
+Senior Management
+Hans-Ulrich Holdenried
+Annette Engelfried¹
+Member of various
+supervisory bodies
+Dr. Friedrich Eichiner
+Member of various
+supervisory bodies
+Vice-Chairman of the
+Joint Works Council and
+Chairman of the Works
+Council Regensburg,
+Infineon Technologies AG
+Management Consultant -
+LuxNova Suisse GmbH
+2,472
+Xiaoqun Clever
+Johann Dechant'
+Deputy Chairman
+Chairman
+Dr. Wolfgang Eder
+Supervisory Board member
+Géraldine Picaud
+> voestalpine AG, Austria
+> SBK Siemens-Betriebskrankenkasse, Germany
+Name
+Infineon Technologies | Annual Report 2021
+> Bridge imp GmbH, Germany
+Member of the Advisory Board
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Germany
+Supervisory Board member
+Management GmbH, Germany
+> Siemens Gamesa Renewable Energy
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Germany
+Supervisory Board member
+> Allianz SE, Germany
+> Festo Management SE, Germany (Chairman)
+> BHP Group Plc., UK and BHP Group Ltd., Australia
+Supervisory Board member
+Member of the Board of Directors
+› Cornelsen Group, Germany
+Member of the Administrative Board
+› Amadeus IT Group SA, Spain
+› Capgemini SE, France
+Supervisory Board member
+Member of the Administrative Board
+3,178
+8,790
+8,778
+Acquisition-related depreciation/amortization and other expenses
+Gains (losses) on sales of businesses, or interests in subsidiaries, net
+Other income and expense, net
+Power & Sensor Systems
+(14)
+(27)
+Industrial Power Control
+(20)
+Automotive
+11
+1
+Reversal of impairments (impairments) (in particular on goodwill)
+Impact on earnings of restructuring and closures, net
+Share-based payment
+Inventories:
+€ in millions
+1,170
+2,072
+2020
+2021
+Plus/minus:
+Segment Result:
+€ in millions
+(544)
+Depreciation and amortization allocated to the segments
+Depreciation and amortization not allocated to the segments
+Total depreciation and amortization
+(540)
+1
+(9)
+9
+accounted for using the equity method
+Share of profit (loss) of associates and joint ventures
+(177)
+(182)
+Financial expenses
+29
+22
+Financial income
+Total
+581
+1,470
+Operating profit
+Corporate and Eliminations
+Other Operating Segments
+(27)
+(31)
+Connected Secure Systems
+(1)
+Other Operating Segments
+The following table provides the reconciliation of Segment Result to profit (loss) from
+continuing operations before income taxes:
+Connected Secure Systems
+Of the €544 million (2020: €540 million) “Acquisition-related depreciation/amortization
+and other expenses” incurred in the 2021 fiscal year, €295 million (2020: €316 million)
+was attributable to cost of goods sold, €15 million (2020: €18 million) to research
+and development expenses, €220 million (2020: €161 million) to selling, general and
+administrative expenses and €14 million (2020: €45 million) to other operating income
+and expense.
+2020
+2021
+There were limited levels of trading relationships between the operating segments
+during the 2021 and 2020 fiscal years. Costs are generally recharged without impact
+on profit or loss.
+Q = < 220 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Cegléd, Hungary
+100
+0
+24.82
+(0.70)
+9
+Shanghai, People's Republic of China
+17
+100
+0
+3.03
+0.09
+€ in millions
+Segment Result:
+Automotive
+Industrial Power Control
+1,170
+Power & Sensor Systems
+(2)
+(2)
+2,072
+Industrial Power Control
+3
+2
+Automotive
+130
+Profit (loss) from continuing operations before income taxes
+182
+636
+823
+256
+275
+€ in millions
+147
+792
+Connected Secure Systems
+Other Operating Segments
+Corporate and Eliminations
+Total
+Power & Sensor Systems
+Depreciation and amortization:
+9,124
+1,319
+Infineon Technologies | Annual Report 2021
+73
+106
+Greater China¹
+1,182
+1,167
+Asia-Pacific (excluding Japan, Greater China)
+2,495
+2,582
+therein: Germany
+3,627
+4,107
+Non-current assets:
+Europe
+30 Septem-
+ber 2020
+30 Septem-
+ber 2021
+€ in millions
+Non-current assets as of 30 September 2021 and 2020, by region, were as follows:
+No single customer accounted for more than 10 percent of Infineon's revenue during
+the 2021 and 2020 fiscal year.
+Revenue:
+€ in millions
+Europe, Middle East, Africa
+Revenue for the 2021 and 2020 fiscal years by region was as follows:
+2,773
+therein: Germany
+therein: USA
+therein: Mainland China, Hong Kong
+3,174
+9,137
+Infineon Technologies Asia Pacific Pte Ltd
+4,195
+Americas
+Greater China¹
+1,291
+1,744
+14
+18
+Japan
+Asia-Pacific (excluding Japan, Greater China)
+67
+92
+therein: Mainland China, Hong Kong
+1,056
+1,278
+2,322
+Entity-wide disclosures in accordance with IFRS 8
+Impairment losses on assets in the 2021 fiscal year amounted to €0 million (2020:
+€5 million) in the Automotive segment, €18 million (2020: €5 million) in the Power &
+Sensor Systems segment, and €9 million (2020: €13 million) in Corporate and
+Eliminations. Also allocated to Corporate and Eliminations in the 2021 fiscal year
+was €15 million (2020: €11 million) of reversal of impairments to assets.
+2020
+30 Septem-
+1,260
+1,513
+293
+473
+967
+1,040
+3
+3
+62
+70
+226
+272
+181
+186
+495
+509
+2020
+2021
+30 Septem-
+ber 2021
+ber 2020
+990
+2021
+Q = < 221 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+2,052
+2,181
+424
+184
+3
+2
+190
+149
+449
+565
+251
+232
+975
+243
+Infineon Technologies Americas Corp.
+9
+10.55
+0.00
+0
+100
+Wilmington, Delaware, USA
+11, 30
+(2.23)
+(2.28)
+0
+100
+Wilmington, Delaware, USA
+0.00
+0.00
+0
+n.a.
+Austin, Texas, USA
+11, 26, 30
+(€ in millions)
+(€ in millions)
+Footnote
+0.00
+Net result
+11, 30
+40
+100
+Camana Bay (George Town), Cayman Islands
+11, 30
+11, 30
+0.00
+0.00
+0
+100
+Wilmington, Delaware, USA
+1.33
+20.96
+0
+100
+Kawasaki, Japan
+10
+6,27
+(0.04)
+1.42
+0
+General Trias, Philippines
+0
+Equity
+in %
+Subsidiaries, associated companies, joint ventures and other companies
+(not consolidated) as of 30 September 2021
+Q = < 225 >
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies AG, Am Campeon 1-15, D-85579 Neubiberg (Germany).
+The business address of each member of the Supervisory Board is:
+Infineon Technologies | Annual Report 2021
+Margret Suckale
+Dr. Manfred Puffer
+Dr. Wolfgang Eder (Chairman)
+Nomination Committee
+Jürgen Scholz
+Dr. Susanne Lachenmann
+Peter Gruber
+Dr. Wolfgang Eder
+Xiaoqun Clever
+GRI 102-45
+thereof Infineon
+Technologies AG
+Name of company
+5200 Ben White Condominiums Association, Inc.
+Shareholdings
+Nonthaburi, Thailand
+Ebène, Mauritius
+Stockholm, Sweden
+Lausanne, Switzerland
+Melaka, Malaysia
+Registered office
+Cypress Semiconductor International, Inc.
+Cypress Semiconductor International Sales B.V.
+Cypress Semiconductor Hong Kong Private Limited
+Cypress Semiconductor GmbH
+Cypress Semiconductor Corporation
+Cypress Semiconductor (Mauritius) LLC
+Cypress Semiconductor (Scandinavia) AB
+Cypress Semiconductor (Switzerland) Sàrl
+Cypress Semiconductor (Thailand) Limited
+Cypress Semiconductor (UK) Limited
+Cypress Semiconductor (Malaysia) Sdn. Bhd.
+Cypress Semiconductor (Canada), Inc.
+Cypress Manufacturing, Ltd.
+Cypress International, LLC
+Cypress Innovates G.K.
+CYLand Corp.
+Cirrent, LLC
+AgigA Tech, Inc.
+Fully consolidated subsidiaries:
+71.27
+0.72
+8
+(0.36)
+299.78
+0
+100
+Wilmington, Delaware, USA
+0.01
+6.07
+0
+100
+Amsterdam, The Netherlands
+17
+0.05
+0.40
+0
+100
+Hong Kong, People's Republic of China
+4
+1.36
+8.64
+11, 30
+0
+Cypress Semiconductor Ireland Limited
+Cork, Ireland
+0
+100
+17
+Seoul, Republic of Korea
+Camana Bay (George Town), Cayman Islands
+Cypress Semiconductor Technology (Shanghai) Co. Ltd.
+Cypress Semiconductor Technology India Private Limited
+Cypress Semiconductor Technology Ltd.
+Cypress Semiconductor México, S. de R.L. de C.V.
+Cypress Semiconductor Philippines Headquarters, Ltd.
+Cypress Semiconductor Singapore Pte. Ltd.
+Cypress Semiconductor Korea Ltd.
+6
+(0.03)
+0.31
+0
+100
+0.78
+4.24
+0
+100
+6
+Basiglio (Milan), Italy
+Cypress Semiconductor Italia S.r.l.
+100
+Munich, Germany
+6
+0
+100
+17
+(0.02)
+0.18
+Shanghai, People's Republic of China
+0
+100
+7
+0.58
+6.96
+0
+100
+17
+0.03
+0.04
+0
+100
+Kanata, Ontario, Canada
+0.62
+(0.09)
+17
+100
+11, 30
+(471.58)
+5,693.76
+0
+100
+Wilmington, Delaware, USA
+(0.25)
+5.33
+0
+Dr. Ulrich Spiesshofer (Chairman)
+100
+5
+1.98
+78.26
+0
+100
+17
+(0.33)
+17.84
+0
+Bristol, Great Britain
+Strategy and Technology Committee
+Annette Engelfried
+Dr. Wolfgang Eder
+in %
+thereof Infineon
+Technologies AG
+Equity
+(€ in millions)
+Net result
+Footnote
+(€ in millions)
+17
+Lviv, Ukraine
+100
+0
+2.02
+0.11
+Camana Bay (George Town), Cayman Islands
+100
+0
+6.08
+0.00
+11, 30
+Karlsruhe, Germany
+Shareholdings
+100
+Registered office
+Infineon Technologies (Advanced Logic) Sdn. Bhd.
+100
+0
+253.17
+(0.82)
+11, 30
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 226 >
+Notes to the Consolidated Financial Statements
+Name of company
+Cypress Semiconductor Ukraine LLC
+Cypress Semiconductor World Trade Corp.
+Hitex GmbH
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+Infineon Semiconductors (Shenzhen) Co., Ltd.
+Infineon Semiconductors (Wuxi) Co., Ltd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+100
+2.16
+0.00
+2.33
+9
+Kulim, Malaysia
+100
+0
+326.53
+1.21
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Infineon Technologies (Wuxi) Co., Ltd.
+Melaka, Malaysia
+100
+0
+355.15
+36.46
+17
+Wuxi, People's Republic of China
+100
+0
+123.92
+9
+27.79
+0
+100
+3, 20, 22
+Beijing, People's Republic of China
+17
+100
+0
+15.27
+1.14
+18
+Shenzhen, People's Republic of China
+4.38
+100
+1.39
+0.03
+Wuxi, People's Republic of China
+17
+100
+0
+45.53
+1.74
+Melaka, Malaysia
+0
+Infineon Technologies (Xi'an) Co., Ltd.
+31.49
+100
+Management Board and
+Supervisory Board
+> DWS Group GmbH & Co. KGaA, Germany
+> Deutsche Telekom AG, Germany
+> HeidelbergCement AG, Germany
+Supervisory Board member
+> BKK of BMW AG, Germany
+Member of the Administrative Board
+> Krones AG, Germany
+Supervisory Board member
+› Catalina Holdings (Bermuda) Ltd., Bermuda
+› Athene Holding Ltd., Bermuda
+Member of the Board of Directors
+› Oldenburgische Landesbank AG, Germany
+> Servicios Prescriptor y Medios de Pagos, S.A.U., Spain
+› Nova KBM Bank, Slovenia
+> Athora Lebensversicherung AG, Germany
+Supervisory Board member
+> Huaxin Cement Co., Ltd., People's Republic of China
+> LafargeHolcim Maroc Afrique SAS, Morocco
+Business focus and strategy
+> LafargeHolcim Maroc SAS, Morocco
+Combined Management Report
+Further information
+Johann Dechant
+Dr. Friedrich Eichiner (Chairman)
+Investment, Finance and Audit Committee
+Diana Vitale
+Margret Suckale
+Hans-Ulrich Holdenried
+Annette Engelfried
+Johann Dechant
+Dr. Wolfgang Eder (Chairman)
+Executive Committee
+Jürgen Scholz
+Hans-Ulrich Holdenried
+Johann Dechant
+Dr. Wolfgang Eder (Chairman)
+Mediation Committee
+Supervisory Board committees
+Notes to the Consolidated Financial Statements
+< 224 >
+Q =
+Consolidated Financial Statements
+> Lafarge Maroc SA, Morocco
+> Holcim Technology Ltd, Switzerland
+> Holcim Group Services Ltd, Switzerland
+Camana Bay (George Town), Cayman Islands
+100
+0
+5.78
+0.02
+11, 30
+17
+Singapore, Singapore
+100
+0
+6.27
+0.53
+Shanghai, People's Republic of China
+Bangalore, India
+17
+100
+0
+4.90
+0.73
+7
+17
+(0.01)
+(0.04)
+0
+and other comparable governing bodies of domestic
+and foreign companies (as of 30 September 2021)
+Member of the Board of Directors
+Membership of other Supervisory Boards
+of the Infineon Works
+Council, Warstein,
+Infineon Technologies AG
+Deputy Chairwoman
+Member of various
+supervisory bodies
+The Blackstone Group,
+member of various advisory
+boards and investor
+Infineon Technologies
+Dresden GmbH & Co. KG
+Senior advisor -
+Expert in the frontend-
+manufacturing,
+Analysis Engineer and
+Vice Chairwoman of the
+Works Council Campeon,
+exempted member
+of the Works Council
+First authorized agent
+of IG Metall Regensburg
+0
+Independent
+Management Consultant
+Diana Vitale¹
+Margret Suckale
+Dr. Ulrich Spiesshofer
+Kerstin Schulzendorf¹
+Jürgen Scholz¹
+2.86
+0.64
+Guadalajara, Mexico
+100
+1 Employee representative
+17
+Wilmington, Delaware, USA
+0
+60
+60
+Warstein, Germany
+17
+17, 28
+17, 30
+(16.05)
+(10.59)
+4.71
+13.67
+0
+40
+Hong Kong, People's Republic of China
+30.12
+8.93
+0
+15
+15
+15
+Siegen, Germany
+42.5
+38.65
+Dover, Delaware, USA
+(3.75)
+17
+Duisburg, Germany
+9
+0.35
+1.04
+100
+100
+Duisburg, Germany
+9
+0.00
+0.00
+0
+100
+Wilmington, Delaware, USA
+9
+(10.32)
+(10.73)
+25
+49
+Shanghai, People's Republic of China
+9, 29
+100
+Infineon Technologies | Annual Report 2021
+Infineon Technologies Mantel 29 GmbH
+162.27
+678.49
+0
+0
+0.02
+0.00
+Wilmington, Delaware, USA
+100
+0
+68.48
+0.00
+15, 30
+19
+Bangalore, India
+100
+0
+n.a.
+n.a.
+Netanya, Israel
+Spansion Inc.
+Infineon Technologies Polska Sp. z o.o.
+Infineon Technologies Romania s.r.l.
+Infineon Technologies RUS LLC
+Spansion LLC
+Deca Technologies, Inc.
+Infineon Technologies Mantel 27 GmbH
+Infineon Technologies Mantel 26 AG
+Infineon Technologies Linz Verwaltungs GmbH
+Infineon Technologies Iberia, S.L.U.
+Infineon Technologies Holding GmbH
+Infineon Technologies Gamma GmbH
+Infineon Technologies Delta GmbH
+Infineon Technologies Campeon Verwaltungsgesellschaft mbH
+Infineon Technologies Bipolar Verwaltungs GmbH
+Hitex (UK) Limited
+EPOS embedded core & power systems Verwaltungs GmbH
+Futurium gGmbH
+EPOS embedded core & power systems GmbH & Co. KG
+CHIL Semiconductors Corporation
+Other companies (not consolidated):1
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd
+Infineon Technologies Bipolar GmbH & Co. KG
+Joint ventures:
+SkyHigh Memory Limited
+pmdtechnologies ag
+Associated companies:
+100
+0.07
+0.00
+9, 20
+0.00
+0.03
+100
+100
+Neubiberg, Germany
+0.00
+0.03
+100
+100
+Neubiberg, Germany
+9
+0.00
+0.12
+0
+100
+Linz, Austria
+9
+0.04
+Neubiberg, Germany
+0.15
+100
+0.03
+0.22
+0
+100
+Moscow, Russian Federation
+17
+0.01
+0.04
+0
+100
+Bucharest, Romania
+17
+0.02
+0.11
+0
+100
+Warsaw, Poland
+9
+9, 20
+0.00
+100
+0
+100
+Madrid, Spain
+9
+0.00
+0.03
+60
+60
+Warstein, Germany
+9
+0.09
+2.13
+0
+100
+Coventry, Great Britain
+9
+n.a.
+n.a.
+n.a.
+n.a.
+Berlin, Germany
+25
+Neubiberg, Germany
+100
+0
+0.11
+9
+0.00
+0.13
+100
+100
+Neubiberg, Germany
+9, 20
+0.00
+0.01
+4
+100
+Neubiberg, Germany
+9
+0.00
+0.01
+100
+100
+Neubiberg, Germany
+9
+0.02
+100
+0.02
+100
+62.14
+100
+100
+0.03
+0.00
+Neubiberg, Germany
+93
+0
+107.28
+23.81
+9, 24
+10
+Kawasaki, Japan
+100
+0
+6.37
+6.33
+Batam, Indonesia
+9
+100
+Neubiberg, Germany
+0
+9
+0.00
+0
+1.06
+0.26
+Wilmington, Delaware, USA
+100
+0
+147.82
+28.45
+9, 30
+Curepipe, Mauritius
+9, 30
+100
+0
+0.00
+0.00
+Neubiberg, Germany
+100
+6
+133.40
+9, 20, 21
+100
+17.08
+Wilmington, Delaware, USA
+Tijuana, Mexico
+100
+0
+7.31
+1.14
+SILTECTRA GmbH
+Dresden, Germany
+100
+0
+3.19
+9
+0.25
+Wilmington, Delaware, USA
+100
+0
+516.15
+(0.03)
+11, 30
+11, 30
+Rectificadores Internacionales, S.A. de C.V.
+1.22
+9, 30
+Footnote
+100
+0
+0.00
+0.00
+11,30
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 228 >
+Notes to the Consolidated Financial Statements
+Name of company
+Registered office
+Shareholdings
+in %
+thereof Infineon
+Technologies AG
+Equity
+(€ in millions)
+Net result
+(€ in millions)
+9
+Herlev, Denmark
+9, 20, 21
+5.14
+0.23
+9
+Muntinlupa City, Philippines
+100
+0
+0.20
+0.26
+Cheonan, Republic of Korea
+9
+100
+100
+55.82
+2.77
+Bristol, Great Britain
+9
+100
+0
+17.00
+0
+0.81
+100
+9
+2.83
+Kawasaki, Japan
+100
+0
+0.04
+0.00
+14, 30
+Kuala Lumpur, Malaysia
+100
+0
+0.00
+0.00
+13, 30
+19
+Taipei, Taiwan
+100
+0
+n.a.
+n.a.
+Kista, Sweden
+9
+Bucharest, Romania
+100
+2,231.98
+277.82
+Wilmington, Delaware, USA
+100
+0
+1,532.80
+271.26
+9, 30
+Wilmington, Delaware, USA
+100
+0
+(0.04)
+19.25
+9, 30
+Neubiberg, Germany
+100
+100
+125.22
+0.00
+0
+100
+Wilmington, Delaware, USA
+9, 30
+0
+4.58
+1.70
+3
+Maia, Portugal
+100
+100
+3.50
+0.62
+0
+Taipei, Taiwan
+Bristol, Great Britain
+100
+0
+8.60
+1.55
+9
+100
+0
+1.51
+1.92
+9
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Infineon Technologies Philippines, Inc.
+Infineon Technologies Power Semitech Co., Ltd.
+Infineon Technologies Reigate Limited
+Infineon Technologies Romania & Co. Societate in Comandita
+Infineon Technologies Shared Service Center, Unipessoal Lda.
+Infineon Technologies Taiwan Co., Ltd.
+Infineon Technologies UK Limited
+Infineon Technologies US HoldCo Inc.
+Infineon Technologies US InterCo LLC
+Infineon Technologies US Investment LLC
+Infineon Technologies Vermögensverwaltungsgesellschaft mbH
+International Rectifier HiRel Denmark ApS
+International Rectifier HiRel Products, Inc.
+International Rectifier Mauritius, Inc. (in liquidation)
+MOLSTANDA Vermietungsgesellschaft mbH
+MOTEON GmbH
+MoTo Objekt CAMPEON GmbH & Co. KG
+Nihon Cypress G.K.
+PT Infineon Technologies Batam
+Infineon Technologies Nordic AB
+Ramtron International Corporation
+Infineon Technologies Memory Solutions Taiwan Ltd.
+Infineon Technologies Maasstad C.V.
+Klagenfurt, Austria
+100
+0
+10.24
+5.61
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 227 >
+Notes to the Consolidated Financial Statements
+Name of company
+Infineon Technologies Japan K.K.
+Infineon Technologies Korea Co., LLC
+Infineon Technologies Linz GmbH & Co KG
+Infineon Technologies LLC
+Infineon Technologies Memory Solutions Germany GmbH
+Infineon Technologies Memory Solutions Holdings Inc.
+Infineon Technologies Memory Solutions India LLP
+Infineon Technologies Memory Solutions Israel Ltd.
+Infineon Technologies Memory Solutions Japan G.K.
+Infineon Technologies Memory Solutions Malaysia Sdn. Bhd.
+9
+Infineon Technologies | Annual Report 2021
+Shareholdings
+5.94
+5.89
+Wilmington, Delaware, USA
+100
+0
+121.66
+49.30
+11, 30
+Rotterdam, The Netherlands
+9
+100
+0
+26.80
+2.08
+9
+Neubiberg, Germany
+100
+77
+Rotterdam, The Netherlands
+0
+Registered office
+100
+9
+in %
+thereof Infineon
+Technologies AG
+Equity
+Net result
+Footnote
+(€ in millions)
+(€ in millions)
+9
+Tokyo, Japan
+100
+0
+40.64
+6.17
+Seoul, Republic of Korea
+9
+100
+0
+13.42
+3.92
+Linz, Austria
+2.18
+7.25
+0
+0.09
+0.00
+Wilmington, Delaware, USA
+100
+0
+8.16
+3.25
+9, 30
+Infineon Technologies Finance B.V.
+Rotterdam, The Netherlands
+100
+100
+1.97
+(0.03)
+12
+9
+Infineon Technologies France S.A.S.
+Infineon Technologies Holding Asia Pacific Pte. Ltd.
+Infineon Technologies Holding B.V.
+0
+Infineon Technologies Hong Kong Ltd.
+100
+9, 20, 21
+187.05
+17.39
+9
+Infineon Technologies Denmark ApS
+Herlev, Denmark
+100
+0
+4.72
+0.22
+9, 23
+Infineon Technologies Dresden GmbH & Co. KG
+Infineon Technologies Dresden Verwaltungs GmbH
+100
+Infineon Technologies Epi Services, Inc.
+Dresden, Germany
+100
+100
+246.52
+8.70
+Neubiberg, Germany
+Infineon Technologies India Private Limited
+Infineon Technologies Investment B.V.
+Infineon Technologies Ireland Limited
+Infineon Technologies Italia s.r.l.
+Infineon Technologies IT-Services GmbH
+St. Denis, France
+Bangalore, India
+100
+0
+14.33
+2.65
+9
+Rotterdam, The Netherlands
+100
+0
+0.11
+0.00
+Dublin, Ireland
+9
+100
+100
+0.41
+0.14
+9
+100
+7
+0.40
+2.03
+0
+Milan, Italy
+100
+0
+9.10
+0.64
+9
+Singapore, Singapore
+100
+0
+2
+2,916.15
+Rotterdam, The Netherlands
+9
+100
+100
+10,814.67
+54.71
+Hong Kong, People's Republic of China
+9
+100
+7.61
+77
+Shanghai, People's Republic of China
+2
+n.a.
+0
+n.a.
+Kaohsiung, Taiwan
+Dover, Delaware, USA
+25
+0.07
+1.40
+24
+24
+Lippstadt, Germany
+17
+0.29
+0.57
+0
+100
+17
+Villach, Austria
+0.00
+n.a.
+0.00
+25
+0
+0.00
+0
+100
+Wilmington, Delaware, USA
+9
+16
+0.00
+0.00
+0
+100
+Jakarta, Indonesia
+0.00
+0.01
+100
+100
+Neubiberg, Germany
+9
+n.a.
+n.a.
+n.a.
+0
+100
+Wilmington, Delaware, USA
+Silicon Alps Cluster GmbH
+Schweizer Electronic AG
+Rapt Touch Ireland Ltd.
+R Labco, Inc.
+PT Infineon Technologies Indonesia
+OSPT IP Pool GmbH
+MicroLinks Technology Corp.
+Metawave Corporation
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+KAI Kompetenzzentrum Automobil- und Industrieelektronik GmbH
+IR International Holdings China, Inc.
+Infineon Technologies Vietnam Company Ltd.
+Infineon Technologies South America Ltda
+Name of company
+Notes to the Consolidated Financial Statements
+< 229 >
+Q =
+Further information
+Consolidated Financial Statements
+TTTech Auto AG
+Virtual Vehicle Research GmbH
+Combined Management Report
+XMOS Limited
+9
+0.03
+0.09
+0
+100
+Hanoi, Vietnam
+9
+0.00
+0.07
+0.00
+0
+São Paulo, Brasil
+17
+Footnote
+Net result
+(€ in millions)
+Equity
+(€ in millions)
+thereof Infineon
+Technologies AG
+in %
+Shareholdings
+Registered office
+100
+100
+25
+n.a.
+2
+77
+Melaka, Malaysia
+2
+40
+Vila do Conde, Portugal
+2
+17
+Colorado Springs, Colorado, USA
+2
+Infineon Technologies | Annual Report 2021
+Qimonda Investment B.V.
+Qimonda International Trade (Shanghai) Co. Ltd.
+Qimonda Holding B.V. (in insolvency)
+Qimonda France SAS (in liquidation)
+Qimonda Flash GmbH (in insolvency)
+Wilmington, Delaware, USA
+Dresden, Germany
+Dresden, Germany
+77
+Bratislava, Slovakia
+28
+77
+77
+Rotterdam, The Netherlands
+2
+77
+St. Denis, France
+2
+77
+Dresden, Germany
+2
+77
+2
+77
+2
+77
+2
+77
+2
+77
+2
+2
+Leuven, Belgium
+Munich, Germany
+Singapore, Singapore
+Qimonda Finance LLC (in insolvency)
+n.a.
+n.a.
+Vienna, Austria
+25
+n.a.
+n.a.
+0
+n.a.
+Villach, Austria
+25
+17
+(9.15)
+46.28
+9
+9
+Schramberg, Germany
+n.a.
+n.a.
+0
+n.a.
+n.a.
+25
+Graz, Austria
+Qimonda Dresden Verwaltungsgesellschaft mbH (in insolvency)
+Qimonda Dresden GmbH & Co. OHG (in insolvency)
+Qimonda Bratislava s.r.o. (in liquidation)
+Qimonda Belgium BVBA (in insolvency)
+Qimonda Asia Pacific Pte. Ltd.
+Qimonda AG (in insolvency)
+Qimonda (Malaysia) Sdn. Bhd. (in liquidation)
+Itarion Solar Lda.
+Celis Semiconductor Corp.
+Dublin, Ireland
+Qimonda AG and its subsidiaries:²
+n.a.
+0
+n.a.
+Bristol, Great Britain
+25
+n.a.
+n.a.
+n.a.
+n.a.
+n.a.
+Management Board and
+Supervisory Board
+Business focus and strategy
+11 Equity and net result as of 30 September 2020 (period from 16 April 2020 until 30 September 2020).
+12 Equity and net result as of 30 September 2020 (period from 28 April 2020 until 30 September 2020).
+13 Equity and net result as of 30 September 2020 (period from 29 May 2020 until 30 September 2020).
+14 Equity and net result as of 30 September 2020 (period from 26 June 2020 until 30 September 2020).
+Q = < 230 >
+Notes to the Consolidated Financial Statements
+Name of company
+Qimonda IT (Suzhou) Co., Ltd. (in liquidation)
+Qimonda Italy s.r.l. (in liquidation)
+Qimonda Korea Co. Ltd. (in liquidation)
+Qimonda Licensing LLC
+Qimonda Memory Product Development Center (Suzhou) Co. (in liquidation)
+Qimonda North America Corp. (in insolvency)
+Qimonda Richmond LLC (in insolvency)
+Registered office
+Suzhou, People's Republic of China
+Padua, Italy
+Shareholdings
+Further information
+in %
+Equity
+(€ in millions)
+77
+77
+Seoul, Republic of Korea
+77
+Fort Lauderdale, Florida, USA
+77
+Suzhou, People's Republic of China
+77
+Wilmington, Delaware, USA
+Wilmington, Delaware, USA
+77
+77
+Net result
+thereof Infineon
+Technologies AG
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+> the accompanying group management report as a whole provides an appropriate
+view of the Group's position. In all material respects, this group management
+report is consistent with the consolidated financial statements, complies with
+German legal requirements and appropriately presents the opportunities and risks
+of future development. Our opinion on the group management report does not
+cover the content of those components of the group management report specified
+in the "Other Information" section of the auditor's report. The group management
+report contains cross-references that are not required by law and which are marked
+as unaudited. Our audit opinion does not extend to the cross-references and the
+information to which the cross-references refer.
+> the accompanying consolidated financial statements comply, in all material respects,
+with the IFRSS as adopted by the EU, and the additional requirements of German
+commercial law pursuant to Section 315e (1) HGB [Handelsgesetzbuch: German
+Commercial Code] and, in compliance with these requirements, give a true and fair
+view of the assets, liabilities, and financial position of the Group as at 30 Septem-
+ber 2021, and of its financial performance for the financial year from 1 October 2020
+to 30 September 2021, and
+In our opinion, on the basis of the knowledge obtained in the audit,
+The group management report contains cross-references that are not required by
+law and which are marked as unaudited. In accordance with German legal require-
+ments, we have not audited the cross-references and the information to which the
+cross-references refer.
+In accordance with German legal requirements, we have not audited the content
+of those components of the group management report specified in the “Other Infor-
+mation" section of our auditor's report.
+We have audited the consolidated financial statements of Infineon Technologies AG,
+Neubiberg, and its subsidiaries (the Group), which comprise the consolidated state-
+ment of financial position as at 30 September 2021, and the consolidated statement
+of profit or loss, consolidated statement of comprehensive income, consolidated state-
+ment of changes in equity and consolidated statement of cash flows for the financial
+year from 1 October 2020 to 30 September 2021, and notes to the consolidated financial
+statements, including a summary of significant accounting policies. In addition, we
+have audited the combined management report of Infineon Technologies AG and
+of the Group (hereinafter: the "group management report") for the financial year
+from 1 October 2020 to 30 September 2021.
+Opinions
+Report on the Audit of the Consolidated Financial Statements
+and of the Group Management Report
+To Infineon Technologies AG, Neubiberg
+Independent Auditor's Report
+For the Consolidated Financial Statements and Group Management Report we have issued an unqualified auditor's report.
+The English language text below is a translation of the auditor's report. The original German text shall prevail in the event of any discrepancies
+between the English translation and the German original. We do not accept any liability for the use of, or reliance on, the English translation
+or for any errors or misunderstandings that may derive from the translation.
+< 233 >
+Q =
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+< 232 >
+Q =
+Further information
+Responsibility Statement
+by the Management Board
+Infineon Technologies | Annual Report 2021
+Constanze Hufenbecher
+Jochen Hanebeck
+Dr. Helmut Gassel
+Dr. Sven Schneider
+Dr. Reinhard Ploss
+Management Board
+Management Board and
+Supervisory Board
+Footnote
+Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led
+to any reservations relating to the legal compliance of the consolidated financial
+statements and of the group management report.
+(€ in millions)
+Qimonda UK Ltd. (in liquidation)
+2
+2
+2
+2
+2
+2
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 231 >
+2
+Notes to the Consolidated Financial Statements
+Infineon Technologies AG
+Management Board
+Dr. Reinhard Ploss
+Dr. Sven Schneider
+Dr. Helmut Gassel
+Jochen Hanebeck
+Constanze Hufenbecher
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Responsibility Statement
+by the Management Board
+Neubiberg, 25 November 2021
+2
+2
+Infineon Technologies | Annual Report 2021
+1 Certain subsidiaries were not consolidated due to immateriality.
+Taipei, Taiwan
+High Blantyre, Scotland
+77
+77
+2 On 23 January 2009, Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally opened on 1 April 2009. The equity and earnings of Qimonda AG and its subsidiaries are not disclosed due
+to the substantial and ongoing restriction of Infineon's rights as a result of Qimonda AG's insolvency. The list of subsidiaries held by Qimonda AG is based on information from 30 September 2010, since Infineon had not received any further information from the
+insolvency administrator of Qimonda AG with respect to the insolvency or liquidation of Qimonda companies, and further reflects information from the German commercial register. Since all Qimonda-related investments were written down in full in previous years,
+this has no effect on Infineon's net assets, financial position and results of operations.
+3 Equity and net result as of 30 September 2019.
+4 Equity and net result as of 29 December 2019.
+5 Equity and net result as of 30 December 2019.
+6 Equity and net result as of 31 December 2019.
+7 Equity and net result as of 31 March 2020.
+8 Equity and net result as of 27 September 2020 (period from 16 April 2020 until 27 September 2020).
+9 Equity and net result as of 30 September 2020.
+10 Equity and net result as of 30 September 2020 (period from 1 January 2020 until 30 September 2020).
+Infineon Technologies AG
+15 Equity and net result as of 30 September 2020 (period from 8 July 2020 until 30 September 2020).
+16 Equity and net result as of 30 September 2020 (period from 28 September 2020 until 30 September 2020).
+17 Equity and net result as of 31 December 2020.
+18 Equity and net result as of 31 December 2020 (period from 8 July 2020 until 31 December 2020).
+19 The entity was founded in the 2021 fiscal year.
+20 Control and profit transfer agreement.
+21 Exemption pursuant to Section 264, paragraph 3, German Commercial Code from the obligations to disclose the annual financial statements pursuant to Section 325 German Commercial Code.
+22 Exemption pursuant to Section 264, paragraph 3, German Commercial Code from the preparation of a management report pursuant to section 264 et seq. German Commercial Code and from the obligations to disclose the annual financial statements
+pursuant to Section 325 German Commercial Code.
+23 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report as well as notes and from the obligations to disclose the annual financial statements.
+24 Exemption pursuant to Section 264b German Commercial Code from the obligations to prepare a management report and to disclose the annual financial statements.
+25 Because criteria pursuant to Section 285, No. 11, German Commercial Code are not met, investments in the affiliate are not disclosed.
+26 Non-stock entity. Disclosure of ownership in percent does not apply.
+27 The entity owns land of which Infineon is the sole tenant.
+28 Infineon accounts for its interest using the equity method because Infineon has significant influence due to the right to hold a supervisory board position in combination with comprehensive minority rights and certain contractual rights in the context of development cooperation.
+29 Infineon accounts for its interest using the equity method as Infineon lacks controlling influence due to certain contractual participation rights of the co-shareholder.
+30 IFRS figures.
+Qimonda Taiwan Co. Ltd. (in liquidation)
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+We conducted our assurance work of the reproduction of the consolidated financial
+statements and the group management report contained in the above-mentioned
+electronic file provided in accordance with Section 317 (3a) HGB and the IDW Assurance
+Standard: Assurance in accordance with Section 317 (3a) HGB on the Electronic Repro-
+duction of Financial Statements and Management Reports Prepared for Publication
+Purposes (IDW ASS 410 10.2021). Accordingly, our responsibilities are further described
+below. Our audit firm has applied the IDW Standard on Quality Management 1: Require-
+ments for Quality Management in Audit Firms (IDW QS 1).
+In our opinion, the reproduction of the consolidated financial statements and the
+group management report contained in the above-mentioned electronic file provided
+and prepared for publication purposes complies in all material respects with the
+requirements of Section 328 (1) HGB for the electronic reporting format. We do not
+express any opinion on the information contained in this reproduction nor on any
+other information contained in the above-mentioned file beyond this reasonable
+assurance conclusion and our audit opinion on the accompanying consolidated
+financial statements and the accompanying group management report for the financial
+year from 1 October 2020 to 30 September 2021 contained in the "Report on the Audit
+of the Consolidated Financial Statements and of the Group Management Report" above.
+Report on Assurance in accordance with Section 317 (3a) HGB on the
+Electronic Reproduction of the Consolidated Financial Statements
+and the Group Management Report Prepared for Publication Purposes
+We have performed assurance work in accordance with Section 317 (3a) HGB to obtain
+reasonable assurance about whether the reproduction of the consolidated financial
+statements and the group management report (hereinafter the "ESEF documents”)
+contained in the electronic file "Infineon_Technologies_AG_KA+KLB_ESEF_2021-09-
+30.zip" (SHA256-Hashwert: f59eead9aa516c1fa1afefc8ed72d415a230c3f95c3892cd-
+38cc5aaa3514e019) provided and prepared for publication purposes complies in
+all material respects with the requirements of Section 328 (1) HGB for the electronic
+reporting format ("ESEF format"). In accordance with German legal requirements,
+this assurance only extends to the conversion of the information contained in the
+consolidated financial statements and the group management report into the ESEF
+format and therefore relates neither to the information contained in this reproduction
+nor any other information contained in the above-mentioned electronic file.
+Other Legal and Regulatory Requirements
+From the matters communicated with those charged with governance, we determine
+those matters that were of most significance in the audit of the consolidated financial
+statements of the current period and are therefore the key audit matters. We describe
+these matters in our auditor's report unless law or regulation precludes public disclo-
+sure about the matter.
+Q = < 238 >
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+We also provide those charged with governance with a statement that we have
+complied with the relevant independence requirements, and communicate with
+them all relationships and other matters that may reasonably be thought to bear on
+our independence, and where applicable, the related safeguards.
+We communicate with those charged with governance regarding, among other matters,
+the planned scope and timing of the audit and significant audit findings, including
+any significant deficiencies in internal control that we identify during our audit.
+> Perform audit procedures on the prospective information presented by the Manage-
+ment Board in the group management report. On the basis of sufficient appropriate
+audit evidence we evaluate, in particular, the significant assumptions used by the
+Management Board as a basis for the prospective information, and evaluate the
+proper derivation of the prospective information from these assumptions. We do not
+express a separate opinion on the prospective information and on the assumptions
+used as a basis. There is a substantial unavoidable risk that future events will differ
+materially from the prospective information.
+> Evaluate the consistency of the group management report with the consolidated
+financial statements, its conformity with [German] law, and the view of the Group's
+position it provides.
+> Obtain sufficient appropriate audit evidence regarding the financial information
+of the entities or business activities within the Group to express opinions on the
+consolidated financial statements and on the group management report. We are
+responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our opinions.
+> Evaluate the overall presentation, structure and content of the consolidated finan-
+cial statements, including the disclosures, and whether the consolidated financial
+statements present the underlying transactions and events in a manner that the
+consolidated financial statements give a true and fair view of the assets, liabilities,
+financial position and financial performance of the Group in compliance with IFRSS
+as adopted by the EU and the additional requirements of German commercial law
+pursuant to Section 315e (1) HGB.
+> Conclude on the appropriateness of the Management Board's use of the going
+concern basis of accounting and, based on the audit evidence obtained, whether
+a material uncertainty exists related to events or conditions that may cast signifi-
+cant doubt on the Group's ability to continue as a going concern. If we conclude
+that a material uncertainty exists, we are required to draw attention in the auditor's
+report to the related disclosures in the consolidated financial statements and in
+the group management report or, if such disclosures are inadequate, to modify our
+respective opinions. Our conclusions are based on the audit evidence obtained up
+to the date of our auditor's report. However, future events or conditions may cause
+the Group to cease to be able to continue as a going concern.
+> Evaluate the appropriateness of accounting policies used by the Management
+Board and the reasonableness of estimates made by the Management Board and
+related disclosures.
+> Obtain an understanding of internal control relevant to the audit of the consoli-
+dated financial statements and of arrangements and measures (systems) relevant
+to the audit of the group management report in order to design audit procedures
+that are appropriate in the circumstances, but not for the purpose of expressing an
+opinion on the effectiveness of these systems.
+< 237 >
+Q =
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+To the best of our knowledge, and in accordance with the applicable reporting
+principles, the Consolidated Financial Statements give a true and fair view of
+the assets, liabilities, financial position and profit or loss of the Group, and the
+Combined Management Report, which is combined with the Management Report
+of Infineon Technologies AG, includes a fair review of the development and perfor-
+mance of the business and the position of the Group, together with a description
+of the principal opportunities and risks associated with the expected development
+of the Group.
+The Company's Management Board is responsible for the preparation of the ESEF
+documents including the electronic reproduction of the consolidated financial
+statements and the group management report in accordance with Section 328 (1)
+sentence 4 item 1 HGB and for the tagging of the consolidated financial statements
+in accordance with Section 328 (1) sentence 4 item 2 HGB.
+In addition, the Company's Management Board is responsible for the internal controls
+it considers necessary to enable the preparation of ESEF documents that are free
+from material non-compliance, whether due to fraud or error, with the requirements
+of Section 328 (1) HGB for the electronic reporting format.
+The Supervisory Board is responsible for overseeing the process of preparing the
+ESEF documents as part of the financial reporting process.
+Our objective is to obtain reasonable assurance about whether the ESEF documents
+are free from material intentional or unintentional non-compliance with the require-
+ments of Section 328 (1) HGB. We exercise professional judgement and maintain
+professional scepticism throughout the audit. We also:
+Infineon Technologies | Annual Report 2021
+[German Public Auditor]
+Wirtschaftsprüfer
+Schmitt
+[German Public Auditor]
+Wirtschaftsprüfer
+Pritzer
+Wirtschaftsprüfungsgesellschaft
+KPMG AG
+Munich, 25 November 2021
+German Public Auditor Responsible for the Engagement
+The German Public Auditor responsible for the engagement is Michael Pritzer.
+-
+Our auditor's report should always be read in conjunction with the audited consoli-
+dated financial statements and the audited group management report as well as
+the audited ESEF documents. The consolidated financial statements and the group
+management report converted into ESEF format - including the versions to be
+published in the German Federal Gazette [Bundesanzeiger] – are merely electronic
+reproductions of the audited consolidated financial statements and the group
+audited management report and do not replace these. In particular, the ESEF assur-
+ance report and our assurance conclusion contained therein can only be used in
+conjunction with the audited ESEF documents provided in electronic form.
+Management Board and
+Supervisory Board
+Other matter - Use of the Auditor's Report
+Further information pursuant to Article 10 of the EU Audit Regulation
+We were elected as group auditor at the annual general meeting on 25 February 2021.
+We were engaged by the Supervisory Board on 3 May 2021. We have been the group
+auditor of Infineon Technologies AG without interruption since financial year 2000.
+> Evaluate whether the tagging of the ESEF documents with Inline XBRL technology
+(iXBRL), in accordance with Articles 4 and 6 of Commission Delegated Regulation
+(EU) 2019/815 in the version valid on the reporting date, enables an appropriate
+and complete machine-readable XBRL copy of the XHTML reproduction.
+> Evaluate whether the ESEF documents enable an XHTML reproduction with content
+equivalent to the audited consolidated financial statements and the audited group
+management report.
+> Evaluate the technical validity of the ESEF documents, i.e., whether the electronic
+file provided containing the ESEF documents meets the requirements of Commis-
+sion Delegated Regulation (EU) 2019/815 on the technical specification for this
+electronic file.
+> Obtain an understanding of internal control relevant to the assessment of the
+ESEF documents in order to design assurance procedures that are appropriate in
+the circumstances, but not for the purpose of expressing an assurance opinion
+on the effectiveness of these controls.
+Q = < 239 >
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+> Identify and assess the risks of material intentional or unintentional non-compliance
+with the requirements of Section 328 (1) HGB, design and perform assurance pro-
+cedures responsive to those risks, and obtain assurance evidence that is sufficient
+and appropriate to provide a basis for our assurance opinion.
+We declare that the opinions expressed in this auditor's report are consistent with
+the additional report to the Audit Committee pursuant to Article 11 of the EU Audit
+Regulation (long-form audit report).
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+We exercise professional judgement and maintain professional scepticism throughout
+the audit. We also:
+> Identify and assess the risks of material misstatement of the consolidated financial
+statements and of the group management report, whether due to fraud or error,
+design and perform audit procedures responsive to those risks, and obtain audit
+evidence that is sufficient and appropriate to provide a basis for our opinions. The
+risk of not detecting a material misstatement resulting from fraud is higher than
+for one resulting from error, as fraud may involve collusion, forgery, intentional
+omissions, misrepresentations, or the override of internal controls.
+In order to take account of the existing forecast uncertainty and the earlier cut-off
+date selected for impairment testing, the Company examined the effects of possible
+changes in the discount rates, revenue and margin performance and the long-term
+growth rate in perpetuity on the value in use by calculating alternative scenarios
+and comparing these with its own reported figures (sensitivity analysis). We have
+assessed this analysis. In order to take into account the earlier cut-off date for impair-
+ment testing, we also assessed the impact of events until 30 September 2021 on
+impairment testing.
+To ensure the computational accuracy of the valuation method used, we verified the
+Company's calculations on the basis of selected risk-based elements.
+We checked how the discount rates used were derived and their amounts. For this
+purpose, we compared the assumptions and data underlying the discount rates,
+in particular the risk-free rate, the market risk premium and the beta factor with our
+own assumptions and publicly available data.
+used for measurement is within a reasonable range. We also confirmed the accuracy
+of the Company's previous forecasts by comparing the budgets of previous financial
+years with actual results and by analysing deviations.
+Q = < 235 >
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+When assessing the impairment test, we also assessed the appropriateness of key
+assumptions. We assessed the Company's calculation method and selected assump-
+tions in terms of their appropriateness with the help of our valuation specialists. For
+this purpose, we checked that corporate planning was updated for the next five years
+and adopted by the Management Board. Using elements selected on the basis of risk,
+we had the staff responsible for preparing corporate planning explain to us in particular
+revenue and margin performance, as well as the long-term growth rates assumed in
+perpetuity, which consider a steady state including the synergy effects of the prior-year
+acquisition of Cypress Semiconductor Corporation. In this context, revenue perfor-
+mance in particular was critically reviewed and assessed based on publicly available
+market estimates and information to determine whether the revenue performance
+Our audit approach
+As a result of the impairment test performed, the Company did not identify any
+impairment. In light of the discretionary judgement of the assumptions underlying
+the impairment testing, there is the risk for the consolidated financial statements
+that a required impairment was not recognised. There is also the risk that the related
+disclosures in the notes are not appropriate.
+Infineon tests goodwill for impairment in accordance with IAS 36 at the operating
+segment level annually as at 30 June, as well as in cases where events or changes to
+the prevailing conditions provide indications that the recoverable amount may have
+fallen below the carrying amount. The recoverable amount is the higher of fair value
+less costs of disposal and value in use. Goodwill is impaired if the carrying amount
+of the operating segment to which the goodwill is allocated exceeds the recoverable
+amount of this unit. Infineon determines the recoverable amount of the respective
+cash generating unit to which goodwill was allocated according to value in use.
+Impairment testing of goodwill is complex and based on a range of assumptions that
+require judgement. Such judgement includes, among other elements, the assumptions
+found in the adopted corporate planning for a period of five years, such as revenue
+growth and margins, assumed long-term growth rates in perpetuity, which consider
+a steady state including the synergy effects of the prior-year acquisition of Cypress
+Semiconductor Corporation, and the underlying discount rates.
+The consolidated financial statements of Infineon Technologies AG reported goodwill
+in the amount of EUR 5,962 million as at 30 September 2021. At 26% of the balance
+sheet total, goodwill accounts for a considerable share of total assets.
+The financial statement risk
+Please refer to note 2 in the notes to the consolidated financial statements for infor-
+mation on the accounting policies applied and the assumptions used. Information on
+the value of goodwill can be found under note 13.
+Impairment testing of goodwill
+Key Audit Matters in the Audit of the Consolidated Financial Statements
+Key audit matters are those matters that, in our professional judgement, were of most
+significance in our audit of the consolidated financial statements for the financial
+year from 1 October 2020 to 30 September 2021. These matters were addressed in the
+context of our audit of the consolidated financial statements as a whole, and in form-
+ing our opinion thereon, we do not provide a separate opinion on these matters.
+We conducted our audit of the consolidated financial statements and of the group
+management report in accordance with Section 317 HGB and the EU Audit Regulation
+No 537/2014 (referred to subsequently as "EU Audit Regulation") and in compliance
+with German Generally Accepted Standards for Financial Statement Audits promulgated
+by the Institut der Wirtschaftsprüfer (IDW) [Institute of Public Auditors in Germany].
+Our responsibilities under those requirements and principles are further described in
+the "Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
+and of the Group Management Report” section of our auditor's report. We are inde-
+pendent of the group entities in accordance with the requirements of European law
+and German commercial and professional law, and we have fulfilled our other Ger-
+man professional responsibilities in accordance with these requirements. In addition,
+in accordance with Article 10 (2)(f) of the EU Audit Regulation, we declare that we
+have not provided non-audit services prohibited under Article 5 (1) of the EU Audit
+Regulation. We believe that the evidence we have obtained is sufficient and appro-
+priate to provide a basis for our opinions on the consolidated financial statements
+and on the group management report.
+Basis for the Opinions
+Q = < 234 >
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Our observations
+The calculation method used for impairment testing of goodwill is appropriate and
+in line with the accounting policies to be applied.
+Finally, we assessed whether the disclosures in the notes regarding impairment
+testing of goodwill are appropriate.
+The related disclosures in the notes are appropriate.
+Reasonable assurance is a high level of assurance, but is not a guarantee that an
+audit conducted in accordance with Section 317 HGB and the EU Audit Regulation
+and in compliance with German Generally Accepted Standards for Financial State-
+ment Audits promulgated by the Institut der Wirtschaftsprüfer (IDW) will always
+detect a material misstatement. Misstatements can arise from fraud or error and
+are considered material if, individually or in the aggregate, they could reasonably be
+expected to influence the economic decisions of users taken on the basis of these
+consolidated financial statements and this group management report.
+Our objectives are to obtain reasonable assurance about whether the consolidated
+financial statements as a whole are free from material misstatement, whether due
+to fraud or error, and whether the group management report as a whole provides an
+appropriate view of the Group's position and, in all material respects, is consistent
+with the consolidated financial statements and the knowledge obtained in the audit,
+complies with the German legal requirements and appropriately presents the oppor-
+tunities and risks of future development, as well as to issue an auditor's report that
+includes our opinions on the consolidated financial statements and on the group
+management report.
+Auditor's Responsibilities for the Audit of the Consolidated Financial
+Statements and of the Group Management Report
+The Supervisory Board is responsible for overseeing the Group's financial reporting
+process for the preparation of the consolidated financial statements and of the group
+management report.
+Furthermore, the Management Board is responsible for the preparation of the group
+management report that, as a whole, provides an appropriate view of the Group's
+position and is, in all material respects, consistent with the consolidated financial
+statements, complies with German legal requirements, and appropriately presents
+the opportunities and risks of future development. In addition, the Management Board
+is responsible for such arrangements and measures (systems) as it has considered
+necessary to enable the preparation of the group management report that is in accor-
+dance with the applicable German legal requirements, and to be able to provide
+sufficient appropriate evidence for the assertions in the group management report.
+In preparing the consolidated financial statements, the Management Board is
+responsible for assessing the Group's ability to continue as a going concern. It also
+has the responsibility for disclosing, as applicable, matters related to going concern.
+In addition, it is responsible for financial reporting based on the going concern basis
+of accounting unless there is an intention to liquidate the Group or to cease operations,
+or there is no realistic alternative but to do so.
+The Management Board is responsible for the preparation of consolidated financial
+statements that comply, in all material respects, with IFRSS as adopted by the EU, and
+the additional requirements of German commercial law pursuant to Section 315e (1)
+HGB and that the consolidated financial statements, in compliance with these require-
+ments, give a true and fair view of the assets, liabilities, financial position, and financial
+performance of the Group. In addition, the Management Board is responsible for
+such internal control as they have determined necessary to enable the preparation of
+consolidated financial statements that are free from material misstatement, whether
+due to fraud or error.
+Supervisory Board for the Consolidated Financial Statements
+and the Group Management Report
+Responsibilities of the Management Board and the
+< 236 >
+Q =
+The Company's assumptions used for measurement are appropriate.
+Consolidated Financial Statements
+Combined Management Report
+Further information
+Independent Auditor's Report
+Management Board and
+Supervisory Board
+Other information
+The Management Board and the Supervisory Board, respectively, are responsible for
+the other information. The other information comprises the following components
+of the group management report, whose content was not audited:
+> the separate combined non-financial report of the Company and Group, which is
+referred to in the group management report,
+Business focus and strategy
+> information extraneous to management reports and marked as unaudited.
+The other information also includes the remaining parts of the annual report. The
+other information does not include the consolidated financial statements, the group
+management report information audited for content and our auditor's report thereon.
+> the combined corporate governance statement for the Company and the Group
+referred to in the group management report, and
+In connection with our audit, our responsibility is to read the other information and,
+in so doing, to consider whether the other information
+> is materially inconsistent with the consolidated financial statements, with the
+group management report information audited for content or our knowledge
+obtained in the audit, or
+> otherwise appears to be materially misstated.
+If, based on the work we have performed, we conclude that there is a material
+misstatement of this other information, we are required to report that fact. We have
+nothing to report in this regard.
+Infineon Technologies | Annual Report 2021
+Our opinions on the consolidated financial statements and on the group management
+report do not cover the other information, and consequently we do not express an
+opinion or any other form of assurance conclusion thereon.
+Neubiberg, 25 November 2021
+Further information
+Applications and product range
+Automotive
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+> Embedded SIM
+Q =
+Industrial power supplies
+> Auxiliary power supplies
+> Battery chargers
+› Charging stations for electric vehicles
+> Home energy storage
+> Uninterruptable power supplies
+Industrial robotics
+> Rolling mills
+Industrial vehicles
+› Construction vehicles
+> Electric delivery vehicles
+> Forklifts
+> Hybrid buses
+Traction
+> High-speed trains
+› Locomotives
+> Agricultural vehicles
+› Metro trains
+› Pipelines
+> Materials handling
+> Offshore wind farm HVDC transmission lines
+> Overland HVDC transmission lines
+Home appliances
+> Air conditioners
+> Dishwashers
+> Induction cooktops
+> Microwave ovens
+> Oil derricks
+> Refrigerators
+> Washing machines
+Industrial drives¹
+> Air conditioning technology
+> Automation technology
+> Drives technologies
+> Elevator systems
+> Escalators
+> Vacuum cleaners
+› Trams
+1 Including motors, compressors, pumps and fans.
+Product range
+> Multi-copters
+> eScooters
+> eBikes
+- Power saws
+- Drills
+- Cordless screwdrivers
+> Battery-powered power tools, e.g.,
+Cellular communications infrastructure
+- Vacuum cleaners
+- Lawn mowers
+> Battery-powered gardening equipment, e.g.,
+- Hedge trimmers
+BLDC motor
+> Power train for low-speed electric vehicles
+> Onboard charger
+> In-cabin USB PD charging
+> Blind spot detection
+> Battery-powered home appliances, e.g.,
+> Battery-powered loudspeakers
+Audio amplifiers
+Applications
+› Bare die business
+› Discrete IGBTs
+> Driver ICs
+> IGBT modules (low-power, medium-power,
+high-power)
+> IGBT module solutions including IGBT stacks
+> Intelligent IGBT modules with integrated
+control unit, driver and switch
+> SiC diodes, SiC MOSFETs, SiC modules
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Applications and product range
+Power & Sensor Systems
+Q =
+< 242 >
+☐ Power & Sensor Systems
+> FACTS (Flexible AC Transmission Systems)
+Automotive electronics
+Energy transmission
+> Urban district
+> Door electronics
+> Electronic seat adjustment
+> Hatch door
+> Lighting
+> Power window
+> Steering
+> Sunroof
+› Body control units
+> Suspension
+Infotainment
+› Connectivity for in-cabin infotainment
+› Digital instrument cluster
+Powertrain
+› Battery charging control
+› Battery management
+> Combustion engine control
+> Windshield wipers
+> Electric motor control
+> Air conditioning
+> Tire pressure monitoring system
+< 240 >
+Applications and product range
+Automotive
+Applications
+Assistance systems and safety systems
+> ABS (Anti-blocking system)
+› Airbag
+Comfort electronics
+> Automatic parking
+> Cruise control
+› Distance control
+> Electronic chassis control
+> Electronic power steering
+> Emergency braking assistant
+> ESP (Electronic Stability Program)
+> Lane departure warning system
+> Blind spot detection
+› Generator control
+> Start-stop system
+> Transmission control
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Applications and product range
+Industrial Power Control
+Q =
+> Voltage regulators
+< 241 >
+Applications
+Energy generation
+> Photovoltaic systems
+> Wind power turbines
+Energy storage
+> Grid stability
+> Home usage
+Industrial Power Control
+> Transceivers (CAN, CAN FD, LIN, Ethernet, FlexRay™)
+> SiC diodes, SiC MOSFETs and SiC modules
+> Radar sensor ICs (77 GHz)
+Security
+› Communication
+-Car-to-car
+-Car-to-infrastructure
+> Original spare parts authentication
+> Protection against manipulation (e.g., odometer)
+> Protection against software manipulation
+> Tachograph
+Product range
+> 32-bit automotive microcontrollers for powertrain,
+safety, driver assistance systems, infotainment and
+digital display systems
+> 3D ToF sensors
+> Discrete power semiconductors
+> IGBT modules
+> Industrial microcontrollers
+> Magnetic and pressure sensors
+> Memory ICs (NOR flash, SRAM, nvSRAM, F-RAM)
+> Power ICS
+> Wall box
+Mobile communications
+> Smart speakers
+Specific disclaimer for Informa Tech - former IHS Markit Technology - reports, data and information
+referenced in this document:
+Microinverter for roof-top systems
+Mobile devices
+› Activity trackers
+> Health care trackers
+› Navigation devices
+› Smartphones
+> Tablets
+LED and conventional lighting systems
+Power management
+› Data centers
+> Home appliances
+> Mobile devices
+> PCs and notebooks
+› Servers
+Product range
+> 3D ToF sensors
+› Consumer electronics
+> Voice control
+> Smart speakers
+› Sensors
+HGB Hamburger Geschäftsberichte GmbH & Co. KG,
+Hamburg (Germany)
+Page 6, 10: Werner Bartsch, Hamburg (Germany)
+The following were brand names of Infineon Technologies AG
+in the 2021 fiscal year:
+Infineon, the Infineon logo, AURIX™M, CIPOSTM, CoolGaNTM, CoolMOS™, CoolSIC™,
+EiceDRIVER™, FlexRay™, HybridPACK™, ¡MOTION™, ModusToolbox™, OPTIGA™,
+PrimePACKT, PSoCTM, SECORATM, TRAVEO", XENSIVTM, XMCTM.
+Visit us on the web: www.infineon.com f in
+Forward-looking statements
+› Base stations
+Charging stations for electric vehicles
+Special applications in harsh environments
+› Aerospace systems
+> Aviation technologies
+> Defense technologies
+> Oil and gas exploration
+> Submarine telecommunications
+Human-machine interaction
+IoT
+› Communications
+> Chips for gas sensors
+> Chips for MEMS microphones
+› Chips for pressure sensors
+› Control ICs for power switches
+Connected Secure Systems
+Applications
+Authentication
+› Accessories
+> Brand protection
+› Game consoles
+direct current to direct current conversion
+> Industrial control systems
+> Printer cartridges
+Automotive
+› Connected vehicles
+- eCall
+-Car-to-infrastructure communications
+> Electronic toll collection (Toll Collect)
+> In-cabin infotainment
+> Protection against manipulation (e.g., tachographs)
+Consumer electronics
+< 243 >
+KPMG AG Wirtschaftsprüfungsgesellschaft,
+Munich (Germany)
+Q =
+Consolidated Financial Statements
+> Customized chips (ASICS)
+> Discrete low-voltage, mid-voltage and
+high-voltage power MOSFETs (Si-based)
+> GaN power switches
+> GPS low-noise amplifier
+> Low-voltage and high-voltage driver ICs
+> Radar sensor ICs (24 GHz, 60 GHz)
+› RF antenna switches
+> RF power transistors
+> SiC diodes, SiC MOSFETS
+> TVS (transient voltage suppressor) diode
+> USB controller
+Infineon Technologies | Annual Report 2021
+› Telecommunication technology
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Further information
+Applications and product range
+Connected Secure Systems
+› Game consoles
+1 October to 30 September
+Note
+light-emitting diode
+micro-electromechanical system
+machine learning
+metal-oxide-semiconductor field-effect transistor
+near-field communication
+plug-in hybrid electric vehicles
+programmable system-on-chip
+radio frequency
+intelligent power module
+silicon
+time-of-flight
+trusted platform module
+universal serial bus
+(universal serial bus standard power delivery)
+wireless fidelity
+Management Board and
+Supervisory Board
+Business focus and strategy
+silicon carbide
+Industrial Internet of Things
+Internet of Things
+Infineon Technologies | Annual Report 2021
+Wi-Fi
+Si
+FHEV
+full hybrid electric vehicles
+Sic
+FPGA
+field programmable gate array
+ToF
+GaN
+IC
+IGBT
+HMI
+HVDC
+high-voltage DC transmission
+integrated circuit
+insulated gate bipolar transistor
+gallium nitride
+human-machine interaction
+TPM
+USB (USB PD)
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Financial calendar 2022
+Q = < 246 >
+third quarter 2022¹
+results
+Publication of
+fourth quarter and
+fiscal year 2022¹
+results
+1 Preliminary
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Imprint
+Business focus and strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Imprint
+Q = < 247 >
+Published by:
+Editors:
+Copy deadline:
+Fiscal year:
+Independent auditors:
+Designed by:
+Photography:
+Publication of
+Infineon Technologies AG, Neubiberg (Germany)
+Investor Relations, Accounting, Consolidation & Reporting
+25 November 2021
+Publication of
+second quarter 2022¹
+results
+Publication of
+first quarter 20221
+results
+Financial calendar 2022
+February
+February
+May
+August
+November
+Thursday
+Thursday
+Monday
+Wednesday
+3
+17
+9
+3
+Tuesday
+The Informa Tech reports, data and information referenced herein (the "Informa Tech Materials - mostly former
+IHS Markit Technology Materials") are the copyrighted property of Informa Tech Research Ltd. and its subsidiaries
+("Informa Tech") and represent data, research, opinions or viewpoints published by Informa Tech, and are not
+representations of fact. The Informa Tech Materials speak as of the original publication date thereof and not as of
+the date of this document. The information and opinions expressed in the Informa Tech Materials are subject to
+change without notice and neither Informa Tech nor, as a consequence, Infineon have any duty or responsibility
+to update the Informa Tech Materials or this publication as a result. Informa Tech Materials are delivered on
+an "as-is" and "as-available" basis. No representation or warranty, express or implied, is made as to the fairness,
+accuracy, completeness or correctness of the information, opinions and conclusions contained in the Informa
+Tech Materials. To the maximum extent permitted by law, Informa Tech and its affiliates, IHS Markit and its Affiliates
+and their respective, officers, directors, employees and agents, disclaim any liability (including, without limitation,
+any liability arising from fault or negligence) as to the accuracy or completeness or use of the Informa Tech
+Materials. Informa Tech and/or IHS Markit will not, under any circumstance whatsoever, be liable for any trading,
+investment, commercial or other decisions based on or made in reliance of the Informa Tech Materials. The
+"IHS Markit" brand and logo have been licensed for use by Informa Tech. The "IHS Markit" brand and logo and
+any third-party trademarks used in the IHS Markit Technology Materials are the sole property of IHS Markit Group
+or their respective third-party owners.
+15
+Annual General
+Meeting 2022
+(virtual)
+> Remote control
+- Car-to-car communications
+Government identification documents
+a differentiating factor
+C07 Market share in the total semiconductor market in the 2020 calendar year 38
+C08 System knowhow and services are becoming more and more
+78
+excl. NFC embedded Secure Element) in the 2020 calendar year
+37
+as well as SiC wafers with minimum loss of material
+74
+39
+73
+C27 Revenue and Segment Result of the Power & Sensor Systems segment
+C28 Market share for security ICs (excl. NFC controller;
+C06 Siltectra's Cold Split technology allows splitting of SiC boules
+36
+in the 2020 calendar year (by units)
+73
+73
+C25 Market share for power ICs in the 2020 calendar year
+C26 Market share of MEMS microphones die suppliers
+له لا
+C09 The main stages of the semiconductor value chain
+51
+C10 Top 20 semiconductor manufacturers in the 2020 calendar year
+C11 Global semiconductor sales in the 2020 calendar year by region
+(total market size US$473 billion)
+57
+C14 Dividend per share for the 2010 to 2021 fiscal years
+C15 Core competencies in the segments
+56
+88
+> Smart watches and activity trackers
+82
+C33 Infineon owns the key components for XEV charging stations
+C34 Investments
+54
+C12 Top 20 semiconductor consumer in the 2020 calendar year
+C13 Revenue by segment in the 2021 fiscal year
+54
+C32 R&D expenses
+79
+8%
+78
+78
+C29 Market share for security ICs (excl. NFC controller; excl. NFC
+embedded Secure Element) in the 2020 calendar year by application
+C30 Market share for microcontrollers in the 2020 calendar year
+C31 Revenue and Segment Result of the Connected
+Secure Systems segment
+53
+36
+and modules market share in the 2020 calendar year
+C05 Worldwide discrete power semiconductors
+C04 Strategic growth model
+> Security controllers (contact-based, contactless,
+dual-interface)
+and industrial applications
+> Microcontroller for consumer electronics
+> Embedded security controllers
+› Connectivity solutions (Wi-Fi, Bluetooth, BLE)
+Product range
+Infineon Technologies | Annual Report 2021
+Trusted Computing
+Ticketing, access control
+> NFC-based contactless payment
+> Mobile payment
+› Credit/debit cards
+Payment systems
+> SIM cards
+- IoT applications
+- Consumer applications
+(machine-to-machine communication)
+Management Board and
+Supervisory Board
+59
+Business focus and strategy
+Consolidated Financial Statements
+32
+C03 We are linking the real and the digital world
+69
+C23 Revenue and Segment Result of the Industrial Power Control segment
+C24 Market share for MOSFETs in the 2020 calendar year
+28
+C02 Additional semiconductor demand per vehicle raised by electromobility
+22
+68
+C22 Market share in IGBT modules in the 2020 calendar year
+from megatrends in society
+C01 Our growth areas and growth drivers are derived
+Page
+Page
+Chart overview
+< 244 >
+Q =
+Further information
+Chart overview
+Combined Management Report
+C16 World market for automotive semiconductors in the 2020 calendar year
+C17 Market share for automotive semiconductors in the 2020 calendar year
+C18 Market share of Infineon for automotive semiconductors
+by region in the 2020 calendar year
+80% 80 1
+63
+RF
+central processing unit
+CPU
+PSOC
+complementary metal-oxide-semiconductor
+CMOS
+PHEV
+DC-DC
+Consumer Internet of Things
+NFC
+Bluetooth
+$$ཡཿགྷ
+MOSFET
+Bluetooth Low Energy
+BLE
+ML
+Clot
+Specific disclaimer for IHS Markit - reports, data and information referenced in this document:
+The IHS Markit reports, data and information referenced herein (the "IHS Markit Materials") are the copyrighted
+property of IHS Markit Ltd. and its subsidiaries ("IHS Markit") and represent data, research, opinions or viewpoints
+published by IHS Markit, and are not representations of fact. The IHS Markit Materials speak as of the original
+publication date thereof and not as of the date of this document. The information and opinions expressed in the
+IHS Markit Materials are subject to change without notice and neither IHS Markit nor, as a consequence, Infineon
+have any duty or responsibility to update the IHS Markit Materials or this publication. Moreover, while the IHS
+Markit Materials reproduced herein are from sources considered reliable, the accuracy and completeness thereof
+are not warranted, nor are the opinions and analyses which are based upon it. IHS Markit and the trademarks
+used in the Data, if any, are trademarks of IHS Markit. Other trademarks appearing in the IHS Markit Materials are
+the property of IHS Markit or their respective owners.
+Infineon Technologies | Annual Report 2021
+> Driver's licenses
+> Healthcare cards
+> National identity cards
+› Passports
+> Social insurance cards
+IoT
+> Industry 4.0
+> IT equipment
+> Smart city
+This report contains forward-looking statements and/or assessments about the business, financial condition,
+performance and strategy of the Infineon Group. These statements and/or assessments are based on assumptions
+and management expectations resting upon currently available information and present estimates. They are
+subject to a multitude of uncertainties and risks, many of which are partially or entirely beyond Infineon's control.
+Infineon's actual business development, financial condition, performance and strategy may therefore differ
+materially from what is discussed in this report.
+> Smart home
+www.infineon.com
+Am Campeon 1-15, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+Visit us on the web:
+Contact for Investors and Analysts:
+Media Contact:
+Headquarters:
+Infineon Technologies AG
+brushless direct current
+BLDC
+BT
+automotive safety integrity level
+104
+100
+100
+98
+97
+MEMS
+68
+G40 Risk assessment matrix
+68
+G39 Financial debt by currencies
+64
+C19 Revenue and Segment Result of the Automotive segment
+C20 Market share for discrete IGBTs in the 2020 calendar year
+C21 Market share for IPMS in the 2020 calendar year
+G38 Revenue by segment in the 2021 fiscal year
+63
+C36 Shareholder structure as of the end of the 2021 fiscal year
+G37 Revenue by segment
+63
+C35 Development of the Infineon Technologies AG share compared to
+Germany's DAX Index, the Philadelphia Semiconductor Index (SOX)
+and the Dow Jones US Semiconductor Index for the 2021 fiscal year
+(daily closing prices)
+113
+139
+G41 Diversity target
+Management Board and
+Supervisory Board
+ASIL
+LED
+Infineon Technologies | Annual Report 2021
+ASIC
+IoT
+IPM
+artificial intelligence
+ΑΙ
+advanced driver assistance system
+application-specific integrated circuit
+alternating current to direct current conversion
+AC-DC
+ADAS
+List of abbreviations
+Q = < 245 >
+Further information
+List of abbreviations
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Пот
+Further information
+← Q = < 29 >
+Infineon
+TLE 4998x8D
+magnetic field
+sensor chip 1
+Sustainable and optimally networked mobility within metropolitan areas as well as
+between large cities is one of the key topics of the 21st century. Today more than ever,
+rapid and reliable public transportation determines the quality of life in many regions
+and cities worldwide and the ability of those regions and cities to compete with
+others. The trend towards electric trains has been with us for some time and is set to
+continue. Our components (mainly power semiconductors, but also microcontrollers
+and sensors) are used not only in local passenger trains, metro trains and trams, but
+also in high-speed trains. Moreover, electrification is becoming increasingly common
+for the locomotives of freight trains, as well as for buses, trucks, construction equip-
+ment and farm machinery. Power electronics also play a key role here.
+Active safety systems are increasingly
+developing into driver assistance systems.
+By supporting the driver with the tasks of
+driving, they increase both comfort and
+road safety. Among other things, they assist
+in critical situations or help correct a driver
+error where appropriate, for example, with
+automatic emergency braking maneuvers.
+The main systems for partially and fully
+automated driving comprise, firstly, sensors
+(such as exterior cameras, radar, and 3D
+ToF cameras for in-cabin surveillance),
+and secondly, a central high-performance
+computer to evaluate sensor data and
+determine the driving strategy (in a sense,
+the system's intelligence). The third element
+is additional secure memory IC solutions
+and the fourth is actuators (steering, brakes,
+engine control and transmission), while
+the fifth is a reliable power supply for all
+these control units, sensors, memories
+and actuators, R07. Our competence in
+providing solutions illustrates the potential
+edge computing holds for us.
+The Dual Hall Sensor TLE4998 includes
+two sensor ICs which are placed exactly on top
+of each other. This kind of redundancy is a basic
+requirement for highly dependable systems.
+Transport of people and goods
+A high degree of reliability is required for driver assistance systems in vehicles. Unlike
+humans, they are expected to be 100 percent reliable. Functional safety and the
+quality of products, software and systems are therefore very important, placing chal-
+lenges on the whole industry. For Infineon, this falls under the umbrella of reliability
+or "dependability” and the Company has a significant competitive lead in this field.
+Infineon Technologies | Annual Report 2021
+Consolidated Financial Statements
+sensor chip 2
+Combined Management Report
+Supervisory Board
+Management Board and
+Supervisory Board
+› Security for mobile devices
+Power & Sensor Systems
+Automotive, Industrial Power Control,
+> Infotainment
+› Passenger and freight transport
+> Automated driving
+› Charging infrastructure for
+electromobility
+> Electromobility
+Industrial Power Control,
+Power & Sensor Systems
+› Usage and conversion of electrical energy
+> Energy storage
+› Energy transmission
+> Renewable energy sources
+IoT and big data
+Security
+Mobility
+Electrification, Digitalization
+Digital transformation
+Urbanization
+Climate change and scarce resources
+Energy efficiency
+> Security for contactless payment
+Demographic and social change
+> Secure authentication for the
+Consumer loT and Industrial IoT
+> Integrity of devices
+Wind
+The renewable energy industry has been expanding fast for years and is gaining in
+importance as a result of the greenhouse gas reduction pledges made in various
+regions. According to estimates from the International Energy Agency, annual addi-
+tions from renewables will need to more or less quadruple from their current figure
+of around 200 gigawatts by 2030, if the global goal of carbon neutrality is to be
+reached by 2050. Infineon benefits from the fact that wind turbines and photovoltaic
+(PV) power plants require multiple power semiconductors per gigawatt of electricity
+generated, compared with conventional power plants. In contrast to coal-fired,
+gas-fired and nuclear power plants, there is no turbine whose consistent movement
+can generate a constant alternating current of 50 or 60 hertz. Therefore, the electricity
+generated cannot be fed directly into the grid. Instead, power electronic systems are
+required for conversion and safeguarding. Infineon supplies all major manufacturers
+of wind power turbines and PV inverters.
+Power generation from renewable energy sources
+A new mindset on climate protection depends entirely on a new mindset on energy
+transformation. An energy transformation will only be viable if we take sustainable
+and climate-friendly action along the entire supply chain, from the generation of
+electricity to its consumption. Microelectronics play a decisive role here, helping to
+provide the growing population with energy in an efficient and environmentally
+friendly manner. For environmental reasons, it will no longer be possible in the future
+to meet the rising demand for electric energy by using fossil fuels to the same extent
+as we do today. Renewable energy sources, which do not emit carbon into the environ-
+ment, are becoming more and more important. The use of wind power and solar
+energy is a key factor here. The fluctuating availability of energy from these sources
+can be balanced out by using electric storage systems but requires holistic manage-
+ment of the power grid.
+Energy efficiency
+Infineon's growth areas are the source of its specific
+growth drivers
+← Q = < 23 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Growth drivers
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Power & Sensor Systems,
+Connected Secure Systems
+> Edge computing
+› Cellular infrastructure
+› Data center
+> Industrial loT
+› Consumer IoT
+> Human-machine interaction
+Connected Secure Systems,
+Automotive
+> Security for connected vehicles
+Profiting segments
+Growth drivers
+Growth areas
+Combined Management Report
+Business focus and strategy
+Business focus
+Management Board and
+Supervisory Board
+・ジュの
+ジェネラル・
+ム・バチスタ2
+100-0
+Infineon Technologies | Annual Report 2021
+In the past few years, our strategy has been consistently guided by global megatrends
+that will continue to shape the world in the future: demographic and social change,
+climate change and scarce resources, urbanization, and digital transformation. From
+these megatrends, we derive our focus on the following growth areas: energy efficiency,
+mobility, security, and loT and big data. In these markets, we address structural
+drivers: i.e., areas which are expected to see disproportionate growth in the long term
+as a result of these trends or which have major innovation potential. The coronavirus
+pandemic has not altered these underlying assumptions.
+We want to continue to develop, grow and create value for our customers and our
+shareholders as well as for our employees and society. The coronavirus pandemic
+has put the brakes on for the moment but cannot stop us. On the contrary, the
+coronavirus pandemic has worked in some ways as a catalyst and accelerator of
+innovation. Many of the developments would have happened anyway, but the
+coronavirus pandemic has resulted in change being instigated much more rapidly
+or implemented more swiftly, especially with regard to the digitalization of society
+and the economy.
+Business focus
+OIO
+and strategy
+Business focus
+< 20 >
+Q =
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Business focus
+Management Board and
+Supervisory Board
+Consolidated Financial Statements
+Further information
+← Q = < 21 >
+Demographic and social change
+Megatrends
+C01 Our growth areas and growth drivers are derived from megatrends in society
+store and use energy more efficiently is growing. Rising levels of traffic and trans-
+portation mean that sustainable, intelligent mobility solutions are crucial. The
+increasing digitalization of things enables energy to be used more efficiently. Electri-
+fication also requires more semiconductors in the end application, depending on
+the level of electrification. In a highly digitalized world, the number of interconnected
+objects increases and there is a rise in demand for secure processing, transmission and
+storage of data. Our solutions and systems serve all these application areas and help
+us achieve sustainable growth. In summary, Infineon is benefiting in equal measure
+from increasing electrification and from the digitization of end applications. C01
+In each of the growth areas we address in the semiconductor market - energy efficiency,
+mobility, security, and IoT and big data – there are numerous application fields with
+high growth potential for our semiconductor business. Driven by increasing demand for
+energy and the setting of global carbon reduction goals, the need to generate, transmit,
+-
+Megatrends create new areas of growth
+Growth drivers
+Q = < 22 >
+Further information
+Consolidated Financial Statements
+When it comes to energy generation from wind, two trends in particular drive demand
+for semiconductors. First of all, older low-performance wind power turbines are
+being replaced by modern high-performance ones, a process referred to as repowering.
+Secondly, ever-stronger turbines are being used in initial installations. The performance
+of wind turbines has risen from around 100 kilowatts in the 1980s to present-day
+figures of up to 6 megawatts for onshore turbines and 14 megawatts for turbines in
+offshore wind farms. Depending on the type of wind turbine, semiconductors costing
+€2,000 to €3,500 per megawatt are required. Offshore wind farms in particular present
+major challenges in terms of the robustness and reliability of the components used,
+since they have to function in a harsh environment, at high humidity levels and in
+saline air over a long period, as well as needing to be low-maintenance.
+Combined Management Report
+Management Board and
+Infineon Technologies | Annual Report 2021
+Digitalization is permeating more and more areas of our lives and the coronavirus
+pandemic has accelerated this trend. New digital communication technologies have
+an impact on our everyday life, alter our lifestyle and give rise to new patterns of
+behavior. The digital transformation also allows for better use of resources. Resource
+use can be monitored and tracked and
+thus optimized. Meanwhile, humans and
+machines are producing enormous amounts
+of data. Big data is an extremely valuable
+raw material. People are revealing more and
+more sensitive information about them-
+selves. This makes it necessary for users to
+be able to communicate with one another
+securely and without the risk of the misuse
+or theft of data. Safeguarding electronic
+devices and infrastructures thus takes the
+highest priority and makes the digital trans-
+formation possible. Meeting this increased
+need for security represents one of the core
+competencies of Infineon.
+Digital transformation
+More and more people are crowding into the cities from rural areas. The coronavirus
+pandemic may interrupt this trend in the short term if at all. In the long term, major
+cities and metropolitan regions will continue to grow and act as magnets for migration,
+with the result that the trend towards urbanization will continue. Rapid urbanization
+places huge demands on infrastructure and on related services. How should a major
+city be designed in order to guarantee an adequate quality of life for everyone when
+Urbanization
+Climate change has found its way into the public consciousness, and climate protection
+policies are being adopted in many parts of the world. Our actions have a significant
+impact on our environment. Efficient use of resources is therefore of fundamental
+importance. Developing energy-efficient products is one of the key elements in saving
+energy and tackling climate change. Our goal is to make "more from less". Our semi-
+conductors feed renewable energy into electricity grids with minimum loss, reduce
+electricity consumption in computers, secure our digital data traffic, and power our cars
+in a more energy-efficient way. They make our everyday lives more comfortable, while
+at the same time minimizing the environmental impact of our energy consumption.
+Climate change and scarce resources
+people are living in such close proximity? One possible solution is the “smart city”
+model. In the cities of the future, all aspects of public life will be intermeshed and
+connected with one another. This will also be true of suburban areas. An intelligent
+power grid (smart grid) can manage energy requirements efficiently. Sustainable
+mobility solutions like the smart car and expansion of the rail network will help
+manage the increasing volume of traffic. Digital and intelligent solutions in the
+smart home can also enhance the quality of life. Our products are our contribution
+towards advances in energy infrastructure, traffic and transportation systems and
+residential spaces. The objective is to make metropolises more efficient, greener,
+and more livable.
+According to the United Nations, around 9.7 billion people will be living on Earth by
+2050, two billion more than today. Population growth and the desire for a good life
+are two of the factors leading to an increase in energy consumption. This makes it
+necessary to produce, store, transmit and use energy more efficiently. Rising demand
+for resources is also pushing existing concepts for infrastructure, industry and com-
+munication to their limits. Microelectronics play a decisive role in supplying energy
+to the growing and evolving population and in creating sustainable spaces in which
+to live.
+Business focus and strategy
+Growth drivers
+Business focus and strategy
+Growth drivers
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+Growth drivers
+← Q = < 28 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Growth drivers
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+In order to reduce the fleet average to the mandated carbon target value, many vehicle
+manufacturers are expanding their product ranges to include models such as hybrid
+vehicles or pure electric vehicles. These have a significantly higher semiconductor
+content than conventional vehicles. Infineon offers a wide range of power semicon-
+ductor components for these vehicles. Of interest here is 48-volt technology, which is
+used in addition to the 12-volt onboard network. The vehicles that use this technology
+carbon per kilometer by 2025. The reduction target for 2030 is 59 grams of carbon per
+kilometer, a reduction of 37.5 percent compared with 95 grams of carbon per kilometer
+in the 2021 calendar year. This will increase demand for semiconductors. Optimization
+of the combustion engine is in itself no longer enough to fulfill legal requirements
+and to satisfy customer demand for sustainable mobility. Instead, systems consuming
+energy in the vehicle will increasingly have to be made more efficient, while hydraulic
+or mechanical solutions will need to be replaced by more efficient electromechanical
+systems based on semiconductors.
+The automotive industry is working con-
+tinuously to reduce pollutant emissions.
+European Commission rules require, for
+example, a reduction in fleet average
+emissions from new cars to 81 grams of
+Electromobility
+World population growth and increasingly
+global value chains as well as urbaniza-
+tion are driving demand for all types of
+transportation, ranging from mass trans-
+portation, such as trains and buses, to
+vehicles for private use, such as cars, eBikes
+and eScooters. Towns and cities in particu-
+lar are confronted with the challenge of
+making transportation cheaper, more effi-
+cient and more sustainable.
+Mobility
+charge lasts as long as possible. As a result, more and more brushless direct current
+(BLDC) motors are being used. In BLDC motors, all the commutation (i.e., the polarity
+reversal of the direction of the current to produce electromagnetic fields) is electronic,
+depending on rotor position, rotor rotation speed and torque. This calls for appropriate
+power semiconductors and also, depending on the configuration, components for
+diagnostic and security functions. This type of motor requires high-performance elec-
+tronic control units, compared with conventional electric motors. In addition to their
+high levels of energy efficiency, BLDC motors are particularly well-suited for use in
+battery-powered systems due to their low power-to-weight ratio. Examples include
+cordless home appliances such as robot vacuum cleaners, cordless screwdrivers and
+electronic lawnmowers. In addition to the electric motors, batteries are also becoming
+more and more efficient, enabling longer operating times, which is continuing to
+drive forward the transition from wired devices to battery-powered devices. Further-
+more, all the examples cited also require additional power semiconductor components
+for the chargers. With battery-powered devices, we benefit both from unit growth
+and from the higher number of semiconductor components used.
+← Q = < 27 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Growth drivers
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+C02 Additional semiconductor demand per vehicle raised by electromobility
+In battery-powered devices, efficiency is
+particularly important, so that a battery
+in US$
+~600
+900
+Driving
+48
+Infineon Technologies | Annual Report 2021
+Autonomous
+Mode
+The steadily increasing number of electric vehicles makes an appropriate charging
+infrastructure necessary. A well-developed network of charging stations increases the
+incentive to buy an electric vehicle. To promote acceptance of electromobility, most
+countries are continuing to expand their networks of publicly accessible charging
+stations. Depending on the system topology, the charging stations use different types
+of power semiconductors. SiC solutions are increasingly being used for ultra-fast
+charging stations which can deliver over 150 kilowatts of power.
+Charging infrastructure for electromobility
+While the current average semiconductor content of a car with a conventional com-
+bustion engine is about US$490, the amount in mild-hybrid vehicles is about US$600,
+while for full hybrid vehicles it is about US$890 and for plug-in hybrid as well as pure
+electric vehicles, it is about US$950. Here, power semiconductors make up the vast
+majority of the additional semiconductor content per vehicle. C02
+are known as mild-hybrid vehicles. On the one hand, this technology means that
+the vehicles can recover a certain amount of braking energy. On the other hand,
+pollutant emissions can be reduced by more efficient systems. Mechanical functions
+are increasingly being replaced by electric functions. The 48-volt part of the onboard
+network handles the power supply for high power consumers, such as the electric
+turbocharger, electric power steering and electronic stability control.
+"Vision Zero" describes one of the major objectives of the automotive industry, which
+is that vehicles should become so safe that there are no longer any serious or fatal
+accidents. Around 90 percent of such accidents today are attributable to human error.
+Active safety systems can either completely prevent an accident or at least signifi-
+cantly reduce its consequences by directly intervening in the driving process. Examples
+of such systems include pedestrian detection, adaptive cruise control and blind spot
+detection. Many of these functions are no longer reserved for luxury cars but have
+become standard features in mid-range vehicles.
+Automated driving
+目 R06
+Additional semiconductor demand
+raised by electromobility
+Semiconductor demand for
+combustion engine vehicle
+and pure
+electric vehicle
+Plug-in hybrid
+Full hybrid
+vehicle
+Mild-hybrid
+vehicle
+Combustion
+engine vehicle
+illl
+-890
+~950
+-490
+› Battery-powered devices
+Ever-stricter energy efficiency requirements
+are being imposed on home appliances. The
+new rules are intended, among other things,
+to create incentives to design products that
+are more efficient and have longer service
+lives. As a result, manufacturers of major
+home appliances are turning to highly-
+efficient motors with modern variable-speed
+control. These motors are significantly
+more energy-efficient, low-noise and have
+longer service lives. They are used, for
+example, in washing machines (drums and
+water pumps), dishwashers, refrigerators
+(compressors) and air-conditioning systems
+(fans, compressors).
+> Home appliances
+Combined Management Report
+Business focus and strategy
+Growth drivers
+Supervisory Board
+Management Board and
+Infineon Technologies | Annual Report 2021
+REFUELLING STATION
+HYDROGEN
+Green hydrogen from renewable energy is
+due to be produced at the Villach site (Austria)
+from the beginning of 2022.
+Very high direct current (DC) is needed for the electrolysis process to produce green
+hydrogen. Alternating current (AC) supplied by the power grid must therefore first be
+converted into direct current. High system
+output (> 50 megawatts) can be achieved
+efficiently through the interaction of several
+high-performance switches. In conjunction
+with photovoltaic plants, there only
+needs to be an adjustment to the directly-
+generated DC in the electrolysis process.
+The combination of renewable energy and
+efficient power semiconductors is a key
+lever for the large-scale production of
+green hydrogen, which could become a
+major growth driver for Infineon. If one day
+green hydrogen is available in sufficient
+quantity and at a competitive cost, fuel cell
+technology will be used in various applica-
+tions to generate electricity, for example,
+in the transportation sector (cars, trucks,
+buses, trains, helicopters, small aircraft)
+and as an alternative to diesel generators
+(on construction sites and campsites,
+for instance, and especially in base sta-
+tions in remote areas and mountainous
+regions).
+Over the course of the next decade, hydrogen will play a crucial role in energy supply.
+However, if we are to exploit the potential of hydrogen, solutions must be found for
+the challenges associated with its production, storage, transportation and use. Semi-
+conductor solutions from Infineon can provide significant support in the development
+of a sustainable hydrogen economy along the value chain.
+Hydrogen
+As a result of the energy transformation, 50 percent of Europe's electricity should
+come from renewable energy by 2030. The use of renewable energy is linked with
+specific requirements for the entire energy supply chain. In contrast to conventional
+electricity generation, which takes place centrally in a small number of power plants,
+the generation of electricity from renewable energy takes place decentrally in a large
+number of small power plants. In addition, fluctuating power generation does not
+always match the demand. Conventional power plants still have to substitute for or
+supplement renewable energy sources. This makes the expansion of battery-based
+energy storage necessary in the long run. With its semiconductors, Infineon provides
+the essential power components and subsystems for efficient energy storage.
+Energy storage
+HVDC systems are playing a key role globally by providing reliable, low-loss energy
+transmission over long distances. They are also used for the grid connection of offshore
+wind farms. It is to be expected that future growth in the use of renewable energy
+will result in a rise in demand for efficient transmission routes. The semiconductor
+products for HVDC applications must satisfy particular requirements: robustness,
+short-circuit resistance and dynamic performance. We have developed an IGBT
+module- and a diode module-family specifically for this purpose.
+High-voltage direct current transmission (HVDC)
+In photovoltaics, Infineon has been cooperating for years with the world's leading
+manufacturers of PV inverters. Among other things, we are benefiting from the growth
+of Chinese inverter manufacturers, both with regard to domestic expansion of photo-
+voltaics in China itself and to the export of PV inverters to other regions. We are also
+working closely with leading European and U.S. manufacturers. Efficient conversion
+and low system costs contribute to reducing electricity generation costs in open-space
+photovoltaic plants and to creating grid parity compared with conventionally gener-
+ated electricity. Using our SiC transistors enables manufacturers of PV inverters to
+achieve better systems performance in terms of efficiency, size and cost when com-
+pared with Si-based solutions.
+Photovoltaics
+← Q = < 24 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 25 >
+Using electric energy
+One way to reduce the energy consumption of an electric motor is to use an electronic
+control unit for speed control, which adapts performance to the load required at that
+time. Electronically controlled motors are also a key element in automation. Without
+them, it would be impossible to coordinate the various motion sequences efficiently.
+The market penetration of speed-controlled motors will increase. Such a motor
+control unit requires a large number of the power semiconductors we supply. The
+number and value of these power semiconductors depend on the power range of the
+motor. Industry 4.0 will trigger a new investment cycle, not only for automation in
+factories, but also for general transport and handling systems as well as for collabora-
+tive robots (see "IoT and big data" in this chapter, p. 31 ff.).
+> Industrial automation
+moves or is transported or cooled. Drives
+are also found in pumps, ventilators and
+compressors. According to the European
+Commission, electric motors account
+for almost 50 percent of the electricity
+consumed in Europe. Accordingly, there
+is great potential for savings if efficiency
+is improved. We provide our customers
+with all-in-one solutions for the efficient
+control of their electric motors, compris-
+ing microcontrollers, driver ICs, power
+switches and configuration software. These
+enable us to support fast times to market
+of our customers' products and to ensure
+their simple operation.
+Electric drives are at the heart of a large number of systems, such as cranes, con-
+veyor belts, automation systems and robots. We find them wherever something
+Drives and automation
+As with AC-DC conversion, rising demand for more computing power and storage
+capacity is also driving demand for DC-DC converters. Special processors such as
+Al accelerators, FPGAs, ASICs and GPUs require high power at very low voltages.
+In addition, energy requirements change considerably depending on load and at
+extremely short notice. As a result, the electronic systems are supplied with higher
+voltages that are then precisely stepped down to the required low voltage directly
+in the processor. The same applies to PCs and communication devices, which some-
+times require a large number of different voltages. This voltage conversion system is
+known as point of load. Requirements placed on dynamics, efficiency and stand-by
+consumption are increasing all the time. Customers are looking for simple, reliable
+high-performance solutions, necessitating the change to digital regulation of point
+of load systems and driving the trend towards all-in-one solutions.
+DC-DC conversion
+← Q = < 26 >
+Further information
+Consolidated Financial Statements
+Management Board and
+Supervisory Board
+Combined Management Report
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+USB ports are widely used around the world, for example, in laptops, vehicle cabins
+and planes, or in numerous public places as wall sockets. They are used primarily for
+the transmission of data but can also supply power to a limited extent to connected
+devices. The USB PD standard was created to increase significantly the maximum
+power that can be transmitted. Behind the standard lies the idea of a universal power
+supply for various devices, in which the power supply on offer is more flexible, while
+allowing data to be transmitted through a cable at the same time. This means that
+devices such as laptops, which require more power than a smartphone, can be supplied
+with power and charged via this interface. USB PD is on its way to becoming the new
+universal charging standard.
+> USB power delivery (USB PD)
+transported from the charging station to the device and the battery will be recharged
+without requiring a physical connection.
+The number of devices that can be charged wirelessly is constantly increasing.
+Wireless charging gives users the chance to charge their devices almost in passing,
+wherever they are, in the car, at home or in a public place. A charging station can
+also be used for the wireless recharging of several devices at a time. User acceptance
+will continue to increase as opportunities for fast charging grow. Wireless charging
+has advantages in terms of space and design, especially for small devices, as there
+is no need for a charging port. Following on from the smartphone, wireless charging
+will also apply to many other devices. Using electromagnetic fields, energy will be
+> Wireless charging
+AC-DC conversion
+A power supply for electric devices consists essentially of two stages. First, the power
+unit converts the grid alternating current (AC) into generally much lower direct current
+(DC), a process referred to as AC-DC conversion. The second step, depending on the
+intended usage, is for the voltage of this direct current to be adapted precisely at the
+point of load to suit actual requirements, such as those of a server's processors. This
+second stage is referred to as DC-DC conversion. The devices in question usually have
+several DC-DC converters. Growth in the area of power supply depends on the power
+and complexity of the devices and, above all, on an increase in the number of units.
+Power supply
+Business focus and strategy
+Growth drivers
+In the area of AC-DC conversion, we see high growth potential in the medium term
+in servers and telecommunications infrastructure. Power semiconductor demand
+and the number of servers are determined above all by the increasing complexity of
+the various systems and the growing demand for power which is the result. Demand
+for computing power and DRAM/Flash memory has been boosted substantially by
+the coronavirus pandemic. Working from home and mobile working, video streaming,
+social networking and, increasingly, machine learning will keep demand high. IoT
+and Industry 4.0 will accelerate this trend in the future. In addition, we see growth
+opportunities for our business in the following areas: compact chargers, fast-charging
+features and wireless charging solutions for smartphones, tablets and light laptops
+(portables).
+Infineon
+Consolidated Financial Statements
+Actuate
+Software/
+Ecosystem
+Compute & connect
+Security solutions
+Connectivity
+010100
+00101001
+101010010100:
+101001 Digital world
+01010
+Value addition and
+optimized use of resources
+Smartphones
+Health care products
+Automotive
+Sense Sensors
+Compute & connect Microcontrollers, special memories, Wi-Fi, BT, BLE, USB
+Actuate Power semiconductors
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Growth drivers
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 33 >
+Wearables
+Wearables are continuing to offer new innovative functions, such as health and fitness
+monitoring. They are practical and comfortable to wear and can, depending on the
+application, be used for a variety of purposes. Factors to consider in the design of a
+wearable are size, comfort for the wearer and ease of use. Other success factors are
+accuracy of measurement, a long service life, stability, and security functions. Our
+products and system solutions fulfill these requirements. Small energy-saving sensors
+enable, for example, high-quality monitoring of health, physical movement and
+sporting activities. Our radio frequency solutions support connectivity and location
+tracking. Our solutions for wireless charging also make it easier for the user to recharge
+the devices. As wearables collect user data about health, a high level of data security
+is essential in order to protect the user's privacy.
+Collaborative robots
+Sense
+The area of robotics has been attracting great attention for some years. In addition
+to the continuing development of conventional industrial robots, more and more
+areas of industry are using collaborative robots (cobots). Cobots work together with
+humans in the manufacturing process and are no longer separated from their human
+colleagues by protective equipment like typical industrial robots. They are therefore
+required to meet high standards of safety and reliability, as they have to be able to
+perceive their surroundings well enough to work effectively together with humans
+without endangering them. Cobots will be able to relieve and support humans per-
+forming hard and dangerous tasks. In the long term, cobots will also support elderly
+people in living independent lives, helping to solve the challenge of an aging popula-
+tion. As cobots develop, the trend will be towards intuitive robot programming and
+self-learning robots. Infineon offers not only the necessary sensors, microcontrollers,
+connectivity solutions, power semiconductors and security solutions, but also pro-
+vides numerous start-ups in this market with knowhow in the areas of motor control,
+sensor systems and security.
+Information and data
+about the real world
+Coin cell-powered devices
+The ever-increasing connectedness of vehicles creates opportunities for many new
+services but also carries the risk of unauthorized access. This makes it necessary to
+guarantee the secure exchange of data both between the various onboard systems
+and with other vehicles and the infrastructure. Vehicle safety and personal safety, on
+the one hand, and data security and IT security, on the other hand, can no longer be
+considered in isolation from each other. The vehicle is becoming a networked com-
+puter on four wheels and part of the lot. The demand for data security and IT security
+in the vehicle is rising. We see our opportunity here in the hardware-based security
+provided by our security controllers - either as a separate component or integrated
+into our automotive microcontrollers.
+Integrity of devices
+The integrity of devices has to be ensured as they become increasingly interconnected.
+In principle, this means that no unauthorized modifications can be made to programs
+and data by third parties. A Trusted Platform Module (TPM) can be implemented here.
+This special security chip can protect keys, passwords and digital certificates and store
+them separately from the CPU. In this way, sensitive information and security-critical
+data are locked away in a "data vault”. At the same time, the integrity of the data can
+be checked, making it possible to detect attacks promptly and ensure the correct
+functioning of a system.
+IoT and big data
+IoT connects the real world and the digital world. A wide variety of physical things
+- ranging from smartphones, watches and cameras to cars and computers and even
+to home appliances and industrial machinery - are equipped with embedded elec-
+tronic systems, sensors and software. The possibilities are huge: greater convenience
+and security in the smart home, higher productivity together with better ecology in
+farming, greater productivity in manufacturing, new services, and support for older
+people. These examples show that loT has the potential to effect radical change in
+the interaction not only between companies and consumers, but also between com-
+panies as well as between consumers.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Growth drivers
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← Q = < 32 >
+Our semiconductor solutions drive the loT. Sensors record mostly analog information
+from their surroundings and transform it into digital data. Then microcontrollers
+process this data and generate control signals, actuators convert the control signals
+into actions (in most cases motion, but also light or heat) and security solutions
+protect the integrity of devices and data, while connectivity chips are the link
+between the real world (the end device) and the digital world (the digital twin in
+the cloud). C03
+Human-machine interaction
+Human-machine interaction is concerned with how humans and systems interact
+and communicate with each other. For a long time now, the focus has no longer been
+on traditional industrial machines but on computers, digital systems or loT devices:
+i.e., the connection between the real world and the digital world. More and more
+devices are connected and perform their tasks automatically. The operation of all
+these machines, systems and devices has to be as intuitive as possible, as if the user
+were communicating with a human.
+C03 We are linking the real and the digital world
+Battery-powered devices
+Power supplies
+Industrial IoT
+Drives
+|_
+Smart home
+Real-world applications
+Smart city
+Consumer loT
+Infineon at the core of loT
+Souto
+Smart home
+"Smartification" is also happening in the home and involves the use of pioneering
+technology to make our daily lives easier and more convenient. Today's growing
+range of technologies includes home appliances and interconnected mobile devices.
+To be "smart" in this sense, these devices and systems need to be equipped with the
+right semiconductor solutions. These enable smart devices to perceive their surround-
+ings and to adapt to changing situations through connectivity. Sensors, control units
+and actuators enable real-time data to be properly captured, interpreted and processed
+and for the appropriate action and/or reaction to be triggered. In times of increasing
+connectivity, cyber-attacks present a security risk that can be reduced by including
+security solutions as an integral part of the devices.
+Infineon Technologies | Annual Report 2021
+Thinking and acting responsibly over the long term goes beyond our direct business.
+It is also crucial that, in addition to developing a greater understanding of our cus-
+tomers' systems, optimizing our products and solutions, and achieving an adequate
+return in line with our objectives, we incorporate sustainability into the management
+of our business and engage responsibly with society. Making life greener is part of our
+mission. Therefore, we have set ourselves the target of becoming carbon-neutral
+by 2030.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Group strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 36 >
+Strategic guideline: Strengthening our core business
+and tapping into new growth markets
+With our strategic focus on the megatrends referred to above, we are ensuring long-
+term growth for Infineon. We concentrate on markets with strong structural growth,
+especially on electromobility, the various stages of the electric energy supply chain
+and the increasing digitalization of all aspects of life. The way we act in the individual
+markets depends on our competitive position, which we analyze in terms of technol-
+ogies, products and application understanding. Here we look at three categories:
+firstly, our core business; secondly, adjacent complementary business; and thirdly,
+new options for products and applications as well as for markets. Il C04
+Our core business includes all those areas in which we have a full understanding of
+the applications or where we master the underlying technologies and in which we
+can therefore offer an extensive differentiating product portfolio. In our core business,
+we want at least to grow with the market and thereby maintain or even strengthen
+our leading positions ("grow in scale"). One example is our power semiconductors,
+which are employed in the generation, transmission, storage and use of electric power.
+C04 Strategic growth model
+Markets
+Applications
+Products/
+Technologies
+grow in scale
+Core
+Adjacent
+Enable
+Drive
+Enable
+Drive
+New
+grow in scope
+C05 Worldwide discrete power semiconductors and modules market share
+in the 2020 calendar year
+Within these strategic guidelines, the acquisition of Cypress that we completed in the
+2020 fiscal year is enabling us to grow faster than we would have done organically.
+By combining complementary product portfolios, we are strengthening and expanding
+our core business and can service an even wider range of applications. We also offer
+our customers comprehensive system solutions and better performance and ensure a
+faster time to market for their products. These are the ways in which we differentiate
+ourselves and increase our growth potential.
+Since the end of the 2020 calendar year, the semiconductor industry has experienced an
+unprecedented global shortage of manufacturing capacity. There were, and in some
+cases still are, many factors contributing to this shortage. In the December quarter,
+economic recovery began sooner and faster than expected. In geographical terms, this
+was the case, especially in China. In terms of industries, the bounce back was strongest
+in the automotive industry. The digitalization push caused by the coronavirus pandemic
+led to a surge in demand. Lockdowns in some countries (i.e., Malaysia), extreme
+climate situations (the winter storm in Texas, water scarcity in Taiwan), accidents
+(the fire in a semiconductor factory in Japan), disruption to the logistics chain (the
+tanker accident in the Suez Canal, a shortage of air and sea freight capacity) and,
+last but not least, ongoing political tensions greatly slowed production. Our strategy
+of engaging in differentiating in-house production, on the one hand, and outsourcing
+products based on standard manufacturing technologies to contract manufacturers,
+on the other, has proved successful. We will continue to adopt this strategy, making
+adjustments where necessary.
+At the heart of our implementation is our
+strategic approach "Product to System",
+through which we focus our entire value
+chain on achieving success for the cus-
+tomer. This approach is supported by
+other elements: a broad-based culture of
+innovation, constant pursuit of technology
+leadership, a high level of quality aware-
+ness, in-house production that differentiates
+us from our competitors, and a sales and
+marketing strategy tailored to the various
+markets. We are therefore able to offer
+our customers leading products with the
+highest quality and delivery reliability,
+enabling us to achieve profitable growth
+and grow faster than the market. All
+this promotes our goal of achieving and
+securing a leading position in the markets
+and applications we are active in, while
+successfully addressing issues relating
+to the future.
+In recent years, we have established a stable foundation for success in our target
+markets. Our strategy is to further strengthen our core business and tap into new
+growth markets. We have built up and systematically expanded the technical
+expertise required over many years. Since good ideas do not turn into innovations
+until they are successful in the market, we have also developed the right concepts
+for implementing our value-creation strategy. Il C04
+Management Board and
+Supervisory Board
+Business focus and strategy
+Growth drivers
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← Q = < 34 >
+Smart buildings
+Smart buildings improve the comfort of their occupants and are set to become an
+integral part of the energy transformation. According to the German Federal Ministry for
+Economic Affairs and Energy, buildings are currently responsible for around 35 percent
+of Germany's energy consumption. By 2050, however, the Federal Government wants
+to reduce the energy requirements of its building stock by 80 percent. That goal could
+be achieved if smart buildings were to generate their own electricity (using solar
+systems, for example, as part of a smart grid) and, at the same time, were much more
+energy-efficient than conventional buildings. They can, for example, use sensors to
+detect how many people are in a room at a
+particular time and, based on that informa-
+tion, automatically regulate the lighting or
+heating. Maintenance costs are also reduced.
+Sensors that measure and monitor the con-
+dition of components are included in the
+building installations, such as elevators. If
+there is the risk of a defect as a result of
+wear and tear, technicians are notified. They
+then carry out predictive maintenance
+before the elevator breaks down. Expensive
+outages can thus be avoided. Last but not
+least, smart buildings improve safety. If
+there is a fire in the building, sensors are
+able to detect how the smoke is spreading,
+enabling escape routes to be identified.
+220
+22.0
+00000
+Industrial Internet of Things (IoT)
+Security for connected vehicles
+The lloT describes the digital transformation of industrial production. Sensors, micro-
+controllers and actuators make machines smarter. They can monitor themselves
+and their surroundings and optimize their actions. In manufacturing, machines are
+connected with each other to form an intelligent network that enables comprehensive
+optimization of processes, material flow and capacity utilization. This makes the
+5G mobile communications infrastructure
+The advent of the new 5G mobile communications standard has greatly increased
+potential applications when compared with previous standards. Above all, 5G's high
+data transmission rates and considerably shorter reaction times and/or response
+times make new applications and devices possible. Network providers are continuing
+to expand their 5G infrastructure so that they are prepared for the increase in data
+volume and can offer their customers good network coverage. The network archi-
+tecture has to migrate to smaller and more numerous cell sites to enable better
+exploitation of the available frequency spectrum and especially the use of higher
+frequency ranges. Our radio frequency components are used for communication
+between mobile devices and/or edge computing end devices (see next paragraph)
+and the base station, as well as for wireless backhaul from local networks to the core
+network.
+Edge computing
+IoT and the related explosive growth in devices with an internet connection, as well as
+other new applications that require real-time computing, will drive the growth in edge
+computing systems. In edge computing, data are processed where they arise, on the
+edge of a network. They do not first need to be sent to a central computer server, the
+cloud. This means that edge devices need to have sufficient capacity. High levels of
+capacity combined with limited system resources and energy budget require optimized
+concepts. This is where our products and systems come into play, for example, micro-
+controllers, power semiconductors and sensors, as well as connectivity ICs and security
+ICs. Our hardware, algorithms and system solutions are optimized for these tasks.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Group strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 35 >
+Group strategy
+supply chain and manufacturing more efficient. By involving customers and suppliers,
+demand-related changes in capacity utilization or a breakdown in the supply chain
+can be offset faster. Predictive maintenance means that expensive machine down-
+time can be avoided. Infineon is both a user and provider of IloT solutions. We supply
+microcontrollers, sensors and security solutions for smart factories. At the same
+time, we have adopted Industry 4.0 approaches to a great extent at our own manu-
+facturing sites.
+Combined Management Report
+disruptions and downtime through predictive maintenance. However, the networking
+and digitalization of factories create points of attack for hackers. To protect them-
+selves, companies must therefore take security into account from the very beginning
+of Industry 4.0 projects. A combination of software-based and hardware-based security
+solutions can protect connected machines and communication nodes. Examples
+are OPTIGA™ TPM chips from Infineon, which can be integrated into routers, industrial
+PCs or complex control units and which serve to identify devices to communicating
+partners in the network. They thus authenticate themselves in the network while
+securing transmission of the data. At the same time, they also help protect the devices
+against manipulation, for example by helping to secure software updates. They act
+in a way like vaults for the encryption certificates.
+Further information
+Management Board and
+Supervisory Board
+Business focus and strategy
+Group strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 39 >
+Strategic action areas:
+Factors for successful implementation
+Our strategic approach "Product to System" shapes our actions
+Our strategic approach "Product to System" goes well beyond thinking in terms of
+technologies and products, co8. This approach was also a key element in develop-
+ing the strategic guideline on strengthening our core business and tapping into new
+and adjacent growth markets described above. We want to understand what the
+markets are demanding and how they are changing. Only then will we be able to
+understand how we in turn can change the markets ourselves. We therefore look
+not only at the direct sales opportunities for our products, but also at our customers'
+success factors and at trends in the end markets. We want to recognize at an early
+stage when the foundation of our business is changing. Only then can we take appro-
+priate action in good time, ensure sustainable differentiation in growth applications
+and increase earnings. For this to succeed, we have to understand the environment
+in which our customers' products are used, how these products are embedded in
+larger systems, with which other devices the products interact, what requirements
+they have to fulfill and what function they are intended to perform. Looking at
+our products in these systems, we have to consider which other active and passive
+components and control concepts they use and what capabilities our customers
+contribute to the value creation process. Equipped with this knowledge, we can make
+the most of our competencies. We want to translate the technologically possible
+into marketable products that provide the greatest possible benefit to our customers.
+Sensor systems, for example, not only capture information about their surroundings,
+but also interpret and process the data they gather in order to initiate a particular
+action. Digital control loops in power supplies enable higher energy efficiency at
+both high and low load levels. Connectivity enables devices to be networked. Security
+controllers must be capable of distinguishing between authorized and unauthorized
+access. In all cases, in addition to the hardware components involved, software
+is also required to a greater or lesser extent. System understanding therefore also
+means software understanding.
+As the range of services provided is increasingly becoming a differentiating factor,
+we have expanded our range to include an ecosystem. For many small customers
+without expertise in mounting semiconductor components, an ecosystem offers
+crucial value added, as it can significantly reduce their development time.
+The basic idea is that we continue to expand our competence portfolio, thereby
+increasing our potential for differentiation and helping shape semiconductor trends.
+Best of all, however, is always to be one step ahead. Technology knowhow has
+invariably been the foundation of our business model, whether in the form of discrete
+components, integrated solutions or products that combine analog and digital
+functionality. Our broad portfolio ranges from individual components to solutions
+with basic firmware and driver software. This enables us to provide targeted support
+C08 System knowhow and services are becoming more and more a differentiating factor
+Services
+Software
+Hardware
+Customer system
+Ecosystem
+Development environment
+Full system functionality
+(algorithms, Al)
+Partial system functionality
+(firmware)
+Building block (integration of
+analog and digital functionality)
+Single function
+(discrete components)
+Base technology
+System knowhow
+Competencies evolve over time
+Infineon Technologies | Annual Report 2021
+Services
+R01
+2.4%
+Further information
+Q = < 38 >
+other times groundbreaking concepts on the customer side require the development
+of suitable semiconductor solutions. By becoming involved in these new business areas
+at an early stage, we want to secure a good starting position in highly promising future
+markets. Take the example of smart buildings. Sensors are the sensing organs of a
+building. They actively perceive their surroundings by "hearing", "seeing", "smelling"
+and "feeling". With our sensors, we can open up new application fields, such as
+predictive maintenance of smart buildings. To identify system failures, such as in an
+air-conditioning system, before they occur, our sensors measure various parameters
+and data points. These measurements provide information about whether the rele-
+vant system is operating properly or whether it might break down soon. The ability
+to monitor the state of these devices and systems and to predict outages before they
+actually occur, and to avoid the need to replace devices or systems too early, means
+that smart buildings offer significant potential for cost savings and greater convenience
+for their occupants. Intelligent control and monitoring of systems can of course also
+be used in many other areas, especially in industry.
+We will continue to supplement our organic growth in the future with selective acqui-
+sitions. These acquisitions will need to fulfill three criteria: a) strategically beneficial
+across our three growth categories (core business, adjacent business, new options),
+b) financially advantageous and c) a good cultural fit. A purchase must strengthen
+Infineon's market position in accordance with our strategic focus, usefully comple-
+menting our range of competencies. The corporate culture of any potential acquisition
+target must be a good fit with Infineon's culture, or at least add valuable elements.
+We applied these very criteria to the acquisition of Cypress, which was a major
+groundbreaking step in Infineon's strategic approach. By combining complementary
+product portfolios, we are strengthening and broadening our core business in power
+semiconductors and are able to service an even wider range of applications. Our
+focus on structural growth drivers has been reinforced as a result and the base
+of our business model widened. Cypress has an extensive portfolio of microcontrol-
+lers, software and connectivity components. By combining these with our power
+semiconductors, sensors and security solutions, we are able to offer our customers
+even more extensive and forward-looking system solutions. The synthesis of our
+security expertise and Cypress' connectivity knowhow is accelerating our entry into
+new applications in the area of loT. In the field of automotive semiconductors,
+the expanded portfolio of microcontrollers and NOR Flash memory ICs offers great
+potential, especially given their growing importance for driver assistance systems, new
+electronic architectures and haptic operating elements. The complementary nature
+of our product ranges means that we can differentiate ourselves even more strongly
+from the competition in our core applications with our strategic approach "Product
+to System" and we can thus service adjacent business areas. After the acquisition of
+Cypress Infineon is among the world's top-10 semiconductor manufacturers, co7.
+The advantage of our system solutions to the customer is that the relevant parts
+come from a single source. They are compatible with each other and rounded off with
+software solutions. For our customers, this means shorter product development
+times and an attractive cost-benefit ratio for their products.
+C07 Market share in the total semiconductor market in the 2020 calendar year
+US$473.491 billion market size
+Intel
+Samsung
+16.1%
+12.0%
+SK Hynix
+5.6%
+Micron
+4.7%
+Qualcomm
+Broadcom
+4.1%
+3.8%
+3.0%
+Nvidia
+2.8%
+Infineon
+2.4%
+MediaTek
+Texas Instruments
+Infineon Technologies | Annual Report 2021
+onsemi
+Technological progress also paves the way for completely new application areas for
+which commercialization has not yet started on a wide scale. Sometimes innovations
+in semiconductor technology provide the momentum for new applications, while
+STMicroelectronics
+Management Board and
+Supervisory Board
+Business focus and strategy
+Growth drivers
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q =
+< 30 >
+Security
+The increasing degree of interconnection between humans, machines and devices
+demands greater IT security: from the manufacturing industry and smart home
+applications to information and communication technologies. We provide our cus-
+tomers with robust, future-oriented embedded security hardware for electronic
+devices, computer systems, network components and industrial facilities. These
+security technologies make it possible to authenticate people and machines, protect
+confidential data and detect unauthorized changes to networked machines and
+devices. In industry, this trend is already evident. With increasing digitalization, the
+desire for reliable IT security that is also easy to use is growing.
+Security for mobile devices
+The development of smartphones and wearables, the mobile internet and Near
+Field Communication (NFC) technology has made it possible to integrate payment
+services into today's mobile devices.
+During the coronavirus pandemic, people
+have particularly valued this function.
+However, cashless payment is just one of
+many of the functions of mobile devices
+requiring the storage and processing of
+sensitive data. Travelers on public trans-
+portation, for example, enjoy the conve-
+nience of using mobile tickets instead
+of coins or physical tickets. These applica-
+tions require special security solutions
+such as a security chip called a Secure
+Element (SE). The SE can either be built
+into the smartphone (when it is referred
+to as an embedded SE, or eSE) or inte-
+grated into the SIM card.
+Security for contactless payment
+Contactless payment has been common for several years in many countries and
+regions, such as the U.S. and Canada, and Europe, but also Asia, especially China and
+Singapore. The coronavirus pandemic ensured greater acceptance of this type of
+payment, even in previously hesitant countries such as Germany. Behind contactless
+payment transactions, there is generally a transmission standard that transmits the
+data over a short distance of four centimeters at the most. This small range, in con-
+junction with encrypted data transmission, makes contactless payment transactions
+secure. Infineon is one of the world's largest manufacturers of security chips and
+antennae for payment cards.
+Secure authentication for the loT
+Security plays a key role in IoT. The rising number of hacking attacks underlines
+the need for appropriate precautions. In order to secure electronic systems, it is
+important to connect only authorized and
+authenticated devices with each other and
+to protect them against manipulation and
+cyber-attacks. This means that security
+must be integrated into every end-point
+whenever possible. The electronic compo-
+nents central to security are typically
+assembled on the printed circuit board,
+which is why these components are referred
+to as embedded security. Infineon offers
+various embedded security controller
+families adapted to meet specific security
+requirements.
+For machine-to-machine communication, Infineon
+offers eSIM controllers in a tiny package.
+Security for industrial applications (smart factories)
+In the era of Industry 4.0, companies are using the latest technologies to make their
+manufacturing faster and more cost-effective, to reduce rejection rates and to minimize
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Growth drivers
+Combined Management Report
+Consolidated Financial Statements
+Mitsubishi
+Toshiba
+8.3%
+5.5%
+5.0%
+The greatest growth potential is to be found in markets adjacent to our core business
+that we have not yet addressed at all or in which we have only been partly active. It
+only takes a moderate amount of effort to adapt existing technologies and products
+for additional applications, enabling us to increase potential sales. In the application
+fields where we are already active, we can use our system understanding to increase
+revenue with a broader portfolio of products and solutions ("grow in scope"). The
+core mentioned above should therefore not be seen as a static portfolio of activities.
+Instead, the adjacent business becomes part of our core business in the medium
+term, the core grows and the boundaries shift, because when we make progress in
+specific markets in terms of technology, products and application understanding,
+the classification of these markets changes accordingly. To return to the example of
+power semiconductors, "Power" is one of our original core competencies, but here
+too we continue to develop. We are expanding our portfolio so that we can offer our
+customers an increasing degree of “Intelligence” in addition to power semiconductors.
+Specifically, this means that we have focused on complementing our range of efficient
+power transistors with additional components, increasingly using digital solutions.
+The products required for intelligent control of switches tend to be more complex and
+higher-end because they incorporate greater functionality. In the context of increas-
+ingly complex systems and shorter development times, many customers appreciate
+this greatly, as it enables them to reduce their development costs and development
+risk significantly.
+Accordingly, we offer our customers optimal solutions, and we can show them new
+ways of being successful. Our high-volume manufacturing means that we can achieve
+economies of scale, while at the same time, we can provide manufacturing capacity
+for individual customer projects and grow alongside our customers.
+Wafer dicing
+Device fabrication
+Epitaxy
+Lower half
+Wafer splitting
+Upper half
+Device fabrication
+Epitaxy
+Boule splitting
+Boule
+← Q = < 31 >
+C06 Siltectra's Cold Split technology allows splitting of SiC boules as well as SiC wafers
+with minimum loss of material
+← Q = < 37 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+We began researching new materials for power semiconductors at an early stage.
+SiC and GaN are particularly well suited for use in power electronics. Here, we are
+moving towards new levels of performance and efficiency. These components are
+typically more expensive than Si-based products, but thanks to new system architec-
+tures they also offer the customer multidimensional additional benefits, such as a
+smaller form factor, greater efficiency and lower system costs. Realizing these benefits
+often goes hand in hand with higher research and development costs for our cus-
+tomers. Therefore, we support the introduction of these new technologies in two ways.
+On the one hand, we work closely together with our highly innovative customers,
+while, on the other hand, we provide less technology-oriented customers with appro-
+priate solutions that make the switch easy to implement, for example, compatible
+control components. Given the increasing relevance of SiC for certain power semi-
+conductor applications, we acquired SiC specialist Siltectra in 2018. The company
+has developed an innovative method known as Cold Split technology to process
+crystal efficiently and with minimum loss of material, c06. Infineon will use the
+Cold Split technology for the efficient separation of SiC boules and to split SiC wafers.
+That gives us two advantages. Firstly, we can manufacture in a more cost-effective
+manner, as we use the raw materials more efficiently. Secondly, we achieve a higher
+We understand how these systems are used to convert and control electric power,
+and we supply particularly compact and energy-efficient MOSFETs and IGBTs for this
+purpose. We are the undisputed global market leader in this area. Il C05
+R04
+19.7%
+4.6%
+output of SiC components from the raw materials purchased, which increases our
+security of supply. This is particularly important given the ongoing expansion of
+renewable energy and the increasing use of SiC in the powertrain of electric vehicles.
+We have now established all the prerequisites for future success in the growing
+SiC market: access to high-quality wafers, leading technology at the product level
+(Trench SIC MOSFET), module expertise and system understanding.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Group strategy
+Further information
+possess the required skillsets and are given opportunities for further development,
+they not only display higher levels of creativity, productivity and innovation, but also
+create better outcomes, which goes hand in hand with a personal sense of achieve-
+ment and greater motivation. Regularly conducted pulse checks of our employees
+worldwide enable us to measure their level of engagement and thus keep our finger
+on the pulse of their needs. Appropriate measures are taken as the need arises.
+The coronavirus pandemic continued to necessitate swift, carefully considered action
+in the field of HR in the fiscal year just ended. The health of our employees is our fore-
+most priority. At the same time, however, we also need to ensure business continuity.
+With a variety of testing and vaccination concepts at its sites, Infineon undertook a
+raft of measures designed to optimally support and safeguard not only its employees,
+but the business as a whole.
+The future of work is impacted by megatrends such as digitalization, artificial intelli-
+gence, the collaboration of man and machine and the (de)globalization of markets.
+Most recently, the coronavirus pandemic acted as a "time machine to the future".
+Changes related to "New Work" that were predicted to take place over the next few
+decades happened within just a few months. In recent years, Infineon has introduced
+a number of digital tools and processes that have helped to keep our business run-
+ning successfully, even after the outbreak of the coronavirus pandemic. Our task now
+is to make further use of the foundations already in place and build on them to define
+a comprehensive understanding of "New Work" for Infineon.
+In order to remain innovative, competitive and successful going forward, Infineon is
+in constant search of the most highly talented individuals. This is a challenge in itself,
+as talented people in the STEM fields (science, technology, engineering and mathe-
+matics) remain in great demand on the labor market. In the fiscal year just ended,
+Infineon recorded its highest level of new hires in recent years. One of Infineon's great
+advantages is its positive brand and employer image, which helps us in our efforts to
+recruit and retain talents. The fact that we manufacture future-oriented products that
+create value for society makes our company a highly attractive prospect to many
+potential employees.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Human Resources strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Q = < 48 >
+To strengthen a positive employee experience and the resulting high level of engage-
+ment, it is also important to continuously develop employees and managers. We
+have geared our learning methods towards digitalization and offer the right formats
+for the relevant content. We provide our employees with a wide range of high-quality
+training courses in various languages, many of which are virtual and can therefore
+be accessed from anywhere and at any time. Due to the dynamic market environment,
+our leaders are regularly faced with new challenges and therefore the approach
+to leadership development at Infineon was revised during the fiscal year just ended.
+For example, various new and integrated offerings were introduced to foster and
+strengthen the self-reflection of our leaders. Moreover, new leadership programs have
+been developed and made available, with the aim of encouraging leadership devel-
+opment in line with specific leadership requirements. Where appropriate, we draw
+on the expertise of external partners. For example, we have entered into a strategic
+partnership with INSEAD Business School to handle selected aspects of our manage-
+ment training program.
+-
+In addition to all the above-mentioned topics, the successful integration of Cypress
+remains a high priority. HR is playing a significant role in integrating more than 6,000
+former Cypress employees worldwide – from a strategic, financial and cultural point
+of view. During the fiscal year just ended, we were able to integrate these new colleagues
+in our organization, processes, systems and remuneration logic and at the same time
+initiate the necessary onboarding and training measures at both individual and team
+level. These are important steps in our ongoing efforts to successfully integrate our
+new colleagues who have joined Infineon as a result of the acquisition of Cypress.
+We also define ourselves through a motivating working environment and in the way
+we collaborate with each other, embracing a distinctive feedback culture, actively
+practiced leadership principles and worldwide interaction with colleagues from over
+100 nations. We are proud of this diversity and will continue to cultivate it with the
+aim of taking in additional dimensions of diversity and inclusion going forward.
+We see diversity as the natural participation of everyone concerned and a key factor
+for our enduring success. The perception that skills and behavior complement each
+other is an essential part of our recruitment and organizational development strategy.
+Our objective for the dimension "gender" is to achieve a share of 20 percent of women
+in leadership positions by 2030, an aim also reflected in our Environmental, Social
+and Governance (ESG) targets, which are part of Infineon's Long-Term Incentives (LTI).
+We will continue to focus on this factor with the aim of constant progress in mind.
+Customer centricity, ease of use, efficiency and a proactive approach to development
+are key points of focus in our ongoing HR services and support work. Moreover, the
+expectations of the younger generation differ significantly from those of the past and
+present us with new challenges. The digital transformation of HR at Infineon has
+enabled us to take a decisive step towards meeting these expectations. In doing so,
+we are focusing on business requirements and at the same time continuously devel-
+oping our HR capabilities. In the course of the 2021 fiscal year, we developed a new
+concept for Human Resources Shared Services going forward and intend to roll it out
+globally in the upcoming fiscal year. The focus is on creating a positive customer
+experience for employees and managers as well as the further standardization and
+digitalization of "end-to-end" processes and services. We also launched the Career
+Project during the 2021 fiscal year with the aim of creating an inspiring career environ-
+ment that promotes individual development while contributing to business value,
+both now and in the future.
+People are the main focus of our activities, as dedicated, healthy, successful employees
+are key to maintaining and improving our market-leading position, thereby creating
+a successful future for us all.
+Further information, including detailed statistics, is available in the 2021 Sustainability
+Report and the 2021 Human Resources Report.
+www.infineon.com/csr_reporting ☐ www.infineon.com/hrreport
+Infineon Technologies | Annual Report 2021
+10000
+20000
+Management Board and
+Supervisory Board
+Business focus and strategy
+We view our Human Resources (HR) strategy from a position of overarching responsibil-
+ity. Firstly, it makes a decisive contribution to ensuring Infineon's ability to achieve its
+growth and profitability targets and successfully navigate through varying economic
+phases and challenges. Secondly, we also feel to have the responsibility to contribute
+to solving the major challenges currently facing society. Our HR understanding "People
+create value. HR fosters people engagement” remains unchanged. It was rolled out
+globally in 2020 and is now firmly embedded throughout the Infineon organization.
+Our overriding objective is to foster our employees' engagement and to take the nec-
+essary measures to achieve this. When employees are enthusiastic about their job,
+Human Resources strategy
+← Q = < 47 >
+Further information
+← Q = < 45 >
+Long-term financial targets underline
+our growth ambitions
+In the coming years, structural trends will drive our growth, in particular, electro-
+mobility, automated driving, renewable energy, manufacturing automation, mobile
+phone standard 5G, data centers, loT and a steadily increasing number of battery-
+powered devices. Thanks to our leading technologies, our understanding of applica-
+tions and systems, and our differentiating expertise in manufacturing, we have
+achieved an outstanding position in these markets. We want to take advantage of
+the resulting opportunities and continue to grow at a faster rate than the markets in
+which we operate, gradually increasing our profitability. To do so, we consistently
+invest. Our long-term financial targets reflect this aspiration. They apply over the
+cycle and are based on a stable macroeconomic environment.
+5G
+Target 1: Average annual revenue growth of more than
+9 percent over the cycle
+We hold leading positions in our core markets and have expanded systematically
+over the years into new and adjacent markets. Our four segments focus on the
+aforementioned trends. Our strategic approach "Product to System" has gained even
+greater impetus due to our integration of Cypress' product portfolio. As a result, we
+use our extensive technological and product expertise to develop better solutions and
+thus create significant added value for our customers. We expect to achieve revenue
+growth in the future of more than 9 percent (“9%+") over the cycle.
+Target 2: 19 percent Segment Result Margin over the cycle
+Growth is only one prerequisite for sustainable success. Another criterion is profit-
+ability. When we work profitably on a sustainable basis, it allows us even in weaker
+market phases, to consistently pursue our development projects. Therefore also our
+profitability target of achieving a Segment Result Margin of 19 percent applies over
+the cycle. Reaching this level will be based on a number of factors: Our system solu-
+tions create higher value. We thereby focus our development on designs that are of
+the greatest use to our customers and for which we will be accordingly rewarded. Our
+technology leadership and our strategic approach "Product to System" enable us to
+maintain a higher degree of differentiation. The integration of Cypress and the related
+revenue and cost synergies are also improving our profitability. Furthermore, we rely
+on the economies of scale and cost advantages generated by innovative manufacturing
+technologies such as 300-millimeter thin wafer manufacturing. In addition, we strive
+for a disproportionately low increase in functional costs such as selling, general and
+administrative expenses.
+On the other hand, we are confronted with increased cost for contract manufacturers
+and materials. Moreover, initial development costs will be incurred, preceding the
+generation of revenue synergies and the commercialization of new technologies, in
+particular the materials SiC and GaN. These factors are considered in our target of
+achieving a Segment Result Margin of 19 percent over the cycle.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Group strategy
+Combined Management Report
+Combined Management Report
+Consolidated Financial Statements
+← Q = < 46 >
+Target 3: Investments totaling 13 percent of revenue over the cycle
+Our planning is geared towards providing the necessary manufacturing capacity
+for our expected growth. In the area of power semiconductors, one of the factors
+differentiating Infineon from the competition is that we manufacture our own
+products. To generate growth in this field, we are planning to expand our 300-milli-
+meter production as well as expanding capacity for SiC and GaN. In the area of
+microcontrollers, connectivity components and security ICs we will continue in the
+future to work together primarily with our manufacturing partners. We are therefore
+able to set our investment rate target at 13 percent of revenue over the cycle. When
+calculating the investment rate, we do not include step-cost investments in clean
+rooms or major office buildings.
+Capital structure targets demonstrate
+our long-term reliability
+The sustainable continuation of the company is of great importance from a variety
+of perspectives. It is important to our customers that we remain a trusted partner and
+reliable supplier for many years to come. Our debt providers need to be certain that
+we can repay principal and pay interest over a long period of time, while our share-
+holders want to achieve an attractive return over the mid to long term. Long-term
+reliability is something we also want to offer our employees, even well beyond their
+working lives through retirement benefits. We therefore attach great importance to
+solid creditworthiness. An investment grade rating is and remains the key element of
+Infineon's conservative financial policy. From this cornerstone, we derive our medium-
+term and long-term capital structure targets. On 11 February 2021, S&P confirmed
+Infineon's investment grade rating of BBB- and raised its outlook to positive.
+Infineon's capital structure targets consist of a liquidity target and a leverage target.
+For liquidity, our gross cash should amount to €1 billion plus at least 10 percent
+of revenue. The fixed base amount of €1 billion provides a solid liquidity reserve for
+contingent liabilities and pension liabilities, which are unrelated to revenue. The
+additional amount of at least 10 percent of revenue means that we always have access
+to sufficient cash to be able to finance our operating business and investment through-
+out all the phases of the semiconductor cycle.
+Our leverage target is expressed as an upper limit on gross financial debt of two
+times EBITDA. Infineon defines EBITDA as earnings (loss) from continuing operations
+before interest, taxes and depreciation and amortization. As a result of the acquisition
+of Cypress, we exceeded this level, but only to the extent compatible with retaining
+our investment grade rating. The originally medium-term objective of Infineon to
+reduce its debt level to or below the maximum target value after the closing of the
+Cypress transaction is expected to be achieved already in the 2022 fiscal year.
+We took further steps in the refinancing process in the 2021 fiscal year, focusing
+on the term loans that were deliberately raised in US dollars as part of the acquisition
+financing. In April 2021, Infineon signed a private placement of bonds in the United
+States with a volume of US$1.3 billion in four tranches with maturities of six, eight,
+ten and twelve years. As a result, the term loan due in 2022 was fully repaid, as were
+US$745 million of the term loan due in 2023. The transaction was completed in June
+2021. Following a further partial redemption of US$365 million in September 2021,
+only one US$1,110 million term loan due in 2024 remained outstanding at the end
+of the 2021 fiscal year.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Human Resources strategy
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Consolidated Financial Statements
+Further information
+Q= < 49 >
+Information pursuant to section 289a, paragraph 1,
+and section 315a, paragraph 1,
+of the German Commercial Code (HGB)
+132 Statement on Corporate Governance pursuant
+to section 289f, 315d of the German Commercial
+Code (HGB)/Corporate Governance Report
+132 Remuneration report
+151
+List of references
+This report combines the Group Management Report of Infineon
+("Infineon" or "Group") - comprising Infineon Technologies AG
+(hereafter also referred to as "the Company") and its consolidated
+subsidiaries - and the Management Report of Infineon Technologies AG.
+The Combined Management Report contains forward-looking state-
+ments about the business, financial condition and earnings perfor-
+mance of Infineon. These statements are based on assumptions and
+projections based on currently available information and present
+estimates. They are subject to a multitude of uncertainties and risks.
+Actual business development may therefore differ materially from
+what has been expected. Beyond disclosure requirements stipulated
+by law, Infineon does not undertake any obligation to update forward-
+looking statements.
+The business with the XMCTM family of industrial microcontrollers
+was transferred from the Automotive segment to the Connected
+Secure Systems segment with effect from 1 October 2020. The previous
+year's figures have been adjusted accordingly.
+The content of these sections is voluntary content that has not
+been checked by the auditor but only read critically. In the case of
+cross-references, the information to which the cross-references
+refer was not checked either.
+Infineon Technologies | Annual Report 2021
+Technology leadership creates added value for customers
+128
+In the area of software, we are also making considerable progress, which is benefiting
+our customers. We are combining our expertise in software with our hardware exper-
+tise. The second generation of our successful automotive microcontroller family
+AURIX™ can, for example, be used for radar signal pre-processing in combination with
+our radar sensor ICs. We have implemented this digital pre-processing of data in
+hardware, as this is considerably more effective. However, we were only able to do this
+because we mastered and integrated the underlying algorithms.
+In recent years, we have intensified our activities in the area of software, not only in
+strategic partnerships and our own software development, but also as a result of the
+acquisition of Cypress. The acquisition means that now, for the first time, we have an
+entire ecosystem comprising software components and a development environment,
+as well as reference designs, product support, blogs, a developer community and
+and understand how to create added value.
+To generate even more of it for our digital-
+age customers, we have expanded the
+iMOTION™ platform to include security and
+connectivity components. It is not always
+the most sophisticated solution that
+provides the greatest added value for the
+customer. Sometimes standard compo-
+nents may be the right fit. Nevertheless,
+system understanding creates a competitive
+advantage, because it gives us the ability
+to cooperate with our customers and
+develop better products.
+can support all these different approaches
+The IMOTION™ IMD111T6 is a highly-integrated IC
+for the control of 3-phase BLDC motors.
+Infineon
+IMD111T6
+to our customers using totally different approaches. Some customers want to differen-
+tiate themselves from their competitors by using their own software, purchasing only
+the necessary hardware from us. We go one step further with automotive microcon-
+trollers and security controllers, which we supply with special firmware that supports
+the basic functionality of the hardware and cannot be modified. More extensive func-
+tions can then be implemented using additional program code. The second genera-
+tion of our IMOTION™ digital motor control platform was developed, for example, for
+use in home appliances and comes with a development kit as standard that reflects
+the priorities of our customers in this market: lower system costs, compact design,
+reduced development costs, short development time and a high level of reliability.
+The iMOTION™ components already contain all the algorithms required to control an
+electric motor. Only a small number of application-specific parameters need to be
+defined in order to complete the programming. Since we think in terms of systems, we
+← Q = < 40 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+online tutorials. A key element of this successful ecosystem is the ModusToolbox™
+development environment. This includes reusable firmware that makes it signifi-
+cantly easier for engineers to program microcontrollers and Wi-Fi and Bluetooth
+components. The next step is to expand Al functionality: ModusToolbox™ Machine
+Learning with access to algorithms for implementation in microcontrollers.
+Further information
+128 Corporate Governance
+112 Risk and opportunity report
+Combined
+Management Report
+50 Business model
+52 Review of the semiconductor industry
+55 2021 fiscal year
+58
+60
+The segments
+Automotive
+65 Industrial Power Control
+70 Power & Sensor Systems
+75 Connected Secure Systems
+124 Overall statement on Infineon's financial condition
+125 Infineon Technologies AG
+80 Research and development
+88 Manufacturing
+91 Manufacturing sites
+92 Internal management system
+95 Sustainability at Infineon
+96 The Infineon share
+99 Group performance
+99 Review of results of operations
+103 Review of financial condition
+105
+Review of liquidity
+109 Report on outlook, risk and opportunity
+109
+Outlook
+87 R&D sites
+Consolidated Financial Statements
+Jan
+Business focus and strategy
+Group strategy
+Innovation drives differentiation
+Key aspects of the focus of our manufacturing landscape include not only innovative
+strength and delivery capability, but also quality and productivity. Our manufacturing
+strategy (of applying leading manufacturing technologies and process expertise in
+our in-house manufacturing, while outsourcing in areas with little differentiation)
+ensures growth, competitiveness and flexibility.
+of scale. Compared with manufacturing on 200-millimeter wafers, we benefit here
+from lower costs, with equal productivity and a lower capital intensity. We have taken
+a further step to extend our lead. With the new factory at the Villach (Austria) site,
+together with our 300-millimeter manufacturing facility in Dresden (Germany), we
+have established a closely coordinated
+manufacturing network across the two sites.
+In line with our "One Virtual Fab❞ concept,
+we are using the same processes, equip-
+ment, and automation and digitization
+concepts in Villach and in Dresden. This
+brings cost advantages, but it also benefits
+the customer, as we can rapidly shift pro-
+duction volumes between the sites. By
+expanding our manufacturing capacity,
+especially as a result of the start-up of our
+new 300-millimeter factory in Villach, we
+are sending a strong signal to our custom-
+ers that Infineon is the ideal partner for
+future growth.
+← Q = < 42 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+With our 300-millimeter thin wafer manufacturing technology for power semicon-
+ductors, we have made a breakthrough. As pioneers of this technology, the scale
+of manufacturing we have now reached allows us to achieve significant economies
+Our outstanding manufacturing methods and our process and manufacturing expertise
+give us a strategic advantage in many application areas, such as power electronics
+and sensor technologies, enabling us to offer differentiating components.
+All our actions are designed to create, on the one hand, added value for the customer
+and, on the other hand, potential differentiation for us. This also applies to manufac-
+turing. We manufacture in-house when doing so means we can differentiate ourselves
+from the competition through lower cost or higher performance. Typically, this is
+the case for power components and sensors. However, when it comes to standard
+technologies where the intellectual property lies above all in the design or in the
+software, we work primarily with contract manufacturers. This is predominantly the
+case for highly-integrated products, such as microcontrollers, connectivity compo-
+nents, security ICs and memory ICs. As a result of the current shortage of manufactur-
+ing capacity in the standard technologies - for Infineon this applies mainly to feature
+sizes of 65 nanometers and 40 nanometers – we have signed supply agreements with
+our contract manufacturers, which in some cases are multi-year agreements, to
+ensure better delivery capability.
+Strategic differentiation through in-house manufacturing
+Innovation is one of the fundamental success factors in the semiconductor industry
+and is the basis on which we differentiate ourselves from the competition. Infineon
+has shown time and again that our technological and product innovation enables
+us to grow faster than the market. However, the challenges are becoming greater. In
+the attractive markets where we are active, competition is increasing, and we require
+an ever-broader technology portfolio to remain competitive in these markets in all
+applications. In addition, development costs are increasing disproportionately with
+Customers choose Infineon because we stand for the highest levels of quality, for
+reliability and for technological leadership. The satisfaction of our customers attests
+to the fact that this rigorous approach to quality is successful. By way of example, in
+the 2021 fiscal year, Infineon was again recognized by several leading manufacturers
+in the automotive and computer industry, who paid tribute in particular to very good
+collaboration during periods of chip shortages. We received the Best Collaboration
+Award from the Chinese subsidiary of automotive supplier Bosch as well as the
+Best Supplier Award from the Taiwan-based server manufacturer Quanta for brilliant
+services, strategic collaboration, and logistic fulfillment.
+The highly sensitive XENSIVT MEMS microphone IM67D130A allows the capture of
+distortion-free audio signals even in loud environments, and hence enables
+the use of sound as a complementary sensor for ADAS.
+Infineon
+IM67D130A
+Another example is CO2 sensors for buildings. Here energy efficiency standards
+require thicker insulation, which tends to lead to poorer air quality in the building.
+In the 2021 fiscal year, we launched our first CO2 sensor able to detect an increase
+in carbon concentration. Compared to conventional CO2 sensors, ours has a much
+smaller form factor, which opens up new areas of application, such as loT devices and
+smart home applications to improve indoor air quality like air purifiers, thermostats,
+weather stations and personal assistants.
+Many years ago, we deliberately blazed new trails in the field of sensor technologies,
+in the knowledge that capturing environmental data would become massively more
+important in our target markets. Today we have a comprehensive portfolio of sensors
+for a wide variety of systems in vehicles, for mobile devices, in consumer electronics
+and for the IoT. MEMS microphones in particular are experiencing a boom, not only in
+the field of traditional audio applications. In a vehicle, they support driver assistance
+systems by warning of approaching emergency vehicles with sirens sounding.
+← Q = < 41 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+We systematically use our strong technological position to expand our expertise,
+strengthen our core business and grow in scope, for example, whenever the require-
+ments of our markets change or when we see long-term growth potential in an
+adjacent business area. As one of the market leaders in the field of power electronics,
+we began researching new materials at an early stage, building up our expertise,
+and we are constantly broadening our product portfolio. In the future, we will also
+continue to strengthen our expertise in the control of power semiconductors and
+to broaden our product portfolio. As the number one in MOSFETs and IGBTs, we see
+interesting opportunities for faster growth in this adjacent area than has been seen
+to date.
+In accordance with our strategic approach of thinking in systems, our engineers
+anticipate many challenges before our customers are affected by them. This enables
+us to fulfill the promise of technological leadership. By cooperating closely with our
+customers, we learn to understand applications better. Thus we can identify future
+trends at an early stage, then develop products and tailor them accordingly. In this
+way, we can offer our customers individual components as well as complete system
+solutions as required.
+Combined Management Report
+Quality leadership keeps customers loyal
+each further step, as the technologies approach successive physical limits. This fact
+underlines the importance of economies of scale and the relationship between
+technology leadership and size. Previous formulas for success fall short under these
+conditions and have to be either expanded or replaced.
+O
+The digital transformation plays a crucial
+role here. As a global semiconductor manu-
+facturer, we benefit from the digital trans-
+formation in two ways: on the one hand, as
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+This is why innovation and system thinking ideally complement one another. We
+consider what the key factors are and how we can combine several innovative steps,
+which may sometimes appear rather small, to form a greater whole that will in turn
+provide an additional and noticeable benefit to the customer. Our commitment to
+innovation today covers all areas of our company: logistics, operations, technology,
+products, system solutions and cooperation with our customers. We focus on differ-
+ent aspects, depending on market demands. Within the company, the focus is on
+innovation in our business activities and on continuous improvement, with the aim
+of becoming leaner and faster. The key to success is collaboration across organiza-
+tional boundaries and the resultant creation of a working environment that helps us
+expand our innovative expertise. In parallel
+with a structured innovation process, we
+have successfully established new concepts
+that do not take a hierarchical approach but
+are based on the initiative of our employees
+and therefore provide the necessary free-
+dom to act.
+in which we have invested for years, and we will continue to increase this where it
+is beneficial and adapt it to different production conditions. In addition, we will
+gradually be switching our electricity supplies to renewable sources of energy. At our
+European sites we have already switched to 100 percent green electricity. At our sites,
+energy teams who are responsible for the implementation of efficiency measures
+also play a key role. The ongoing transition to state-of-the-art 300-millimeter pro-
+cess technology and the promotion of Industry 4.0 enable us to achieve further
+significant savings. We also expect the introduction of an in-house carbon prize to
+act as an incentive for efficiency improvement measures: Energy-efficient projects
+are becoming more economical. Moreover, we are promoting electromobility by
+expanding the charging infrastructure at our sites. We will offset the small remaining
+part of our emissions with certificates that combine development support and
+carbon avoidance.
+Through good resource management, our products and solutions make an active
+contribution to climate protection. During their service life, they contribute to savings
+of around 72.45 million tons of carbon equivalents. We know, however, that we can do
+even more. We have been working for years on reducing our carbon emissions and have
+set ourselves binding carbon reduction targets. Thus we will become carbon-neutral
+by 2030; by 2025 emissions are to be reduced by 70 percent compared to 2019. This
+target relates to Infineon's own footprint for greenhouse gases and includes not only
+direct emissions, but also indirect emissions from electricity and heat. Our primary
+focus here is on continuing to improve energy efficiency and on reducing carbon in
+our factories. We will achieve the greatest impact from PFC exhaust air abatement,
+To be successful in the long term, economic success must go hand in hand with
+environmental and social commitment. Our "making more from less" approach has
+shaped our actions for a long time. A key factor in arriving at greater sustainability
+and solving climate challenges is technologies that achieve more with fewer resources
+and save emissions at the same time. By fully adopting this approach, also in its
+manufacturing, Infineon consumes 17 percent less water and 44 percent less electricity
+and produces 67 percent less waste in its frontend factories than the global average
+of semiconductor companies represented on the World Semiconductor Council. We
+work constantly on avoiding direct emissions and on continuing to reduce the energy
+requirements of our facilities and processes.
+Sustainable growth: optimized manufacturing processes, efficient
+products and binding carbon emissions targets
+At the same time, we engage in networks consisting of distributors, development
+service providers and manufacturing service providers. These networks enable smaller
+companies and start-ups to come together to develop and manufacture electronics
+for new functions or new end devices. Applying this broad-based sales strategy,
+we want to maximize revenue from existing technologies, while at the same time
+increasing the return on our investment in research and development.
+< 44 >
+Q =
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Group strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+For these customers, we offer easy-to-use solutions using, for example, optimized
+product combinations, reference designs and basic software. Here, in particular, our
+system understanding makes a difference.
+potential of the distribution channel with standardized but configurable products for
+the wider market. We have made good progress here in recent years, because we
+have focused on continuous targeted adjustment of the product portfolio and close
+partnership with distributors.
+a provider and, on the other, as a user of
+digital solutions. As a provider, we use digi-
+tization to service our customers in the best
+Infineon Technologies | Annual Report 2021
+Digitalization is providing a boost to potential applications. More and more devices can
+be upgraded to include new functions through connection to the internet. We acquired
+the components and expertise needed here through our acquisition of Cypress. Next,
+we want to provide our solutions to existing customers and, in particular, new custom-
+ers who want to make their products smart and to help them upgrade their products
+quickly and without encountering obstacles. For most of these new customers, semi-
+conductor technology is only a means to an end. They have neither the ability nor
+the desire to deal with it themselves. The challenge is to offer this very varied clientele
+the service they expect using the available resources as effectively as possible.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Group strategy
+Combined Management Report
+possible way using efficient platforms. An important aspect here is the digitization
+of technical support, which we continuously drive forward. Technical support is
+essential to build and maintain customer relationships in fragmented markets. We
+enable customers to have direct access to the information they require in order to
+Further information
+Consolidated Financial Statements
+solve potential problems efficiently, simply and independently. As a user, on the
+other hand, we also use digitization to optimize our internal processes and to make
+them as efficient as possible. So, for example, we connect our sites and organize
+our global supply chains in accordance with Industry 4.0 in a virtual manufacturing
+network. In sales and marketing, we are using new methods for analyzing big data
+to improve our cross-segment sales opportunities and, as a result, we can provide
+more targeted solutions for our customers' needs. With initiatives such as these, we
+are building our digital expertise and becoming even more competitive. We are
+taking an exploratory approach to make the best use of the potential of the digital
+transformation. This way, we gather experience based on specific use cases and
+work towards solutions in an iterative process.
+IoT and big data are constantly bringing new players to the electronics marketplace,
+and they call for a strong partnership across a variety of competence areas. In this
+dynamic environment, joint innovation is the key to corporate success. One example
+is our Silicon Valley Innovation Center, a start-up center for innovations. It provides
+a platform on site for investigating new ideas and for fast learning. We also operate
+co-innovation spaces, the first of which we opened in Singapore. With our experience
+and expertise, we support the typical skill set of start-ups trying out new technologies
+and applications and bringing some of them to market. This way, both sides benefit.
+This approach also lets us accelerate our own innovation processes and penetrate
+further into new and adjacent markets. One example of this is our collaboration with
+a start-up that enables new utilization concepts in its product with gesture control
+and audio transmission through the finger bones: i.e., structure-borne sound. A large
+number of different Infineon components are used in this application.
+Flexible marketing approaches enable Infineon to adapt
+to rapidly changing markets
+To reach more customers, we will be even more flexible in the future, and we will
+develop new approaches. Historically, Infineon has grown through close collaboration
+with key customers. With these customers, we have successfully defined products
+that then enabled us to penetrate the wider market. We reach many of our smaller
+customers through distributors. We intend to take even greater advantage of the huge
+20.0
+24.1 23.5
+Huawei
+Samsung
+Lenovo
+C12 Top 20 semiconductor consumer in the 2020 calendar year
+Purchasing volume in billion US$
+Apple
+Dell
+7.0 7.0 6.6 6.3 5.2 5.0 4.8 4.6 4.5 4.4 4.1 3.5 3.5
+HP
+14.0
+11.9 11.5
+LG Electronics
+Cisco
+Greater China comprises Mainland China, Hong Kong, Macau, and Taiwan.
+OPPO
+Panasonic
+Xiaomi
+● 10% Americas
+Further information
+•
+Bosch
+The acquisition of Maxim by Analog Devices announced in July 2020 was completed
+in August 2021. The transaction was valued at US$28 billion. Infineon is a competitor
+of both companies in only a few product categories.
+R01
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Review of the semiconductor industry
+Consolidated Financial Statements
+Q = < 54 >
+7% Japan
+The 20 largest semiconductor companies accounted for 74.4 percent of global semi-
+conductor revenue in the 2020 calendar year (2019: 73.0 percent). The remaining
+25.6 percent (2019: 27.0 percent) was spread over more than 1,500 other semicon-
+ductor companies. The semiconductor industry is therefore highly fragmented.
+The consolidation process has advanced at different rates depending on the product
+category. R01
+In terms of purchasing volume, the top 20 semiconductor consumers accounted for
+US$214.353 billion, equivalent to a share of 65.3 percent (2019: US$184.497 billion
+with a share of 62.1 percent). C12
+The boom in demand for data centers, smartphones, consumer electronics, PCs,
+notebooks and PC accessories is clearly shown by almost all the semiconductor con-
+sumers increasing their purchasing volume. Out of the top 20 companies, only the
+two automotive suppliers, Bosch (in 12th position) and Continental (in 15th position),
+reduced their purchasing volume. Denso, another automotive supplier with a pur-
+chasing volume that shrank, which was in 17th position in 2019, was no longer one of
+the top 20 semiconductor consumers in the 2020 calendar year. At US$42.821 billion,
+the purchasing volume of Apple is now significantly higher than the total purchasing
+volume of the global automotive industry. R10
+Infineon Technologies | Annual Report 2021
+42.8
+C11 Global semiconductor sales in the 2020 calendar year by region
+(total market size US$473 billion)
+10% Europe, Middle East, Africa
+15% Asia-Pacific (excluding China, excluding Japan)
+58% Greater China
+Greater China has played the dominant role for years in terms of regional semicon-
+ductor revenue. In the 2020 calendar year, Greater China increased its share of the
+global semiconductor market still further to 58 percent, compared with 56 percent
+in 2019, R09. In Greater China, and especially in Mainland China, contract manufac-
+turers known as EMS (Electronic Manufacturing Services) play a special role. These
+companies assemble electronic products predominantly for Western customers. This
+business model applies particularly to consumer durables and to IT and telecommuni-
+cations products such as servers, PCs, laptops, tablets and mobile phones. Most of
+the semiconductors delivered to and mounted in Mainland China are re-exported as
+part of a finished product. C11
+Intel
+Further information
+Continental
+> Dividend set to be raised to 27 cents per share
+Revenue up by 29 percent; Segment Result Margin rises to 18.7 percent
+Infineon achieved a revenue of €11,060 million in the 2021 fiscal year, 29 percent up
+on the previous year's figure of €8,567 million and in line with the adjusted forecast
+of around €11 billion. Firstly, revenue went up on the back of continued high demand
+for semiconductors and the related expansion of manufacturing capacities, with
+the resulting positive volume and pricing effects causing revenue to grow. Secondly,
+the higher revenue was driven by the acquisition of Cypress in April 2020. For the
+first time, Cypress contributed to Group revenue for a full fiscal year, whereas in the
+fiscal year just ended Cypress' revenue was only included for the period from April to
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+2021 fiscal year
+Consolidated Financial Statements
+In August 2021, US semiconductor manufacturer Synaptics announced its acquisition
+of Israel-based company DSP Group for around US$538 million. DSP Group develops
+digital signal processors and chipsets for wireless communications and audio applica-
+tions. Infineon is a competitor of Synaptics in some product categories.
+> Profitability significantly up: Segment Result Margin
+rises to 18.7 percent (2020: 13.7 percent)
+Q = < 56 >
+The segments all developed positively, with Automotive remaining the largest in
+revenue terms. Based on segment revenue of €4,841 million (2020: €3,521 million),
+Automotive contributed 44 percent of Infineon's total revenue, up by 37 percent
+on the previous year. The Power & Sensor Systems segment recorded revenue of
+€3,268 million (2020: €2,650 million), corresponding to a growth rate of 23 percent.
+Both segments included revenue contributions from Cypress. Revenue generated
+by the Industrial Power Control segment totaled €1,542 million and was therefore
+10 percent above the previous year's figure (2020: €1,406 million). The Connected
+Secure Systems segment reported revenue of €1,397 million (2020: €974 million), up
+by a significant 43 percent and largely driven by an improved product mix and the
+acquisition of Cypress.
+The development of the US dollar exchange rate to the euro, which averaged 1.19 for
+the year compared to 1.12 one year earlier, had a negative impact on revenue.
+C13 Revenue by segment in the 2021 fiscal
+year
+44% €4,841 million Automotive
+14% €1,542 million Industrial Power Control
+● 29% €3,268 million Power & Sensor Systems
+● 13% €1,397 million Connected Secure Systems
+0% €12 million Other Operating Segments,
+Corporate and Eliminations
+September. Pandemic-related constraints, for example on manufacturing capacity
+in Melaka (Malaysia) and on contract manufacturers, and the aftermath of the winter
+storm in Austin (Texas, USA) held down revenue growth.
+> Infineon records revenue of over €11 billion
+for first time
+O
+ALC
+Western Digital
+Amazon
+Vivo
+Asustek
+ZTE
+[ R09
+R10
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+2021 fiscal year
+Consolidated Financial Statements
+Further information
+2021 fiscal year
+AS
+81.053 4.35
+17 62.985 2.07
+3 37.278 1.14
+94.107 0.73
+21.744 5.63
+13.361 1.82
+-2.09▾
++1.17 A
++0.72 A
+-0.51▼
+158.037 1.581x 375.000
+916.598 5.032% 621.000
+634.270 3.984 363.200
+538.014 2.416% 748.000
++3.16A 692.360 0.657 905000
+-1.23 237.981 0.183 832.0
+Sony
+In August 2021, US semiconductor manufacturer onsemi announced its acquisition
+of SiC materials manufacturer GT Advanced Technologies for US$415 million. The
+transaction is expected to be completed in the first half of the 2022 calendar year.
+Infineon is a competitor of onsemi in some product categories and purchases SiC
+materials from GT Advanced Technologies.
+Qualcomm
+Management Board and
+Supervisory Board
+1020
+Infineon Technologies | Annual Report 2021
+by
+sub-contractors
+partners
+by foundry
+Customer
+Distribution
+center
+Design
+In frontend manufacturing, in order to optimize the use of capital and increase flexi-
+bility, we use external manufacturing partners, called foundries, in addition to our
+in-house manufacturing. This applies primarily to technology nodes of 65 nanometers
+or smaller and to older generations of power semiconductors. In backend manufac-
+turing, particularly in assembly and testing, we also use manufacturing partners,
+called subcontractors, for standardized package types. More information about our
+manufacturing strategy is given in the chapter "Manufacturing”, □ p. 89.
+In-house
+manufacturing
+Backend
+manufacturing
+Frontend
+manufacturing
+C09 The main stages of the semiconductor value chain
+Our manufacturing landscape covers both stages of semiconductor manufacturing:
+frontend and backend. In frontend manufacturing, the wafers are processed. Optical,
+physical and chemical methods are used to implement transistors and their inter-
+connections, thus determining the function of the chip. The wafers are dispatched
+from the frontend site to a backend site, where the remaining processing steps take
+place in backend manufacturing. These steps include sawing the wafer into individual
+chips as well as assembly and testing. Finally, the chips are dispatched to the distri-
+bution centers. At the end of the 2021 fiscal year, Infineon operated 20 manufacturing
+sites (see the list of sites on the page “Manufacturing sites”, p. 91).
+Infineon covers the main stages of the semiconductor value chain: from the design,
+via frontend and backend manufacturing, to delivery to customers, C09. It operates
+56 research and development sites worldwide to develop chips, software, and manu-
+facturing technologies (see the list of sites on the page "R&D sites", □ p. 87).
+Q = < 51 >
+Review of the semiconductor market in the 2020 fiscal year
+(in US dollars)
+In the 2020 calendar year, global semiconductor revenue was US$473.713 billion.
+This was the second highest figure ever for annual revenue. The highest figure, of
+US$485.313 billion, was achieved in the 2018 calendar year. Compared with the
+revenue generated in the 2019 calendar year of US$428.832 billion, growth in revenue
+in the 2020 calendar year was 10.5 percent. R01
+In-house
+manufacturing
+As in 2019, there were only three companies in 2020 with a market share of more than
+5 percent: Intel (16.1 percent), Samsung (12.0 percent) and SK Hynix (5.6 percent),
+C10. For Infineon, the revenue figure calculated by Omdia for the 2020 calendar year
+was US$11.215 billion. This represents a market share of 2.4 percent and 9th place in
+the ranking of companies according to revenue. Revenue from Cypress was included
+for both the full 2019 calendar year and the full 2020 calendar year. Infineon's revenue
+grew at a slower pace than that of the semiconductor market as a whole due to the
+high proportion of its revenue derived from automotive and industrial applications.
+Following the completion of backend manufacturing, the products are dispatched
+and sent to customers via regional distribution centers.
+Business focus and strategy
+Review of the semiconductor industry
+The Segment Result totaled €2,072 million for the 2021 fiscal year, 77 percent up on
+the €1,170 million reported one year earlier. One of the factors contributing to this
+strong earnings performance was the decline in idle costs compared to one year earlier.
+It was also possible to pass on increased procurement prices to customers. By contrast,
+the pandemic-related restrictions on manufacturing in Melaka and the shutdown of
+the fabrication plant in Austin had a negative impact on the Segment Result.
+Q = < 53 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business focus and strategy
+Management Board and
+Supervisory Board
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+There were also several months of interruptions in automobile production. In addition,
+for various reasons, there were Manufacturing stoppages in the semiconductor industry
+itself, which resulted in a chip shortage in some product categories.
+Growth in the 2021 fiscal year was mainly due to the digitalization push during the
+coronavirus pandemic and to the resulting strong demand throughout the year for data
+centers, smartphones, consumer electronics, PCs, notebooks and PC accessories.
+However, some industrial projects (including in particular the expansion of high-speed
+trains in China) were postponed or curtailed as a result of the coronavirus pandemic.
+Review of the semiconductor market in the 2021 fiscal year (in euros)
+Global semiconductor revenue in the 2021 fiscal year was €436.887 billion, R08.
+This is an increase of 13.7 percent compared with the figure for the same period of
+the previous year of €384.109 billion.
+Review of the
+semiconductor industry
+Q = < 52 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Review of the semiconductor industry
+The global market for semiconductors without microprocessors, DRAM and NAND
+flash memory grew by 16.7 percent, from €236.673 billion in the 2020 fiscal year to
+€276.293 billion in the 2021 fiscal year, R08. In the same period, Infineon's revenue
+increased by 29.1 percent. Cypress has been fully consolidated since 16 April 2020.
+This limits the comparability of the current figures with those of the prior year.
+Nvidia was able to increase its revenue by 37.3 percent - or around US$3.5 billion -
+to US$13.035 billion and thus oust Infineon from the 8th place it held in 2019. Of
+the 20 largest semiconductor companies, the following are direct competitors of
+Infineon in at least one product category: Samsung, Qualcomm, Texas Instruments,
+STMicroelectronics, NXP, Renesas and Analog Devices.
+In December 2020, Taiwanese wafer manufacturer GlobalWafers announced its acqui-
+sition of German wafer manufacturer Siltronic for around €4.4 billion. In February 2021,
+GlobalWafers secured more than 50 percent of the shares of Siltronic, thus reaching
+the minimum acceptance threshold. The transaction is expected to be completed in
+the first half of the 2022 calendar year. Infineon purchases wafers from both companies.
+In February 2021, Japanese semiconductor manufacturer Renesas announced its
+acquisition of Dialog Semiconductor for around €4.9 billion. The transaction was
+completed on 31 August 2021. Infineon is a competitor of both companies in some
+product categories.
+Infineon Technologies | Annual Report 2021
+HiSilicon
+Western Digital
+Apple
+Renesas
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business model
+Business focus and strategy
+NXP
+Management Board and
+Supervisory Board
+Infineon is divided into four segments, each of which derive their long-term focus
+from the Group strategy. All the Group's activities relate to one of the higher-level
+growth drivers - energy efficiency, mobility, security, and loT and big data. See the
+chapter "Growth drivers”, p. 22 ff. The segments are each responsible for particular
+areas that reflect their core competencies (see the chapter "The segments", p. 58 ff.).
+With 50,288 employees worldwide, Infineon is a leading global provider of semicon-
+ductors. Semiconductors connect the real world and the digital world. They enable,
+for example, intelligent mobility, efficient energy management and the secure
+collection and transmission of data. Infineon designs, develops, manufactures and
+markets a large number of semiconductor and system solutions, focusing on the
+automotive, industrial, and information and communications markets, as well as on
+hardware-based security. Its products range from standard components to customer-
+specific solutions for components and systems, all the way to special components
+for digital, analog and mixed-signal applications.
+Business model
+Q = < 50 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business model
+Business focus and strategy
+Infineon Technologies | Annual Report 2021
+Sony
+Frontend contract manufacturers are not included in this market research.
+AMD
+C10 Top 20 semiconductor manufacturers in the 2020 calendar year
+Revenue in billion US$
+76.2
+56.9
+26.5
+22.2 19.4 18.0-14.1-13.0 11.2 11.1 10.8 10.2 9.6
+10% market share
+5% market share
+_____11211.1 10.8 10.2 9.6 8.7 8.4 8.4 8.2 6.9 6.7 5.7
+Intel
+Samsung
+SK Hynix
+Micron
+Broadcom
+Texas Instruments
+Nvidia
+Infineon
+MediaTek
+Kioxia
+STMicroelectronics
+Analog Devices
+The Segment Result Margin of 18.7 percent was accordingly higher than the previous
+fiscal year's figure of 13.7 percent, and hence in line with the most recent forecast of
+more than 18 percent, as upwardly adjusted in the third quarter.
+Q = < 55 >
+The Return on Capital Employed (ROCE) rose from 3.0 percent to 8.4 percent year over
+year, mainly reflecting the sharp rise in operating profit from continuing operations
+after tax from €473 million to €1,325 million (see the chapter "Review of results of
+operations", p. 99 ff.). Capital employed stood at €15,793 million as of 30 September
+2021, very similar to the amount reported one year earlier (30 September 2020:
+€15,827 million).
+Radio frequency
+Sensor technologies
+Core competencies
+C15 Core competencies in the segments
+Our markets are converging more and more, so that a strict organizational separation
+is not appropriate. Technologies and products are increasingly being used across the
+segments in line with our strategic approach "Product to System”. Digital transforma-
+tion in particular requires flexible and innovative approaches. Teams from various
+organizational units work together on an application-oriented and expertise-specific
+basis. In such cases, one segment takes responsibility for the overall system and
+develops the roadmap for the application, while responsibility for the technologies
+and products required remains in the established organizational units of the other
+segments. Similarly, the segments collaborate on technology development. High-
+voltage power semiconductors for electromobility are, for example, a core topic in
+the area of automotive electronics, so it follows that the Automotive segment assumes
+responsibility here. On the other hand, it is the Industrial Power Control segment
+that takes on responsibility for fundamental developments in IGBT technology,
+IGBT module housing technology and SiC technology.
+In the areas of sensor technologies, power semiconductors, hardware-based security,
+radio frequency and embedded control, Infineon has continually developed and
+deepened its knowledge of its traditional core competencies. In particular, we have
+expanded our expertise in the area of sensor technologies to include the collection
+of other physical measurands, C15. As a result of the acquisition of Cypress, we
+greatly strengthened our position in the area of embedded control. Contributing to
+this are the extensive portfolio of microcontrollers and different types of memory for
+specific applications. Furthermore, with connectivity we acquired a new competence,
+indispensable for the loT growth market. Combining this in turn with our security
+knowhow takes us to a new level.
+Q = < 59 >
+Further information
+Consolidated Financial Statements
+Automotive
+Combined Management Report
+The segments
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+consumer-oriented applications and power supplies in general. Also falling within
+the sphere of responsibility of the Power & Sensor Systems segment are activities
+in the area of radio frequency and sensor-based applications, including the collection
+of sensor data and interaction with machines and devices. Microcontrollers for
+non-automotive electronic applications, connectivity solutions and activities relating
+to traditional and new security applications are bundled in the Connected Secure
+Systems segment.
+Infineon comprises four segments, each of which derive their long-term focus from
+the Group strategy. All the Group's activities relate to one of four key growth areas -
+energy efficiency, mobility, security, and IoT and big data. The segments are each
+responsible for particular areas that reflect their core competencies. The Automotive
+segment is responsible for the semiconductor business for automotive electronics,
+including activities with memory products. The Industrial Power Control segment
+concentrates on power semiconductors primarily used in industrial applications and
+renewable energy, while the Power & Sensor Systems segment addresses more
+COC
+Co
+The segments
+Q = < 58 >
+Further information
+Business focus and strategy
+Industrial
+Power Control
+Power & Sensor
+Systems
+Connected
+Secure Systems
+✓
+Differentiating
+✓
+in-house manufacturing
+Infineon Technologies | Annual Report 2021
+Key performance indicators for Group up on previous year
+Profit for the period improved to €1,169 million (see the chapter "Review of results
+of operations", p. 102), representing an increase of €801 million compared to the
+previous fiscal year's figure of €368 million. The resulting earnings per share for the
+2021 fiscal year amounted to €0.87 (basic and diluted) and were thus significantly
+above the preceding year's figure of €0.26 (basic and diluted). Adjusted earnings per
+share (diluted) for the year under report amounted to €1.20 (2020: €0.64).
+✓
+Software
+Security
+Power semiconductors
+power semiconductors
+くくく
+✓
+Memories for
+specific applications
+Connectivity
+✓
+✓
+Control of
+✓
+Embedded control
+✓
+✓
+Consolidated Financial Statements
+Combined Management Report
+The segments
+✓
+Management Board and
+Supervisory Board
+12
+12
+18
+20
+22
+22
+in € cents
+C14 Dividend per share for the 2010 to 2021 fiscal years
+2019 fiscal year. Due to Infineon's good economic performance in the 2022 fiscal year
+and the positive outlook for the current fiscal year, the dividend is now to be increased
+again by €0.05. Accordingly, a proposal is planned to be put forward at the Annual
+General Meeting in February 2022 to distribute a dividend of €0.27 per share for the
+2021 fiscal year. The number of shares issued totaled 1,305,921,137 as of 30 Septem-
+ber 2021. The figure includes 4,545,602 shares owned by the Company that are
+not entitled to a dividend. The total dividend amount would therefore increase to
+€351 million, compared with €286 million one year earlier.
+Our dividend policy is aimed at letting shareholders adequately participate in Infineon's
+economic development and, in general, at paying out at least an unchanged dividend
+even in the event of stagnating or declining earnings. However, due to the negative
+economic impact of the coronavirus pandemic, the risks that existed at the time of
+the payout, and in order to maintain sufficient financial flexibility, a dividend of €0.22
+was paid for the 2020 fiscal year, i.e. €0.05 lower than the amount distributed for the
+The net cash position at the end of the 2021 fiscal year was a negative amount of
+€2,663 million (30 September 2020: negative €3,806 million).
+The gross cash position improved by €695 million to stand at €3,922 million at the
+end of the reporting period (30 September 2020: €3,227 million), with the increase
+resulting mainly from high Free Cash Flow amounting to €1,574 million.
+Free Cash Flow from continuing operations was a positive amount of €1,574 million
+in the 2021 fiscal year (2020: negative €6,727 million) and arose mainly due to the
+high level of net cash provided by operating activities from continuing operations
+totaling €3,063 million (2020: €1,817 million). The figure reported for the previous
+fiscal year was influenced primarily by the net payment (i.e., net of cash and cash
+equivalents acquired) amounting to €7,433 million used to acquire Cypress.
+Q = < 57 >
+Further information
+Business focus and strategy
+Consolidated Financial Statements
+Combined Management Report
+2021 fiscal year
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+12
+10
+Dividend payment of €0.27 per share planned
+2011
+2016
+2017
+2018
+Infineon Technologies | Annual Report 2021
+271
+22
+22
+27
+22
+2019
+27
+25
+2020
+1 Proposal to the Annual General Meeting to be held on 17 February 2022.
+2015
+2014
+2013
+2021
+2012
+27
+2010
+#2
+Position
+#1
+13.2%
+#1
+#1
+#1
+15.9%
+13.8%
+14.2%
+13.3%
+#2
+C18 Market share of Infineon for automotive semiconductors by region in the 2020 calendar year
+8.5%
+8.3%
+目 R02
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+7.5%
+10.9%
+13.2%
+STMicroelectronics
+Texas Instruments
+Renesas
+NXP
+10.8%
+C17 Market share for automotive semiconductors in the 2020 calendar year
+Infineon
+R02
+目 R02
+€ in millions
+China
+Electromobility and driver assistance systems continued to be the main drivers behind
+our growth in the 2021 fiscal year. Electromobility benefited not only from incentive
+schemes, but also from the increasing availability of charging stations, the wider
+range of models being produced by almost all vehicle manufacturers and from a
+change in attitude in society to sustainable technologies. During the reporting period,
+the first vehicle with our CoolSiCTM Hybrid PACKTM drive module also went into series
+manufacturing. As a result, we generated significant revenue from SiC for the first
+time in the automotive area. We won three additional contracts for SiC in the power
+train, so we can assume that over the coming years we will continue to achieve steady
+increases in revenue in this area.
+⚫9% Memory
+⚫33% Other
+Particularly the purchase of electric vehicles showed a sharp increase in demand. This
+turn around, together with continuing high levels of demand for other semiconductor
+products in other sectors, led to an industry-wide chip shortage. Pandemic-related
+restrictions on the manufacturing capacity at our frontend and backend manufacturing
+partners exacerbated the difficult supply situation.
+2021
+2020
+Segment Result
+147
+792
+Revenue
+3,521
+4,841
+C19 Revenue and Segment Result of the Automotive segment
+World North America Europe
+The 2021 fiscal year was characterized by an unexpectedly swift economic recovery in
+China and a significant subsequent ramp-up in automotive production in the country.
+In the 2021 fiscal year, the Segment Result was €792 million, an increase of 438.8 per-
+cent compared with the Segment Result for the previous fiscal year of €147 million.
+Based on revenue, the Segment Result Margin was 16.4 percent (previous year:
+4.2 percent). C19
+In the Automotive segment, Infineon generated revenue in the 2021 fiscal year of
+€4,841 million, an increase of 37.5 percent compared with the figure for the previous
+fiscal year of €3,521 million. Cypress was fully consolidated with effect from 16 April
+2020, and therefore the comparability of the current-year figures with the prior-year
+figures is limited. The segment contributed 44 percent of Infineon's Group revenue.
+Review of the Automotive segment
+in the 2021 fiscal year
+Q = < 64 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Automotive
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Japan
+Korea
+The increase in the Segment Result Margin was due to a higher revenue, a significant
+reduction in under-utilization costs and a 12-month contribution to revenue made
+by Cypress' business activities. Factors which had a negative impact on the Segment
+Result were restrictions on our manufacturing capacity as a result of the pandemic,
+especially in Melaka (Malaysia), and costs arising from a manufacturing stoppage in
+Austin (Texas, USA).
+22% Power
+13% Sensors
+Combined Management Report
+The segments
+Automotive
+0
+Infineon Technologies | Annual Report 2021
+We are benefiting from the trend towards
+automated driving, on the one hand, with
+our 77 gigahertz radar sensor ICs, which
+are used in emergency braking systems
+and increasingly in lane change assistance
+systems. On the other hand, we also pro-
+vide dedicated microcontrollers which
+undertake a significant part of the radar
+signal processing. Our optimized radar
+system solutions (including radar sensor
+ICs, microcontrollers, power supply and
+In the traditional applications, our growth will be driven by new functions in the areas
+of connectivity, lighting technology, comfort and safety, on the one hand, and by con-
+tinuing electrification of various vehicle functions, on the other. This means that the
+number of electronic components per vehicle and therefore the value of the semicon-
+ductor content per vehicle will increase. The two megatrends electromobility and
+automated driving have the effect of further increasing the average semiconductor
+demand per vehicle. Even if it will take some time for autonomous driving to be intro-
+duced and to become widespread, driver assistance systems are in high demand and
+the strong growth they have already shown looks set to continue in the coming years.
+Driver assistance systems not only ensure
+greater driving comfort, but also contribute
+to the implementation of "Vision Zero", the
+global project that seeks one day to achieve
+its aim of road traffic without fatalities.
+Infineon supports the trend towards increasing connectivity. This includes both the
+communication between the various control units within the vehicle (for example,
+via CAN, CAN FD and FlexRay™) and the communication with other vehicles (vehicle-
+to-vehicle) and with the cloud (vehicle-to-infrastructure). It also includes the connection
+of mobile devices via Wi-Fi and Bluetooth for in-cabin infotainment. In the area of
+human-machine interaction, switches, buttons and dials will increasingly be replaced
+by touch pads. Human-machine interaction also includes head-up displays.
+The automotive industry continues to experience a period of profound upheaval. The
+car of the future will be a purely electric vehicle, assisted, fully connected and always
+online. Even if this will not yet apply to every newly produced car by the end of the
+current decade, we are still seeing an acceleration in structural change compared
+with previous decades. The reasons for this are the desire for vehicles which are ever-
+safer, ever-smarter and increasingly connected and the need for compliance with
+ever-stricter emission standards and therefore for sustainable mobility. This is evident
+from automotive megatrends: electromobility, automated driving, connectivity and
+security. The greatest contribution to this process will come from vehicle electronics
+and consequently from semiconductor solutions. We are contributing to the change
+and want to benefit disproportionately from these trends. We have a broad product
+portfolio of automotive semiconductor solutions. With this portfolio and a high level
+of system expertise, Infineon can handle a wide range of automotive applications.
+These include powertrain, assistance systems, safety, comfort electronics, digital
+instrument clusters, infotainment applications and security.
+Strategic focus
+Q = < 61 >
+Further information
+Consolidated Financial Statements
+Alongside power semiconductors, the second product category to achieve above-
+average revenue growth rates in the segment is microcontrollers, including the two
+families, AURIX™ and TRAVEO™.
+Business focus and strategy
+Management Board and
+Supervisory Board
+Applications p. 240
+an ever-increasing degree of automated driving,
+electric-electronic (E/E) vehicle architecture and greater
+connectivity, digitization and a higher level of data
+security in vehicles. We also offer our customers
+innovative solutions in the areas of safety, the digital
+cockpit, infotainment, comfort and lighting technology.
+In addition to sensors, microcontrollers, a reliable
+power supply, high-performance memory ICs for specific
+applications and power semiconductors based on
+Si and SiC, our product portfolio also comprises com-
+ponents for human-machine interaction and vehicle
+connectivity. Infineon is the world market leader in
+semiconductor solutions for cars. R02
+engines to hybrid or electric drives, as well as enabling
+and infotainment, body and comfort electronics, safety
+and security. Our range of products and solutions helps
+to navigate the transition from internal combustion
+The Automotive segment shapes the future of mobility
+with products and solutions to make cars clean, safe
+and smart. We cover all application areas in the vehicle:
+powertrain and energy management, connectivity
+Automotive
+€792 m
+SEGMENT
+RESULT
+Q = < 60 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Automotive
+Infineon Technologies | Annual Report 2021
+€4,841 m
+REVENUE
+Business focus and strategy
+Management Board and
+Supervisory Board
+Management Board and
+Supervisory Board
+23% Processors
+Business focus and strategy
+Consolidated Financial Statements
+7% Korea
+6% Other
+● 15% Japan
+18% North America
+⚫ 20% China
+• 34% Europe
+0
+by region
+by product category
+year
+C16 World market for automotive semiconductors in the 2020 calendar
+US$34.960 billion (minus 6.0% compared with 2019)
+In both regions with the greatest decline in market size, North America (9.5 percent)
+and Japan (9.4 percent), Infineon was able to significantly outperform the market,
+gaining market share, and in each case moving up one position. This means that
+Infineon is now at least in 2nd position in all regions, C18. The trend in Japan, where
+the company has quadrupled its market share over the last ten years, is particularly
+encouraging.
+In the 2020 calendar year, Infineon remained the world's largest manufacturer of
+automotive semiconductors, with a 13.2 percent share of the total market, C17.
+It slightly increased its lead over second-placed manufacturer NXP. The five largest
+market players together accounted for 48.4 percent of the market (2019: 49.2 percent).
+Power semiconductors and controllers are the two largest product categories. Together
+they account for around half of all semiconductors in the automotive sector. Infineon
+was the market leader in the 2020 calendar year for power semiconductors, with a
+market share of 30.2 percent. In the case of controllers, Infineon had a market share of
+16.9 percent and was in 3rd position. The gap between it and the two frontrunners
+Renesas (with a market share of 26.7 percent) and NXP (with a market share of
+26.3 percent) narrowed, while the gap between Infineon and Texas Instruments (with
+a market share of 9.8 percent) widened. In the case of sensors, Infineon (with a market
+share of 15.5 percent) remained the second largest manufacturer behind Bosch
+(with a market share of 22.2 percent), R02.
+In the 2020 calendar year, the automotive industry experienced its greatest decline in
+a decade as a result of the coronavirus pandemic. As most car manufacturers halted
+production for several months across all regions, demand for automotive semicon-
+ductors shrank by 6.0 percent from US$37.186 billion in 2019 to US$34.960 billion in
+the 2020 calendar year, R02. An even greater decline was averted by the recovery
+in China in the second half of the 2020 calendar year and by surprisingly high demand
+for electric vehicles, C16. The unexpected rapid resurgence in demand for cars and
+the boom triggered by incentive schemes for electric vehicles, on the one hand, and
+insufficient manufacturing capacity on the other resulted in the ongoing chip shortage.
+Market position
+Q = < 63 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Automotive
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+reliability of the systems, components and semiconductor solutions built into them.
+They must all be fault-tolerant, must not fail and must ensure a minimum function
+if there are unexpected disruptions, and all this must apply for the service life of
+the vehicle. For some time now, Infineon has provided concepts and solutions for
+reliability at the component and subsystem level, adopting an integrated approach.
+Our semiconductor solutions - sensors, microcontrollers, memory, power electronics,
+power management ICs and security ICs - enable systems to meet the high functional
+safety requirements set out in ISO 26262. The AURIX™ family of microcontrollers is
+used, for example, in steering and braking, and as host controllers that contribute
+towards the functional safety of central control units. Other semiconductor solutions
+ensure both internal and external data communication.
+Our product portfolio meets the high quality and reliability requirements of the
+automotive industry. In the case of automated driving, the greater the trust in the
+technological innovations that are replacing the driver of the vehicle, the greater
+the acceptance and the sooner it will be possible to achieve higher levels of auto-
+mation in vehicles - in private vehicles, taxis and buses, in utility and construction
+vehicles, in agricultural machinery and in public transport such as trains and trams.
+The prerequisite for gaining that trust is the reliability of the vehicles and thus the
+In the area of power electronics, we are the undisputed market leader for Si-based
+power semiconductor solutions in the automotive market. In the fast-growing market
+for SiC-based components (diodes, discrete MOSFETs and power modules), we offer
+our customers alternative scalable solutions for greater efficiency and more compact
+design in the areas of drive trains and onboard chargers. In the medium term, we are
+also expanding our portfolio to include components based on GaN. Both compound
+materials, SiC and GaN, offer additional potential for improvements in efficiency and
+power density.
+For electromobility, Infineon has an extensive range of power semiconductors and
+control ICs with the corresponding packaging and connection technologies. Infineon
+also offers battery management solutions for the efficient charging and monitoring
+of battery systems. Infineon's semiconductor solutions are suitable for all types of
+electric vehicles: pure electric vehicles, plug-in hybrid vehicles and mild hybrid
+vehicles with 48-volt technology. Our portfolio also covers semiconductor solutions
+for vehicles based on emerging hydrogen technology. The AURIX™ family of micro-
+controllers is used both in the control of electric motors and in battery management.
+memory IC solutions) enable our customers to achieve faster time to market. Our
+microcontrollers are not only used in driver assistance systems that are radar-based,
+but also in those that are camera-based, as well as in sensor fusion systems up to
+Level 2+. The intermediate level 2+, which was retrospectively defined, includes those
+functions which are part of Level 3 except for the function of the complex handover
+of vehicle control between the vehicle and the driver.
+Q = < 62 >
+Further information
+Combined Management Report
+The segments
+Automotive
+Our system understanding, commitment to quality and the excellent service we pro-
+vide all create added value for our customers and help them grow their businesses.
+In the 2021 fiscal year, we again received awards from several leading automotive
+manufacturers, in particular, recognition of our sustainable actions as well as excellent
+cooperation during this period of chip shortages. From the Chinese car manufacturer
+Great Wall Motor, for example, we received the Best Cooperation Contribution Award
+for exceptionally customer-oriented cooperation. A second example is the Excellent
+Contribution Award which we were given by FinDreams Technology Company, a sub-
+sidiary of the Chinese automotive manufacturer BYD. Thirdly, we received the Global
+Supplier Sustainability Award from the German automotive supplier Bosch for our
+climate-friendly actions. See the chapter “Group strategy”, □ p. 41. |
+Consolidated Financial Statements
+Management Board and
+Supervisory Board
+R03
+3.3%
+Vincotech
+5.8%
+Semikron
+9.7%
+Mitsubishi
+11.4%
+Infineon Technologies | Annual Report 2021
+36.5%
+Fuji Electric
+Infineon
+C22 Market share in IGBT modules in the 2020 calendar year
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+5.5%
+11.6%
+11.2%
+17.1%
+32.9%
+29.3%
+Fuji Electric
+Semikron
+onsemi
+Infineon
+Mitsubishi
+C21 Market share for IPMS in the 2020 calendar year
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+5.5%
+7.7%
+9.3%
+目 R03
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+目 R03
+Management Board and
+Supervisory Board
+2021
+2020
+Infineon Technologies | Annual Report 2021
+Revenue in the transportation sector saw a significant decline. As a result of the corona-
+virus pandemic, passengers are using public transportation much less than usual. In
+many regions, expansion of transport capacity was postponed. New business areas
+such as the electrification of buses, trucks and farm machinery were unable to offset
+this decline.
+In home appliances, the trend towards inverterized motor control systems continues.
+As a result of energy efficiency regulations, we expect demand for inverterized home
+appliances, especially air conditioning units and washing machines, to remain high
+over the coming years. Following a decline in demand in the previous year as a result
+of the coronavirus pandemic, revenue in this area increased substantially in the
+2021 fiscal year.
+The energy infrastructure business comprises the transmission, distribution and
+storage of energy, as well as the charging infrastructure for electromobility. This last
+area enjoyed particularly strong demand. In the 2021 fiscal year, Infineon's revenue
+from battery-based storage solutions was still low. However, as the proportion of
+renewable energy in the energy mix continues to grow, so does the importance of
+storage solutions to stabilize the grids. The energy infrastructure business represents
+8 percent of the segment revenue.
+There was a significant increase in revenue from products for wind power as well as
+from PV inverter products. In many regions of the world, solar and wind power are
+now the cheapest way of generating electricity. Capacity is therefore being expanded
+accordingly, especially in the form of utility scale installations.
+With 26 percent, the fastest rate of growth was to be seen in the area of renewable
+energy, which now accounts for 28 percent of segment revenue. The generation of
+clean energy is an essential prerequisite for the achievement of global carbon emis-
+sion targets. Thanks to our strong market position in the area of renewable energy,
+Infineon is able to benefit directly from this megatrend.
+Demand in the area of automation and electric drives, the segment's largest field of
+application, recovered strongly from the impact of the coronavirus pandemic.
+Segment Result
+275
+256
+Revenue
+15.6%
+1,406
+€ in millions
+C23 Revenue and Segment Result of the Industrial Power Control segment
+In the 2021 fiscal year, the Segment Result was €275 million. This was an increase of
+7 percent compared with the figure for the previous fiscal year of €256 million, C23.
+Despite the increase in revenue, the Segment Result Margin fell slightly to 17.8 percent
+(previous year: 18.2 percent), as the result was adversely impacted by costs arising
+from the coronavirus pandemic and by idle costs in the high power area.
+The growth in revenue was driven by the strong recovery in the areas of automation,
+electric drives and home appliances, as well as by continuing growth in renewable
+energy and in the energy infrastructure, whereas there was a decline in revenue in the
+area of transportation. From a regional perspective, the Chinese market in particular
+contributed to this growth. Revenue increased by 21 percent and represent 55 percent
+of segment revenue.
+In the Industrial Power Control segment, Infineon generated revenue in the 2021 fiscal
+year of €1,542 million, which was an increase of 10 percent compared with the figure
+for the previous fiscal year of €1,406 million. The segment contributed 14 percent to
+Infineon's Group revenue.
+Infineon Technologies | Annual Report 2021
+Review of the Industrial Power Control segment
+Industrial Power Control
+Q = < 69 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Business focus and strategy
+1,542
+onsemi
+Toshiba
+in the 2021 fiscal year
+Infineon
+> The PrimePACK™ module, which combines IGBT5 chip technology with the .XT
+bonding technology. While the IGBT5 chip technology allows higher power
+densities with lower static and dynamic losses, the .XT bonding and connection
+technology in the modules ensures a
+Two examples of this are the following:
+We want to continue to strengthen this core. We are constantly refining our existing
+products, combining them to create complete solutions for the customer. We leverage
+our economies of scale in research and development, as well as in manufacturing,
+and are therefore able to achieve a broad portfolio optimized for both cost and per-
+formance. In addition, we develop products that provide the opportunity for long-term
+differentiation.
+Infineon offers IGBT modules for all power classes and all applications, from small industrial
+motors in household applications and fans in the kilowatt power range to conveyor drives in the
+hundreds of kilowatt power range to traction and pumps in the megawatt power range.
+Power semiconductors are a key element in the products and systems of our cus-
+tomers, largely determining the function, efficiency, size, weight and cost of the
+systems. The products in our Industrial Power Control segment provide the founda-
+tion for the efficient generation, almost lossless transmission and storage of electric
+energy, on the one hand, and the reduction of losses on consumption, on the other.
+Our core business consists of discrete IGBTs and IGBT modules and the driver ICs
+associated with them.
+Strategic focus
+Q = < 66 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Business focus and strategy
+Management Board and
+Supervisory Board
+Industrial Power Control
+Applications p. 241
+The Industrial Power Control segment specializes in
+semiconductor solutions for the intelligent manage-
+ment and efficient conversion of electric energy along
+the entire conversion chain: generation, transmission,
+storage and use. The product portfolio comprises
+mainly IGBT power transistors, driver ICs to control
+them, and power semiconductors based on SiC.
+The latter are becoming increasingly important for
+industrial applications. We offer the products in the
+Industrial Power Control segment, whether Si-based or
+SiC-based, in various form factors and with different
+levels of functionality. The segment's broad application
+spectrum includes motor control units for industrial
+manufacturing and building technology, inverters for
+photovoltaic and wind power systems, home appli-
+ances, traction, electric utility vehicles (such as buses
+and construction and agricultural vehicles), systems
+for high-voltage direct current transmission and energy
+storage, industrial power supplies and the charging
+infrastructure for electric vehicles. Our focus is on inte-
+gration and digitization.
+Power Control
+€1,542 m
+REVENUE
+Q = < 65 >
+Further information
+Industrial Power Control
+Combined Management Report
+The segments
+€275 m
+RESULT
+SEGMENT
+Business focus and strategy
+Fuji Electric
+Mitsubishi
+longer service life through improved
+thermal load cycling capability. This pro-
+vides our customers with significant
+added value for high-power inverters in
+wind and photovoltaic applications and
+in industrial drives.
+> The products in the iMOTION™ family-
+which are basically application-optimized
+microcontrollers - enable easy-to-imple-
+ment intelligent motor control. Infineon
+offers reference design solutions for
+these compact products, including
+connectivity solutions and components
+for human-machine interaction.
+Industrial
+We are strengthening our product portfolio by using new materials. [See the chapter
+“Research and development”, □ p. 82 f. The Easy module family is an important success
+factor here for fast market entry for the customer. It offers a flexible, easily scalable
+module solution with Si or SiC that is particularly effective in applications such as
+C20 Market share for discrete IGBTs in the 2020 calendar year
+Infineon offers its customers evaluation
+boards for motor drive applications, including
+hardware and software. These reference designs allow
+short development times of the customer's products.
+The world market for IGBT modules reached US$3.626 billion in the 2020 calendar
+year, R03. This was an increase of 9.3 percent compared with the figure for 2019
+of US$3.316 billion. Infineon's revenue in this area increased by 12.6 percent. With
+a market share of 36.5 percent, Infineon continued to be the clear market leader
+(2019: 35.5 percent), C22. The five largest market players together accounted for
+66.7 percent of the market (2019: 68.5 percent).
+The world market for Intelligent Power Modules (IPMS) reached US$1.429 billion in
+the 2020 calendar year, R03. This was a decrease of 7.1 percent compared with the
+figure for 2019 of US$1.537 billion. Infineon's revenue in this area fell by 9.4 percent.
+With a market share of 11.6 percent (2019: 11.9 percent), Infineon remained in 3rd
+position, C21. The five largest market players together accounted for 78.3 percent
+of the market (2019: 79.0 percent).
+The world market for discrete IGBT power transistors reached US$1.586 billion in the
+2020 calendar year, R03. This was an increase of 10.9 percent compared with the
+figure for 2019 of US$1.430 billion. Infineon's revenue in this area fell by 0.7 percent.
+With a market share of 29.3 percent, Infineon continued to be the clear market leader
+(2019: 32.7 percent), C20. The five largest market players together accounted for
+67.4 percent of the market (2019: 63.9 percent).
+The world market for discrete power semiconductors and modules grew slightly
+by 0.4 percent in the 2020 calendar year to US$20.896 billion. In the same period,
+Infineon increased its revenue by 3.1 percent. Therefore its market share saw a
+slight rise of 0.5 percentage points to 19.7 percent. R03
+Market position
+Q = < 68 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Industrial Power Control
+With this expanded range, we can address a larger proportion of the semiconductor
+value in an application, which will enable us to continue to grow in our existing
+markets, while we can also offer our customers easy-to-use complete solutions.
+Understanding the newly acquired products and markets also enables us to expand
+the scope of our operations. We can see the potential for synergies, particularly in the
+areas of home appliances and factory automation (and here especially in robotics
+and driverless transport systems).
+406
+Software development is part of our strategic approach "Product to System”. In addi-
+tion to hardware-near software such as firmware or drivers, we offer our customers
+other types of support. One example is IPOSIM (Infineon Online Power Simulation
+Tool), a program that helps the customer select the right product for a given applica-
+tion topology. It also simulates the switching and conduction losses, including an
+assessment of the thermal performance.
+Management Board and
+Supervisory Board
+Business focus and strategy
+Infineon Technologies | Annual Report 2021
+Consolidated Financial Statements
+Further information
+Combined Management Report
+The segments
+Industrial Power Control
+Q = < 67 >
+photovoltaics, industrial automation and the charging infrastructure for electric
+vehicles. In addition to the modules, we are strengthening the volume production
+of our extensive product portfolios of discrete SiC MOSFET components. With our
+SiC products, customers can count on Infineon delivering the reliability for which
+it is known, as well as providing support to develop systems based on this new
+material.
+The Industrial Power Control segment uses
+the expertise acquired in the application of
+discrete IGBTs and IGBT modules to unlock
+additional growth potential in adjacent
+product areas, such as Intelligent Power
+Modules (IPMs). The functional integration
+of drivers and power switches into our
+CIPOST IPMS helps our customers increase
+the efficiency of drives for small motors
+and therefore meet new energy efficiency
+standards for home appliances and indus-
+trial applications. These integrated prod-
+ucts also enable a significant reduction in
+system size and development cost. We
+develop special control algorithms for the
+products in the iMOTION™ family mentioned
+above. Customers only need to adjust a
+few parameters within the algorithms to
+find efficient solutions to their problems.
+Products in the iMOTION™ family are used in all types of home appliances, from
+hairdryers and washing machines to air conditioning units.
+Looking across the segments, the Industrial Power Control segment benefits from
+the range of microcontrollers and connectivity and security solutions on offer in
+the Connected Secure Systems segment. This opens the door to new markets and
+additional growth potential in the application areas for which the Industrial Power
+Control segment is responsible.
+CEC Huada
+24.6%
+Samsung
+20.4%
+17.1%
+STMicroelectronics
+14.5%
+0
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+目 R05
+C29 Market share for security ICs (excl. NFC controller; excl. NFC embedded Secure Element)
+in the 2020 calendar year by application
+US$2.779 billion (minus 7.1% compared with 2019)
+37% Payment
+19% Mobile communications (incl. standard SIM, SWP SIM)
+14% Government ID
+NXP
+. 9% Authentication
+8% Embedded SIM
+8.5%
+Infineon
+us with the opportunity to advance into new
+application areas, including for example
+authenticating devices for IoT applications
+and connecting vehicles, but also protect-
+ing smart factories in industry. Growth in
+this area is being driven by increasing data
+exchange. Vehicles, for example, send
+real-time traffic information to the cloud
+or receive updates from the manufacturer
+"over the air", meaning that the software
+can be updated quickly and cost-effectively.
+The senders and recipients of these data,
+whether these are the vehicle manufactur-
+ers or individual systems in the vehicle, are
+authenticated using cryptographic keys.
+OPTIGA™ TPM stores this sensitive informa-
+tion in much the same way as if it were in
+a vault, providing particularly high levels
+of protection against data-technical and
+The world market for microcontrollers reached US$17.283 billion in the 2020 calendar
+year, R01. This was a decrease of 0.9 percent compared with the figure for 2019 of
+US$17.448 billion. The five largest market players together accounted for 76.2 percent
+of the market (2019: 71.0 percent), C30. The political tensions between the USA
+and China, on the one hand, and the production cutbacks in the automotive industry,
+on the other, had a significant impact on Infineon and thereof on the Cypress busi-
+ness. Infineon lost over 1 percentage point of market share (from 16.0 percent in
+2019 to 14.7 percent in 2020), though it remained the third largest manufacturer of
+microcontrollers.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+Our product range now also includes hardware and software for connectivity solu-
+tions, developed by Cypress specifically for loT applications. The portfolio comprises
+components for Wi-Fi, Bluetooth and BLE transmission standards. Together with
+industrial microcontrollers, these can be included in complete solutions not only for
+customers in the Connected Secure Systems segment, but also for customers in the
+Industrial Power Control and Power & Sensor Systems segments. To do so, products in
+the Industrial Power Control and Power & Sensor Systems segments are assembled
+in a manner specific to the application and combined using software components to
+create a complete solution in a compact form factor.
+Cypress has had years of experience in software development and system knowhow,
+and it is precisely this that enables us to develop reference designs even faster for
+easy-to-use applications. This approach is important, because in the future there will
+be more and more customers whose products are acquiring loT capabilities for the
+first time (i.e., they are "connected"), yet whose expertise does not lie in connecting
+their products to the internet. We want to be able to offer these customers turnkey
+reference designs that are tailor-made for their specific projects. As far as possible,
+we provide all the necessary semiconductor components and the software required
+to control our components. We therefore offer our customers ModusToolbox™, a
+software and development environment that is intuitive to use. ModusToolbox™M
+provides a modern software development approach based on an open-source system
+with prefabricated tools and seamless integration into the applications of third-party
+suppliers, so that developers can use the tools they wish and therefore easily design
+products tailored to their application. The application software remains the customer's
+responsibility.
+We have now expanded our core competence in security, originally acquired in
+traditional smartcard applications (payment cards and governmental identification
+documents), to cover the fast-growing area of embedded security applications and
+we have established ourselves as a provider of security solutions with a chip that
+functions as a highly reliable anchor for security. Software is becoming an increasingly
+important element of the solution we provide, right through to the complete product.
+We offer our customers solutions for secure authentication, encryption and protection
+against unauthorized access, all the way to complete system solutions for payment
+transactions or for PC protection.
+For example, the SECORA™ pay portfolio comprises easy-to-integrate solutions for
+contactless payment cards and mobile devices. With SECORA™ Connect, the product
+family has been expanded to include a solution for coin cell-powered, connected
+smart wearables, such as smart watches. The solution combines a security module
+(Secure Element) with a system-in-package NFC antenna, facilitating the integration
+and management of payment applications for device manufacturers, as well as ticket-
+ing and access solutions. The basis for this is the secure digitization of credit or debit
+cards, referred to as tokenization, in the smartphone or smart watch.
+Embedded security applications provide
+physical attacks. The Trusted Platform Module (TPM) secures all the major communi-
+cation channels in the car, such as the central gateway, the telematic unit and access
+to the infotainment system. OPTIGA™ TPM can therefore be regarded as a successful
+example of our strategic approach "Product to System" and of collaboration across
+segment boundaries.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The segments
+Connected Secure Systems
+Consolidated Financial Statements
+Further information
+Q = < 78 >
+Market position
+The world market for security ICs (excluding NFC controllers and NFC embedded
+Secure Elements) reached US$2.779 billion in the 2020 calendar year, R05. This
+was a decrease of 7.1 percent compared with the figure for 2019 of US$2.991 billion,
+C28. Infineon was able to retain its number 1 position, increasing its market share
+slightly from 24.4 percent in 2019 to 24.6 percent in 2020. The five largest market
+players together accounted for 85.1 percent of the market (2019: 81.0 percent).
+The trends in the various submarkets were very different. The coronavirus pandemic
+encouraged the trend towards cashless payment. The largest submarket, security ICs
+for payment cards (US$1.021 billion, down 2.0 percent), was virtually unchanged by
+this, whereas other submarkets such as governmental identity documents and health
+care cards (US$388 million, down 12 percent) and security ICs for standard SIM cards
+(US$500 million, down 16 percent) saw much more significant declines, C29. Of all
+the submarkets, the fastest growth rate was to be seen in the embedded SIM market
+(US$221 million, up 45 percent), a market which, though still small, is strategically
+important for us.
+C28 Market share for security ICs (excl. NFC controller; excl. NFC embedded Secure Element)
+in the 2020 calendar year
+C30 Market share for microcontrollers in the 2020 calendar year
+130
+Infineon Technologies | Annual Report 2021
+The increase in revenue was due to an improved product mix and a full year's contri-
+bution from the business activities of Cypress. The Segment Result Margin remained
+largely stable due to increased operating costs. Usually there would have been scope
+for higher revenue volumes, but scarce foundry capacity meant that we were not
+able to meet in full the brisk demand for general-purpose microcontrollers and for
+Wi-Fi and Bluetooth components. In addition, there was the temporary shutdown
+of our manufacturing facilities in Austin (Texas, USA) caused by a winter storm, which
+further exacerbated the difficult supply situation.
+C31 Revenue and Segment Result of the Connected Secure Systems segment
+€ in millions
+974
+1,397
+Q = < 77 >
+Revenue
+182
+Segment Result
+Demand for connectivity solutions and microcontrollers remained strong. People
+spending more time at home was one of the contributory factors here. Demand for
+Wi-Fi and Bluetooth components was driven by an increase in the penetration rate
+of end devices for wearables and smart home applications and in the automotive
+sector. Strong demand for microcontrollers was driven by industrial and consumer
+applications. Of particular note here are HMI applications, wearables and battery-
+powered applications.
+The coronavirus pandemic has fueled the trend towards cashless and contactless
+payment. The shift from purely contact-based cards to dual-interface cards, acceler-
+ated by the pandemic, led to supply bottlenecks due to the high level of demand.
+We made progress in the area of biometric cards. On the security side, we announced
+a reference design for the next-generation biometric smart card architecture. This
+enables fingerprint authentication with low latency, high accuracy and power efficiency.
+The integration of the fingerprint sensor, and of the Secure Element, power manage-
+ment and communications reduces the complexity of card manufacturing, which
+shortens the time-to-market and lowers costs.
+International travel started to pick up slowly in the second half of the fiscal year.
+Demand for passports slowly began to stabilize as a result. In many towns and cities
+around the world, the use of public transport declined due to multiple local lock-
+downs and to working from home. As a consequence of this, we continued to see
+weak demand for our transport and ticketing products.
+Revenue from embedded SIMS (eSIMs), which are used in vehicles to make automatic
+emergency calls, increased once again. Demand for eSIMs in industry is also growing
+stronger, driven in particular by progress with Industry 4.0. manufacturing machinery,
+tools and other technical devices are increasingly connected and can therefore be
+monitored or serviced and maintained remotely.
+Authentication products are gaining in importance, driven by the trend for working
+from home. There was a high level of demand in the 2021 fiscal year for a wide range
+of applications in this field, including printers and battery authentication.
+Infineon Technologies | Annual Report 2021
+2020
+2021
+In the 2021 fiscal year, the Segment Result was €182 million, an increase of
+40.0 percent compared with the figure for the previous fiscal year of €130 million.
+Based on revenue, the Segment Result Margin was 13.0 percent (previous year:
+13.3 percent). C31
+目 R05
+In the Connected Secure Systems segment, Infineon generated revenue in the 2021
+fiscal year of €1,397 million. Compared to the previous fiscal year figure of €974 million
+this corresponds with an increase of 43.4 percent for which a significant contribution to
+revenue was made by Cypress since 16 April 2020. The segment contributed 13 percent
+of Infineon's Group revenue.
+← Q = < 79 >
+NXP
+Renesas
+Infineon
+STMicroelectronics
+Microchip
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+17.2%
+17.1%
+14.7%
+14.5%
+12.7%
+目 R01
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+The segments
+Connected Secure Systems
+Consolidated Financial Statements
+Further information
+Review of the Connected Secure Systems segment
+in the 2021 fiscal year
+Further information
+13% Others (incl. ticketing, transportation, access control, others)
+Combined Management Report
+The segments
+Connected Secure Systems
+Infineon
+C24 Market share for MOSFETs in the 2020 calendar year
+The world market for MEMS microphones reached 5.976 billion units in the 2020
+calendar year, R04. This was an increase of 9.0 percent compared with the figure
+for 2019 of 5.482 billion units. Units sold by Infineon rose by 12.8 percent. Infineon
+continued to expand its market share, which rose from 42.7 percent in the 2019
+calendar year to 44.2 percent in the 2020 calendar year, retaining the position as
+market leader it held in the previous year, C26. The five largest market players
+together accounted for 95.4 percent of the market (2019: 95.1 percent).
+The world market for power semiconductor ICs, comprising power management
+ICs, voltage monitoring ICs, drivers and voltage regulators, as well as controllers for
+switch-mode power supplies, power factor correction and battery management,
+was US$24.326 billion in the 2020 calendar year. This was an increase of 0.6 percent
+compared with the figure for 2019 of US$24.191 billion, R03. Infineon's revenue
+in this area rose significantly by 6.8 percent. Hence the company improved its market
+share from 7.8 percent in the previous year to 8.2 percent in the 2020 calendar year
+and remained in 2nd place, C25. The five largest market players together accounted
+for 43.4 percent of the market (2019: 43.2 percent).
+The world market for power MOSFETs, comprising standard MOSFETs, protected
+MOSFETs, SiC MOSFETs and GaN transistors, reached US$8.114 billion in the 2020
+calendar year, R03, an increase of 0.1 percent compared with US$8.105 billion
+in the previous year. Infineon's revenue in these product categories decreased by
+0.4 percent in the 2020 calendar year. With a market share of 24.4 percent compared
+with 24.6 percent in the previous year, the company maintained its clear market
+leader position, C24. The five largest market players together accounted for
+58.4 percent of the market in the 2020 calendar year (2019: 59.7 percent).
+Market position
+onsemi
+Q = < 73 >
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Power & Sensor Systems
+Business focus and strategy
+Consolidated Financial Statements
+Infineon Technologies | Annual Report 2021
+In May 2021, at the PCIM exhibition in Nuremberg (Germany), Infineon presented the
+first integrated product combining a CoolGaN™ switch in a system-in-package with a
+specially designed driver.
+Further information
+Both GaN and SiC are playing an increasingly important role in the area of power
+semiconductors. Using these new materials makes it possible to achieve further
+efficiency improvements here. In the case of SiC, 650 volt SiC switches are of particular
+interest to customers in the Power & Sensor Systems segment for use in their prod-
+ucts. The applications these switches primarily address are servers, telecommunica-
+tions and industry, solar energy systems, energy storage systems, motor drives and
+charging stations for electric cars. In the 2021 fiscal year, we have doubled our port-
+folio of 650 volt CoolSiCTM products. The portfolio now comprises 15 product types,
+including special SiC driver components that offer the customer optimal performance
+in combination with our SiC switches. Our existing portfolio of GaN products is also
+constantly being expanded. It currently comprises several switches in the 400 and
+600 voltage classes. The main applications addressed by the existing portfolio are
+telecommunications, chargers and adapters, motor drives, servers, wireless charging
+and Class D audio amplifiers. A 650 volt GaN switch for use in the onboard chargers
+of electric cars is currently under development. There are plans to add 100 volt and
+200 volt switches to the GaN portfolio in the near future. These could then be used,
+for example, in solar micro-inverters.
+STMicroelectronics
+Renesas
+6.4%
+7.2%
+8.2%
+STMicroelectronics
+Qualcomm
+Infineon
+Analog Devices
+Toshiba
+Texas Instruments
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+5.1%
+7.7%
+8.8%
+12.4%
+24.4%
+C25 Market share for power ICs in the 2020 calendar year
+5.8%
+In the area of radio frequency, the company offers high-performance products for
+various special applications, such as amplifying the signal in cell phones and communi-
+cating between the cell phone and the base station. The portfolio includes RF antenna
+switches, RF power transistors, low-noise amplifiers, GPS signal amplifiers and
+transient voltage suppressor (TVS) diodes. The product portfolio is supplemented
+by GaN-on-Si power transistors for use in 5G base stations.
+Q =
+The Power & Sensor Systems segment encompasses
+a large selection of technologies relating to power
+semiconductors, radio frequency and sensors. We use
+these technologies to make electronic devices like
+power supplies, power tools, lighting systems, mobile
+devices and industrial and consumer applications
+smaller, lighter and more energy-efficient, as well as
+to develop new functionalities. We are drawing on
+the next generation of new, innovative solutions based
+on Si, SiC and GaN for applications in the areas of
+5G, big data, power supplies and adapters, battery-
+powered devices, and renewable energy. Our portfolio
+of products for power supplies, comprising control ICs,
+drivers and MOSFET power transistors, addresses
+the two key requirements of the market: efficiency
+and power density. Infineon is the clear market leader
+in the global Si MOSFET market, C24. Our high-
+precision sensor solutions give loT devices "human
+senses", enabling them to react intuitively to their
+surroundings. The portfolio is rounded off with USB
+controllers and radio frequency products such as
+RF antenna switches, RF power transistors and GPS
+low-noise amplifiers.
+Power & Sensor
+Systems
+€823 m
+SEGMENT
+RESULT
+Q = < 70 >
+Further information
+Applications p. 242
+Consolidated Financial Statements
+€3,268 m
+REVENUE
+Power & Sensor Systems
+Combined Management Report
+The segments
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+< 72 >
+Management Board and
+Supervisory Board
+Combined Management Report
+The segments
+Power & Sensor Systems
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Power & Sensor Systems
+Business focus and strategy
+Management Board and
+Supervisory Board
+I'I
+Business focus and strategy
+Infineon Technologies | Annual Report 2021
+greater functionality. The system therefore becomes more complex and higher-end,
+allowing Infineon's customers shorter development times for their own products.
+These functionalities have been further enhanced by the microcontrollers and con-
+nectivity solutions we added to our product portfolio when we acquired Cypress.
+Infineon is now offering its customers not only wireless connection technologies
+(Wi-Fi, Bluetooth and Bluetooth Low Energy) but also wired USB controllers, which
+transmit both signals and power.
+At the core of the Power & Sensors Systems segment are power semiconductors for
+power supply applications in the low and medium voltage range. The key require-
+ments for power semiconductors are high efficiency levels, the best possible perfor-
+mance and a small form factor. Here, Infineon is able to offer solutions covering all
+the key active components of the system: i.e., control ICs, drivers and MOSFET switches.
+Currently, Si is the predominant base material for power switches, but now we are
+seeing a gradual trend towards increased use of power semiconductor products that
+are based on the new materials SiC and GaN. These result in far lower switching
+losses, which means that significant increases in efficiency and power density can
+be achieved. Digital controls are another factor contributing to improvements in per-
+formance. Power management is moving away from analog systems and becoming
+increasingly digital (Digital Power Management). Digital control ICs also allow for
+Strategic focus
+← Q = < 71 >
+Further information
+Consolidated Financial Statements
+Power & Sensor Systems' broad sensor portfolio allows machines and other electrical
+devices to communicate with their surroundings, depending on their situation. The
+various types of sensors emulate the human senses. MEMS microphones are a substi-
+tute for human ears, radar and time-of-flight (ToF) sensors provide 3-D vision, while
+gas sensors replicate the sense of smell. If the customer so wishes, any of these sensors
+can easily be combined with microcontrollers and connectivity solutions.
+Comparability limited due to differing reporting period (fiscal year-end) and currency.
+Management Board and
+Supervisory Board
+C26 Market share of MEMS microphones die suppliers in the 2020 calendar year (by units)
+€1,397 m
+REVENUE
+€182 m
+SEGMENT
+RESULT
+Further information
+Consolidated Financial Statements
+Connected
+Secure Systems
+Connected Secure Systems
+Business focus and strategy
+Management Board and
+Supervisory Board
+2021
+2020
+Infineon Technologies | Annual Report 2021
+Revenue from radio frequency products, which comprise mainly RF power transistors
+for base stations, RF antenna switches and GPS low-noise amplifiers, also contributed
+to growth in this area.
+Combined Management Report
+The segments
+The recovery in demand for 24 gigahertz radar sensor ICs also contributed to the
+increase in revenue. An important field of application for radar sensors with this
+frequency range is in blind spot detection systems for cars. Revenue from 3D time-of-
+flight sensors sold to smartphone and automotive customers stagnated in the 2021
+fiscal year, remaining at the same level as in the 2020 fiscal year, while the company
+generated first revenue from gas sensors for measuring CO₂, newly launched onto the
+market in the 2021 fiscal year.
+The Connected Secure Systems segment provides
+comprehensive systems for a secure, connected world
+based on reliable, game-changing microcontrollers and
+wireless connectivity solutions and security solutions.
+In particular, we offer microcontroller solutions, Wi-Fi
+and Bluetooth solutions, and combined connectivity
+solutions (known as combo chips), along with hardware-
+based security technologies and an efficient software
+environment for the programming and configuration
+of the microcontrollers and connectivity components
+that cover many application areas: devices for lot
+applications, connected home appliances and smart
+home appliances, IT equipment, consumer electron-
+ics, cloud security and connected vehicles, as well
+as credit and debit cards, electronic passports and
+national identity cards. With our technologies in the
+areas of computing, connectivity and security, we
+are contributing significantly towards ensuring that
+current and future connected systems are reliably
+protected, since communication and data security
+go hand in hand.
+Management Board and
+Supervisory Board
+← Q = < 76 >
+Increasing digitalization unlocks new opportunities but increases the risks of hacker
+attacks or the violation of privacy if suitable countermeasures are not taken. With
+our expanded product portfolio and prefabricated solution components, we have
+strengthened our position, and we confirm our strategy, which is to support our
+customers in the best way we can by providing easy-to-use solutions for system
+integration and ensuring a short time-to-market.
+In addition to its role as an independent business unit, the Connected Secure Systems
+segment fulfills a second important function within the Group. As a competence
+center, it helps the other three segments to integrate security, microcontrollers,
+connectivity and software as functions in their system solutions and thus to create
+additional potential differentiation between them and their competitors.
+Strategic focus
+The digital transformation is penetrating more and more areas of daily life. Digitaliza-
+tion is a key aspect of many applications. As a result of the acquisition of Cypress, we
+were able to expand our product portfolio and our competence portfolio in this area
+to include microcontrollers and connectivity solutions. IoT in particular offers us new
+opportunities for growth. Starting with consumer loT, we will also continue to expand
+our loT industrial applications. It is precisely these applications that require greater
+integration of security solutions into the design of intelligent devices, connected
+vehicles, companies and Industry 4.0 factories. The security aspect will continue to
+be imperative to provide defense against attacks - whether these involve theft of
+intellectual property or private data, fraud or manipulation.
+One of the main reasons for the acquisition of Cypress was to strengthen our compe-
+tencies and expand our portfolio in the area of microcontrollers (MCUs). Cypress'
+microcontroller business was brought together with Infineon's XMC™ family under
+one roof. This structure is helping us to combine forces and derive mutual benefit
+from the experience, knowhow, methods and tools brought to the table by both
+former parts of the business. Cypress' PSOC™ family of microcontrollers have tradi-
+tionally had a greater presence in consumer and IoT applications. The strength of
+the XMCTM family of microcontrollers, on the other hand, lies in industrial applications
+such as motor drives, automation and communication, power conversion and LED
+lighting. Combining the two enables us to benefit from the synergies generated.
+Working together with other segments, we offer our customers tailored system
+solutions. In line with our strategic approach “Product to System", we incorporate
+security functions for example into special microcontrollers. We are thus expanding
+our portfolio, which has until now consisted of specialized security ICs, to include
+microcontrollers enhanced with security functions. This enables us to adapt even
+more specifically to the level of security desired by the customer. These are new
+features that differentiate us from our competitors and therefore provide us with
+growth opportunities.
+Applications p. 243
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+15.8%
+Further information
+Consolidated Financial Statements
+Combined Management Report
+The segments
+Connected Secure Systems
+Business focus and strategy
+Management Board and
+Supervisory Board
+Good revenue growth was also to be seen in the 2021 fiscal year in the area of radio
+frequency and sensor technologies. The greatest contributor to growth was our
+MEMS microphone business. Demand for microphones, not only for smartphones
+but also for the relatively new product group of wireless earphones with active noise
+cancellation, saw further strong growth. This growth was further supported by the
+use of these microphones in voice-controlled applications, such as smart speakers
+and remote controls for smart home devices.
+Q = < 75 >
+Growth in data volumes transmitted remained consistently high due to the persistent
+coronavirus pandemic and the resulting extent of virtual business conferences, working
+from home, home-schooling, online shopping and video streaming. In response, the
+expansion of server capacity and data centers continued undiminished in the 2021
+fiscal year. In light of this development, many countries also expedited the expansion
+of their 5G cellular infrastructure.
+R04
+6.8%
+R03
+Comparability limited due to differing reporting period (fiscal year-end).
+2.6%
+Demand for battery-powered devices, games consoles and televisions also continued
+to develop positively. All these applications require a large number of power semicon-
+ductors, which has resulted in the increase in revenue in these areas.
+Management Board and
+Supervisory Board
+NJRC
+Knowles
+44.2%
+38.3%
+Infineon Technologies | Annual Report 2021
+3.5%
+Omron
+Infineon
+Business focus and strategy
+目 R03
+Consolidated Financial Statements
+Revenue
+Segment Result
+636
+823
+2,650
+3,268
+€ in millions
+C27 Revenue and Segment Result of the Power & Sensor Systems segment
+Combined Management Report
+The segments
+In the 2021 fiscal year, the Segment Result was €823 million, an increase of 29.4 percent
+compared with the figure for the previous fiscal year of €636 million. The Segment
+Result Margin improved from 24.0 percent in fiscal 2020 to 25.2 percent in the 2021
+fiscal year. The main reason for the significant growth in revenue was the sustained
+rise in demand for semiconductors in a variety of applications. Another reason was
+the consolidation of Cypress' USB component business for the first time for a full
+fiscal year. The positive revenue trend also led to a further slight improvement in the
+Segment Result Margin.
+In the Power & Sensor Systems segment, Infineon generated revenue in the 2021 fiscal
+year of €3,268 million, an increase of 23.3 percent compared with the figure for the
+previous fiscal year of €2,650 million (which included the contribution to revenue made
+by Cypress from 16 April 2020 onwards), C27. The segment contributed 29 percent
+of Infineon's Group revenue.
+Review of the Power & Sensor Systems segment
+in the 2021 fiscal year
+Power & Sensor Systems
+← Q = < 74 >
+Further information
+MEMSensing
+Q = < 83 >
+Further information
+Building on our comprehensive system understanding, we develop new tailor-made
+solutions with our key customers. We are also expanding our product portfolio to
+include additional voltage classes. Suitable packages will also be produced, so as to
+exploit SiC technology to the full.
+At the beginning of the 2019 fiscal year, we acquired Siltectra in order to address
+the high cost of the base material, the SiC wafer. We plan to use Siltectra's Cold Split
+technology on an industrial scale in the 2022 fiscal year. In the first phase, boule
+splitting takes place. This technology enables crystalline materials to be split with
+minimum loss of material compared with conventional sawing techniques, which will
+make it possible to produce significantly more wafers from one boule. The second
+phase in the manufacturing is wafer splitting. In this process, the raw wafers we
+purchase are split in two, effectively doubling our output. Advanced development of
+the Cold Split technology is taking place in Villach (Austria) and at the Siltectra site
+in Dresden (Germany).
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Business focus and strategy
+GaN
+Compared to Si-based transistors, GaN-based transistors also have advantages that
+make them useful in areas such as power supplies and chargers. Devices that are
+more efficient and much more compact can be built due to lower losses both when
+switching and when in the on-state. GaN's properties, which are very different from
+those of Si, make it possible to integrate high-voltage systems on a chip, which
+represents another step towards more compact solutions. These can be used, for
+example, in motor control units in robots, where high dynamics and small form
+In the 2017 calendar year, Infineon was one of the first manufacturers to bring a
+SiC MOSFET with trench technology to market. Trench architecture offers significantly
+more opportunities for the realization of efficient, robust transistors than technically
+less demanding planar architecture. It gave Infineon a competitive edge on the devel-
+opment front, which we want to sharpen with the second generation currently in
+development.
+Sic
+The market for SiC is growing at an extremely dynamic pace. Demand was initially
+determined by industrial applications such as photovoltaic inverters, industrial
+power supplies and the charging infrastructure for electric vehicles, but this is now
+being surpassed by demand for automotive applications. Specifically, the new solu-
+tions are being used for the drive train and onboard chargers.
+Sic
+Manufacturing technologies and transistor architectures for power semiconductor
+components based on new materials are a key focus of our research and develop-
+ment activities. SiC, a compound of silicon and carbon, and GaN, a compound of gal-
+lium and nitrogen, enable higher power densities and low switching losses, both of
+which contribute towards improved efficiency of power electronic systems and there-
+fore to reduced losses. Whereas SiC is used especially for voltages exceeding
+600 volts, GaN is favored for lower voltages, where it can play to its particular
+strength, extremely low switching losses. The three materials (SIC, GaN and Si) all
+complement each other, with each one suitable for particular applications and
+requirements.
+New materials
+OPTIGAT
+Vehicle
+Discrete IGBTs,
+IGBT modules, CoolSiC™
+GaN
+Si
+Internal power supply
+Infineon Technologies | Annual Report 2021
+Authentication
+and
+encryption
+factor are important. Another field of application is data centers, which have very
+high requirements in terms of energy efficiency and power density.
+Human-machine
+interface
+Management Board and
+Supervisory Board
+In the 2021 fiscal year, our product portfolio
+was expanded with the launch of a GaN
+power semiconductor IC. This IC, which is
+called CoolGaNTM Integrated Power Stage
+600 V, comprises for the first time a driver IC
+and a switch in one package. The high
+degree of switch integration means that
+the advantages of GaN technology can be
+combined with simple control. With this
+product, we are primarily addressing appli-
+cations such as USB PD chargers, adapters,
+and low to medium-power switch-mode
+power supplies. We will be expanding our
+product range in the medium to long term
+to include discrete and integrated solutions
+with additional voltage classes in the high-
+to medium-power range. Moreover, we are
+expanding our package portfolio.
+Q = < 85 >
+Infineon
+CoolGaNT IPS
+With our products and the use of Al, we make completely new applications and
+forms of human-machine interaction possible. Using our modern sensors, machines
+acquire spatial hearing or the ability to see in 3D, or the capacity to feel or to analyze
+gases. These abilities correspond to the human senses, which makes the machines
+intuitive to operate. Edge Al (artificial intelligence within a device or on the edge
+between the device and the cloud) opens up the possibility of many new applica-
+tions. Al in the cloud, which has prevailed until now, is easily scalable but has the
+disadvantage of high electricity consumption and also requires a reliable data
+connection.
+Infineon develops hardware solutions and software solutions so that Al algorithms
+can be used in integrated systems. In addition to optimizing the hardware of existing
+architectures, this also includes specific Al accelerators with extremely low electricity
+consumption. These are used, for example, in keyword and gesture recognition,
+object identification and classification, and sensor fusion. The prerequisite for this is
+an understanding of the algorithms of neural networks so that these can be imple-
+mented in special semiconductor components in switching circuits (i.e., in hardware).
+As a result, an enormous speed advantage can be achieved with reduced electricity
+consumption compared with a software-based solution. Our aim is to develop com-
+plete solutions in the area of sensors, Al accelerators, microcontrollers and software.
+Al is a key element of our software expertise.
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Research and development
+Consolidated Financial Statements
+Further information
+In many areas of digitalization, values-based trustworthy Al offers an opportunity
+to provide people with support, while at the same time preserving personal freedom.
+If people's wellbeing and dignity are to remain at the heart of all Al-based applica-
+tions in the future, ethical guidelines governing the deployment and use of Al will be
+required. This insight also underlies the new EU Regulation governing Al. The Draft
+Regulation published in April 2021 includes a risk-based approach that regulates the
+supply and operation of Al systems. Applications that conflict with the norms and
+values of the EU will simply be banned. These include, for example, systems that can
+be used by governments for social scoring activities. High-risk applications have
+to fulfill specific conditions regarding data protection, transparency and operability.
+As a company, we endorse a value-based approach that takes ethical aspects into
+consideration when dealing with Al and, at the same time, makes innovation and
+development possible. Infineon is also involved in various cross-company initiatives,
+sometimes politically coordinated, such as Applied.Al and the “Learning Systems"
+platform launched by the German Federal Ministry of Education and Research (BMBF).
+Sensor technologies
+Sensors capture the real analog world. The signals measured are first digitized. Then,
+the digital values are processed, transmitted and stored according to the requirements
+of the target application. Sensors also play an increasingly important role in operat-
+ing machines and devices, referred to as human-machine interaction. In the 2021 fiscal
+year, together with our partner Reality Al, we launched a new sensing solution for the
+automotive sector onto the market. It combines XENSIVT MEMS microphones with
+AURIX™ microcontrollers and Reality Al's Automotive See-With-Sound system. Using
+machine learning-based algorithms, the system is able to detect emergency vehicles,
+cars and other road users, even if they cannot be seen by the driver. Al also ensures
+that the country-specific sirens of emergency vehicles are recognized in all parts of
+the world.
+In the field of intelligent building control, Infineon is offering a new CO2 sensor. CO2 is
+a key parameter for indoor air quality, which directly correlates with the aerosols via
+which coronavirus, for example, is trans-
+mitted. Smart ventilation and warning sys-
+tems equipped with the XENSIV™ PAS CO2
+sensor warn of poor air quality or ensure
+the supply of fresh air necessary if they are
+linked to the air conditioning system. The
+XENSIVT PAS CO2 measures the CO2 content
+in the indoor air extremely accurately on the
+basis of photoacoustic spectroscopy (PAS).
+To do so, it uses a highly sensitive acous-
+tic detector optimized for low frequency
+operation. The PAS principle enables a
+significant reduction in the form factor of
+up to 75 percent compared to customary
+CO2 sensors.
+Connectivity solutions
+XENSIV PAS CO2
+Infineon uses artificial intelligence (AI) methods in many areas such as development,
+production and marketing. In the area of manufacturing, examples include auto-
+mated visual fault detection and predictive maintenance. Around the world, many
+teams from different functions are involved with the use of Al in their working environ-
+ment. Since 2017, Infineon has had local teams of experts who use Al to optimize
+manufacturing. Our development center in Dresden for Al in our products started
+up in 2018. In 2020, we set up our Center of Excellence for Al in Munich (Germany)
+for the global coordination of our Al activities. This was followed in 2021 by our ARISE
+initiative in Singapore.
+Artificial intelligence
+Developing our own software has other advantages. We can ensure the software and
+hardware are a perfect match, thus optimizing performance, energy efficiency and
+data security at the system level. We can generally differentiate our solutions from
+those of our competitors not only through our hardware, but also through software
+we have written ourselves and/or programmed algorithms.
+The acquisition of Cypress brought us
+for the first time a complete ecosystem,
+including the ModusToolbox™ develop-
+ment environment, software components
+and an active developer community.
+The Modus ToolboxTM comprises, among
+other things, reusable firmware, which
+makes programming Wi-Fi and Bluetooth
+components, microcontrollers and
+sensors significantly easier for the engi-
+neers. In addition, we have launched
+the Modus ToolboxTM ML. ML stands for
+machine learning (i.e., artificial intelligence
+methods).
+IGI60F1414A1L
+At the power-source, e.g. in a USB charger, ultimate
+efficiency and reliability can be achieved by aligning the
+latest CoolGaN™ Integrated Power Stage (IPS) 600 V
+with GaN and driver technologies.
+Microcontrollers are key elements of every electronic system. In the automotive
+sector, the highly successful microcontrollers in the AURIX™ family, with their focus on
+the powertrain (motor control/inverters/transmission/charging systems), security
+components and automated driving, have been supplemented by those in Cypress'
+TRAVEO™ family, with their focus on infotainment and body functions. For industrial
+applications, Cypress' PSOC™ family has been added to the product range. Both
+TRAVEO™ and PSOCTM are product families that build on ArmⓇ
+and therefore reach a wide developer community.
+processor architecture
+Infineon Technologies | Annual Report 2021
+Management Board and
+Supervisory Board
+Business focus and strategy
+Microcontrollers
+Combined Management Report
+Research and development
+Further information
+Q = < 84 >
+Software and system support
+Software development is playing an increasingly important role in Infineon's research
+and development. It is a significant part of our strategic approach "Product to System",
+which involves presenting the customer with comprehensive and easy-to-use solu-
+tions. Traditionally, we develop hardware-near software like firmware or drivers. In
+addition, for more and more applications, we are now offering application-related
+program codes. The dynamic loT market offers great potential. Here especially, aspects
+that are important to the customer are short development times and little need
+for modification, combined with a high degree of IT security. This requires not only
+individual software elements, but also a comprehensive software development
+environment.
+迪
+1825
+ModusToolbox™
+Consolidated Financial Statements
+User
+> Hazlet, NJ
+Microcontroller
+> Lexington, KY
+> Erlangen
+› Padua
+› Leominster, MA
+> Duisburg
+> Villach
+› Dresden
+› Linz
+Malaysia
+> Seoul
+Korea
+› Bangalore
+India
+Asia-Pacific
+Denmark
+› Pavia
+> Netanya
+Israel
+› Augsburg
+Germany
+› Graz
+Austria
+Europe, Middle East, Africa
+> Irvine, CA
+Due to its small size, the XENSIVT PAS CO2
+can be integrated into ventilation or lighting
+systems in smart buildings.
+> El Segundo, CA
+> San Diego, CA
+> Colorado Springs, CO
+› Chandler, AZ
+> Beaverton, OR
+Italy
+AURIX™, PSOC™, XMCTM
+› Langen
+> Herlev
+Driver ICs
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Business focus and strategy
+Management Board and
+Supervisory Board
+› Penang
+> Melaka
+> Ipoh
+› Lviv
+Ukraine
+› Reigate
+> Dublin
+> Cork
+> Lynnwood, WA
+Ireland
+> Le Puy-Sainte-
+France
+> Bristol
+> Warstein
+UK
+> Warwick, RI
+> San José, CA
+> Regensburg
+> Kulim
+> Bucharest
+> Neubiberg
+> Milpitas, CA
+Romania
+> Martinsried
+Réparade
+Cypress' Wi-Fi and Bluetooth solutions are
+already well-established in various markets.
+The current main applications are in con-
+sumer products and IoT, including intelligent loudspeakers (smart speakers), activity
+trackers and printers, as well as in the automotive sector. Customers' needs in many
+applications are met primarily as a result of our ability to integrate Wi-Fi and Bluetooth
+technologies on combo chips, as well as the option we can provide of highly integrated
+dual stream 2x2 Wi-Fi components to fulfill complex system requirements.
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Business focus and strategy
+Management Board and
+Supervisory Board
+R&D expenses
+Percentage of revenue
+13.1%
+2021
+2020
+H
+1,113
+13.0%
+1,448
+Infineon Technologies | Annual Report 2021
+€ in millions
+C32 R&D expenses
+Research and development expenses were €1,448 million in the 2021 fiscal year
+compared with €1,113 million in the previous year. This increase of €335 million or
+30 percent was in line with revenue. In the 2021 fiscal year, we invested 13.1 percent
+of revenue in research and development, compared with 13.0 percent in the previous
+year. Capitalized development costs in the 2021 fiscal year were €199 million (previ-
+ous year: €158 million). Amortization of capitalized development costs in the 2021
+fiscal year was €69 million (previous year: €56 million). Subsidies and grants received
+for research and development rose from €108 million in the 2020 fiscal year to
+€123 million in the 2021 fiscal year.
+Combined Management Report
+Research and development
+Research and
+development
+Philippines
+> Muntinlupa
+Singapore
+Greater China
+Japan
+› Nagoya
+> Sendai
+› Chengdu
+> Shanghai
+> Shenzhen
+> Xi'an
+Taiwan
+> Hsinchu
+> Taipeh
+> Tokyo
+Q = < 80 >
+Infineon Technologies | Annual Report 2021
+Consolidated Financial Statements
+Q = < 81 >
+USA
+> Austin, TX
+EiceDRIVER™
+CoolMOST
+CoolSIC™
+Battery in XEV
+DC-DC stage
+AC-DC stage
+AC power
+C33 Infineon owns the key components for xEV charging stations
+> reduce product costs per watt.
+> increase efficiency through lower switching losses and line losses, and
+› improve the power density of the charging station within specified dimensions,
+> increase the power output to shorten the charging time,
+In this way, the customer can
+Further information
+Based on this broad portfolio and our system understanding at application level, we
+support customers in a number of ways in the design of a high-performance solution.
+Our input includes reference designs, simulations, podcasts, blogs and videos.
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Business focus and strategy
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+Fast charging stations for electric vehicles illustrate the P2S approach. Infineon supplies
+the relevant semiconductors in a system solution that includes not only Si-based or
+SiC-based power semiconductors, but also driver ICs, sensor solutions, communica-
+tions components, and microcontrollers with integrated security solutions. Il C33
+The strategic approach "Product to System" (P2S) is of crucial importance here in
+more than one respect. It helps us to better adapt our components to requirements.
+We understand new trends early on and can develop innovative approaches to the
+point that we can suggest new courses of action to our customers, or we can present
+them with completely new possibilities. Particularly important is the opportunity
+to offer customers all-in-one solutions. This provides them with benefits in terms
+of system performance, system costs and development time. This approach also means
+that we are increasingly focusing on and building more expertise in software and
+system solutions.
+Research and development fields at Infineon
+Another indication of Infineon's innovative power and long-term competitiveness
+is the number of our patents. As in the previous fiscal year, we applied for around
+1,700 patents worldwide in the 2021 fiscal year. We regularly review and streamline
+our patent portfolio. At the end of the 2021 fiscal year, the worldwide patent port-
+folio comprised around 29,500 patents and patent applications (previous year:
+around 29,000).
+Infineon's research and development activi-
+ties accord with its strategy of securing
+and strengthening its core business and
+expanding its business in adjacent areas.
+Research and development activities
+therefore concentrate, on the one hand, on
+continuing improvements to our power
+semiconductors (with a particular focus
+on the use of new materials such as SiC
+and GaN) and, on the other hand, on the
+digitization of products and systems. The
+main development fields here are micro-
+controllers, connectivity solutions and
+software, and to an increasing extent artifi-
+cial intelligence in edge computing. The
+ongoing development and expansion of our
+sensor range is a key factor in the area of
+IoT. We address longer-term future-related
+topics in the fields of quantum computing
+and post-quantum cryptography.
+264
+Patents
+At the end of the 2021 fiscal year, we employed 10,372 people (21 percent of Infineon's
+total workforce) in research and development worldwide. At the end of the 2020 fiscal
+year, the corresponding figure was 9,262 (20 percent of the work-force). The number
+of research and development sites was 56 in the 2021 fiscal year (2020: 54 sites) in
+20 countries.
+Q = < 82 >
+Our future developments under the umbrella of the Connected Secure Systems
+segment are focusing, on the one hand, on the next generation of integrated Wi-Fi,
+BT and BLE products and, on the other hand, on the incorporation of these new
+connectivity capabilities into our existing and future range of products and systems
+in the markets and applications we address.
+Business focus and strategy
+Consolidated Financial Statements
+Mission Futre.
+easier, safer a greener
+The first finished 300-millimeter wafer manufactured in the new fab is presented by
+(f.l.t.r): Dr. Sabine Herlitschka (CEO Infineon Austria), Dr. Reinhard Ploss (CEO Infineon)
+and Jochen Hanebeck (COO Infineon).
+Infineon Technologies | Annual Report 2021
+> Richmond, BC
+Canada
+America
+Q = < 87 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+R&D sites
+Business focus and strategy
+R&D sites
+Management Board and
+Supervisory Board
+Infineon Technologies | Annual Report 2021
+in a socket using a compression frame for mechanical fixation.
+Tonests
+Management Board and
+Supervisory Board
+Business focus and strategy
+Combined Management Report
+Research and development
+Consolidated Financial Statements
+Further information
+Q = < 86 >
+Manufacturing commenced at the new 300-millimeter factory on the Villach site in
+Austria in the fiscal year just ended, around three months ahead of schedule. At a big
+opening ceremony attended by many politicians, including the Austrian Chancellor
+and several secretaries of state, the first finished wafer was presented. Over the
+coming four to five years, the areas in the clean room will be fitted with production
+facilities. The total planned investment for the fully equipped buildings and clean
+room facilities is around €1.6 billion. The development of the Villach site will generate
+significant economies of scale and revenue potential of around €2 billion per year.
+Innovative memory solutions
+Quantum computers and post-quantum cryptography
+The active use and precise manipulation of quantum mechanical effects in a few or
+individual particles is a basis for innovative components that may be significant for
+future industrial products. Above all, the field of quantum computing is thought to
+have disruptive potential, as this new computing architecture will enable the solution
+of types of problems that have, until now, hardly been accessible. Problems of such
+complexity occur, for example, in materials research, drug development, weather
+forecasting and logistics optimization. Infineon is a sought-after partner in this highly
+innovative field. Above all, in research networks both inside and outside Germany, it
+contributes its expertise in the planning, design and manufacture of special technol-
+ogies and/or special components. On 10 June 2021, ten leading German companies
+presented the Quantum Technology and Application Consortium (QUTAC) to the pub-
+lic. On board with Infineon are BASF, BMW, Boehringer Ingelheim, Bosch, Merck,
+Munich Re, SAP, Siemens and Volkswagen. Together we will continue to build on the
+existing foundations of quantum computing in order to move into industrially useful
+fields of application.
+In the 2021 fiscal year, Infineon presented the prototype of an industrially manufac-
+tured ion trap quantum chip. The 2x9 ion quantum processor is a pilot designed
+to show how to implement the industrial manufacturing chain of an ion processor
+from conception to application. Our manufacturing expertise, combined with
+strong academic partners at the University of Innsbruck (Austria) and ETH Zurich
+(Switzerland), is enabling the rapid ongoing development of our first prototypes.
+In addition, Infineon is driving forward the development of other technological
+approaches and is developing both superconductive components and spin-based
+systems in SiGe structures for future quantum computers.
+Even if quantum computers are only available in some years' time, this already has
+practical consequences today. The service life of major systems or products, such as
+passports, industrial facilities, medical technology and cars, will potentially extend
+into the era of quantum computers, and these systems and products will still need to
+be secure at that time. Established encryption technologies could be attacked and
+broken with quantum computers. For this reason, Infineon is focusing on post-quantum
+cryptography to start developing solutions now with security chips that will be able
+to resist the computing power attacks of quantum computers. Infineon sits on a
+number of committees involved in setting international standards in this field.
+Module of a trapped-ion quantum chip assembled
+Through its acquisition of Cypress, Infineon acquired additional expertise in various
+memory technologies. The most important of these for Infineon are NOR Flash mem-
+ory ICs, which have a wide range of potential applications in the automotive sector,
+industry and the communications infrastructure. A NOR Flash memory IC is used pri-
+marily as program memory and is therefore distinguished from NAND Flash memory,
+which is used for (multimedia) data. Infineon's NOR Flash memory ICs offer immedi-
+ate availability in the systems used, a sort of "instant on".
+Combined Management Report
+Manufacturing
+Start-up of the 300-millimeter factory in Villach
+This final point particularly paid off when the chip shortage started to bite towards
+the end of 2020 and beginning of 2021. Past investment enabled us to be relatively
+successful at meeting customers' needs in that very fast-moving market environment.
+Further information
+Q = < 88 >
+Manufacturing
+In the 2021 fiscal year, our investments amounted to €1,497 million. This was an
+increase of €398 million, or 36 percent, compared with the €1,099 million invested
+in the previous year. This increase is slightly stronger than our revenue increase and a
+result of a strong recovery in demand. Investments as a proportion of revenue increased
+from 12.8 percent in the 2020 fiscal year to 13.5 percent in the 2021 fiscal year. Of the
+total investments, €1,268 million related to property, plant and equipment (previous
+year: €915 million) and €229 million to other intangible assets, including capitalized
+development costs (previous year: €184 million).
+Infineon Technologies | Annual Report 2021
+C34 Investments
+€ in millions
+12.8%
+1,497
+1,099
+2020
+1 Property, plant and equipment and other intangible assets.
+2021
+13.5%
+Certainly, the allocation situation in the fiscal year just ended was particularly difficult
+for products that we purchase from foundries (frontend). To ensure delivery capability
+in the future, we therefore concluded several long-term supply contracts with found-
+ries in the course of the 2021 fiscal year.
+Investments
+Management Board and
+Supervisory Board
+> Infineon is able to control a large part of the supply chain itself.
+› Close cooperation between chip design and manufacturing generally enables short
+development times and a high level of flexibility.
+> We use the opportunities presented by in-house manufacturing to develop new
+materials to suit the needs of the market, such as SiC and GaN, which involves
+close collaboration between manufacturing and development.
+> Our manufacturing sites benefit from economies of scale. Our 300-millimeter thin
+wafer production enables us to create differentiated products, is cost-effective and
+ensures a high level of quality.
+The relatively high proportion of in-house manufacturing has a number of advantages:
+Percentage of revenue
+In its in-house manufacturing, Infineon focuses on differentiating technologies. In
+frontend manufacturing, these include, in particular, power semiconductors and
+sensors, while in backend manufacturing they include the associated modules. We
+use external manufacturing partners in the frontend phase for CMOS and CMOS-
+derivative technologies. This applies to technology nodes of 65 nanometers and
+smaller but also to older generations of power semiconductors. In the backend area,
+particularly in assembly and testing, we are making increasing use of manufacturing
+partners for standardized package types.
+As of 30 September 2021, there were 33,699 people employed in manufacturing-related
+functions (previous year: 31,292 employees). The increase reflects the capacity expan-
+sion and higher plant utilization rate. We reduced the number of manufacturing sites
+to 20 in 13 countries, compared with 21 manufacturing sites in 13 countries at the end
+of the 2020 fiscal year.
+By far the largest share of investments in property, plant and equipment was dedi-
+cated to manufacturing. Of this, the larger part was invested in frontend operations
+and the smaller part in backend operations.
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Manufacturing
+Business focus and strategy
+Manufacturing strategy
+> Andover, MA
+59.9%
+55.5%
+Annual Report 2023
+Consolidated Financial Statements
+Further information
+5 Q = 4 9
+Here we are making good progress. At the end of the 2023 fiscal year, our scope 1 and
+scope 2 emissions were around 56.8 percent below the emissions of the base year 2019.
+The installation of new PFC abatement systems in our frontend manufacturing in
+Kulim (Malaysia) has already enabled us to reduce our scope 1 emissions by 21 percent.
+In the past fiscal year, we also launched a similar project at our site in Austin (Texas,
+USA). This means that we will have equipped all our prime manufacturing facilities
+with highly efficient PFC abatement systems. The new manufacturing facilities
+referred to above will of course be equipped with such systems right from the start,
+so that they are in line with our CO2 neutrality goal.
+In addition to avoiding direct emissions, other key levers for reducing CO₂ are energy
+conservation and the use of green electricity. In the 2023 fiscal year, we were able
+to use green electricity to meet over three quarters of our electricity requirements.
+We are continuing to develop our corporate culture
+Infineon is seeing strong growth. Over the past few years, our business has become
+bigger and, at the same time, more complex. We therefore make adjustments in the
+company, adapt our processes and, last but not least, continue to develop our corpo-
+rate culture. Crucial to our success is not only what we do but how we do it.
+When I assumed my role as CEO, we launched the SPIRIT project. This is designed to
+deliberately promote three behaviors in the company. We set ourselves ambitious
+targets at all levels. We are accountable for our results and clarify our responsibilities.
+We make timely decisions that are implemented consistently.
+Whether you are setting ambitious targets or clarifying responsibilities, you need to
+begin at the corporate level. We therefore made a decision in the summer that, in the
+future, we would combine accountability with functional management roles across
+the Group. This will make us significantly faster, because it will reduce the complexity
+in our organization and create strong global functions - with local teams, where this is
+expedient. Furthermore, we promote a sense of responsibility and purposefulness as
+elements of our corporate culture. All this makes us even more attractive as an employer.
+Combined Management Report
+A challenging market environment in the 2024 fiscal year
+At the beginning of the 2024 fiscal year, we are operating in an environment that con-
+tinues to present challenges. The mobility of the future and renewable energies
+are currently the strongest growth drivers for our business. In all other areas, we see
+a temporarily difficult, cyclical market environment.
+With regard to structural growth opportunities, we are continuing to implement our
+strategy consistently and we are reinforcing our leading position in power systems
+and lot with long-term investments in our manufacturing landscape and technological
+leadership. Decarbonization and digitalization remain the foundations of our busi-
+ness. With our solutions, we are driving forward the green and digital transformation,
+thus providing our customers and you, our shareholders, with tangible added value.
+Neubiberg, November 2023
+Sincerely
+Jochen Handlech
+Jochen Hanebeck
+Chief Executive Officer
+Infineon | Annual Report 2023
+Equity ratio
+44
+Overall, we are expecting revenue growth to continue in the 2024 fiscal year but at
+a lower rate. We are assuming an increase in revenue of 4 percent. Hence, after the
+two boom years of 2022 and 2023, we anticipate growth will be below the target we
+have set ourselves of average revenue growth of "more than 10 percent per year"
+over the semiconductor cycle. However, the sequence of different growth phases is
+nothing unusual in the semiconductor market and as a company we know how to
+deal with this situation.
+1.65
+Management Board and Supervisory Board
+Letter to shareholders
+At Infineon, as a leading manufacturer of semiconductors, our objective is not only to
+be a technological leader but also a pioneer in sustainability. Infineon will become
+CO2-neutral by the end of the 2030 fiscal year. Our target includes all direct emissions
+(scope 1) as well as indirect emissions from purchased electricity and heat (scope 2).
+By the end of the 2025 fiscal year, we want to have reduced our emissions by 70 percent
+compared with 2019. To achieve these targets, we are working in particular on avoid-
+ing direct emissions.
+We are continuing to enhance our competence in power systems
+and lot with targeted acquisitions
+In addition to SiC, GaN is developing into a key material for power semiconductors. It
+has advantages especially at higher switching frequencies. In particular, for applications
+such as mobile charging, power supplies for data centers, solar inverters for private
+households, and onboard chargers for electric vehicles, GaN is on the brink of a break-
+through and promises very strong market growth. We therefore want to continue to
+enhance our technical skills in the field of GaN.
+In October 2023, we completed the acquisition of the company GaN Systems. The
+company, which is headquartered in Ottawa (Canada), brings with it a broad port-
+folio of GaN-based solutions for power conversion as well as first-class application
+know-how. We are delighted that the team from GaN Systems, comprising more than
+200 employees, is now part of Infineon.
+The strengths of both companies in terms of intellectual property and application
+understanding ideally complement each other. Together, we now have over 450 GaN
+experts, as well as more than 350 GaN patent families and a large number of highly
+promising customer projects in the pipeline. This puts our company in an outstand-
+ing position, opening up huge opportunities in various high-growth markets. This
+will significantly accelerate our development roadmap for GaN solutions and further
+strengthen our leading position in power systems.
+Another exciting key topic for Infineon is artificial intelligence (AI). Machine learning is
+being used in more and more loT applications and enables new functionalities.
+In May 2023, we acquired the company Imagimob. The startup, based in Stockholm
+(Sweden), is a leading platform provider for machine learning solutions for energy-
+efficient edge devices. Imagimob's platform enables a variety of applications, such as
+audio event detection, voice control, gesture recognition, predictive maintenance,
+signal classification and material detection.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Letter to shareholders
+Combined Management Report
+Infineon | Annual Report 2023
+Consolidated Financial Statements
+5 α = 4 8
+With this acquisition, we are strengthening our position as a provider of machine
+learning solutions, complementing our range of embedded Al solutions. This will
+enable us to transfer the capabilities of machine learning, which have until now been
+used mainly in large server farms, to our microcontrollers.
+Artificial intelligence also offers Infineon huge growth potential in the area of power
+systems. More and more data are being recorded, processed, stored and linked. To
+make the data usable for different applications, the major cloud computing providers
+are increasingly employing generative Al. As the example of ChatGPT shows, large
+language models (LLMs) have the potential to take digitalization to a completely new
+level.
+In the coming years, Al will be used in more and more application areas. The volume
+of data to be processed and the computing power required as a result will mean
+a significant increase in the quantity and value of the semiconductors needed in
+the data center servers. Energy-efficient power stages help reduce power losses and
+cooling efforts This allows operators to significantly reduce their costs – and avoid
+CO2. Demand is growing strongly. We offer highly energy-efficient power solutions
+for the entire supply chain, from the grid to the central processor (GPU), making a
+broader use of Al possible. Green computing is an ideal application area for Infineon.
+This is a good example of how decarbonization and digitalization are closely linked
+with one another.
+Networks, data centers, servers and the IT infrastructure form the backbone of digi-
+talization. Another crucial element of the loT is wireless connectivity between end
+devices. In October 2023, we acquired the company 3db Access, a move designed to
+enhance our skills in this area as well. The startup based in Zurich (Switzerland) is
+a pioneer in energy-efficient ultra-wideband (UWB) technology. UWB technology can
+be used to precisely determine positions and distances while being robustly protected
+against signal interference. This makes it extremely attractive for many loT applications.
+These include secure access to vehicles and buildings, indoor navigation and pres-
+ence detection of people in rooms. UWB complements our connectivity technologies
+(Wi-Fi, Bluetooth®/ Bluetooth® Low Energy and NFC) and offers Infineon additional
+opportunities in an interesting growth market.
+Besides the targeted enhancement of our technological skills through acquisitions,
+we are rapidly advancing with the company's research and development activities.
+The focus here is the benefit provided to customers. Our aim is to roll out differentiat-
+ing solutions at an even faster rate. It is therefore crucial that we recognize product
+and customer requirements at an early stage and that we understand our customers'
+systems. Our “from product thinking to system understanding” approach, which
+we have applied for many years, has proved its worth. Given the growing number of
+applications served by Infineon, this approach is now more important than ever.
+Particularly in application areas that are new to Infineon, we work closely together
+with key customers on development. Our teams develop new solutions in tandem
+with customers in an iterative process. By exchanging ideas directly, they learn to
+understand customer and market requirements even better and more quickly and
+can therefore offer tailor-made system solutions within a short period of time.
+We are making Infineon CO2-neutral by 2030
+Further information
+2.38
+Basic earnings per share in €
+14
+As of 30 Sep-
+tember 2022
+tember 2023
+As of 30 Sep-
+30
+2,310
+2,994
+5
+1,664
+1,754
+Change
+in %
+10.0%
+(30)
+1,648
+1,158
+30
+(1,869)
+(1,301)
+7
+(2,441)
+(2,264)
+1,638
+3,590
+3,717
+(3)
+14,944
+17,044
+Total equity
+30
+23.8
+3,378
+27.0
+4,399
+Segment Result Margin
+6
+26,912
+28,439
+Total assets
+Selected financial condition key data
+Segment Result/
+2,179
+3,137
+Profit (loss) for the period
+41
+(1,945)
+(1,143)
+This investment will bring the first FinFET fab to Europe. FinFET is a transistor techno-
+logy used in state-of-the-art digital chips. Even more transistors can be housed on
+the smallest three-dimensional structures. As a result, the semiconductors are even
+more powerful and energy-efficient. FinFET technology is becoming increasingly
+important for our high-performance microcontrollers. With this fab, we are ensuring
+Infineon will have direct access to this technology in Europe, and we are strengthen-
+ing the European semiconductor ecosystem in the long term.
+The planned fab is an ideal complement to our own manufacturing landscape. Whereas
+the projects in Dresden and Kulim mentioned above are designed to expand capacity
+for
+power semiconductors and analog mixed-signal technologies, our participation
+in ESMC secures us access to capacity for our automotive microcontrollers and IoT
+semiconductors, further improving our ability to meet growing demand.
+So that we are equipped to handle the expected increase in demand for semiconductors
+from our customers and are able to deliver in the long term, we are not only boosting
+our in-house manufacturing but also increasing the supply of semiconductors we
+purchase from contract manufacturers. Especially against the backdrop of geopoliti-
+cal uncertainty, we want to make our supply chain even more resilient in the future.
+Together with Taiwan Semiconductor Manufacturing Company (TSMC), the world's
+largest silicon contract manufacturer based in Taiwan, and the companies Bosch and
+NXP Semiconductors, we want to invest in a joint company. As we and our partners
+announced in August, the European Semiconductor Manufacturing Company (ESMC)
+in Dresden is to build an ultra-modern fab for semiconductors with small feature
+sizes of 12 to 28 nanometers. TSMC is to operate the fab for the entity. The project is
+planned under the framework of the European Chips Act.
+Further information
+9
+1 Percentage changes of more than +/-99.5% are shown as "+++" or "---" in the tables in the Annual Report.
+Infineon | Annual Report 2023
+2 See the chapter "Review of results of operations" for definition. p. 52
+3 A dividend per share of €0.35 for the 2023 fiscal year will be proposed to the Annual General Meeting on 23 February 2024.
+4 See the chapter "Internal management system" for definition p. 37 ff.
+5 See the chapter "Review of liquidity" for definition. p. 55 f.
+6 Equity ratio = Total equity/Total assets.
+7 The calculation is based on unrounded figures. Own shares were not taken into consideration for the calculation of market capitalization.
+0.32
+Management Board and Supervisory Board
+Consolidated Financial Statements
+Further information
+5 α = < 3 →
+Infineon at
+a glance
+Infineon Technologies AG is a world
+leader in semiconductor solutions
+that make life easier, safer and greener.
+Microelectronics from Infineon is
+the key to a better future. In the 2023
+fiscal year (ending 30 September),
+the Company reported revenue of
+approximately €16.3 billion with
+some 58,600 employees worldwide.
+Infineon is listed on the Frankfurt
+Stock Exchange (ticker symbol: IFX)
+and in the USA on the over-the-counter
+market OTCQX International Premier
+(ticker symbol: IFNNY).
+Revenue
+€16.309 bn
++15%
+Infineon
+Dividend of
+Combined Management Report
+0.35
+Dividend per share in €³
+4
+440 bp
+Diluted earnings per share in €
+2.38
+1.65
+44
+Return on Capital Employed (ROCE)4
+16.6%
+12.6%
+400 bp
+Adjusted earnings per share
+Market capitalization?
+40,879
+29,574
+38
+in € - diluted²
+2.65
+1.97
+35
+Infineon employees (in total figures)
+58,590
+56,194
+35 cents
+(1)
+per share planned
+€4.399 bn
+±27.0%
+We are driving decarbonization and digitalization with our partners
+Efforts to tackle the climate crisis are being intensified worldwide. At the same time,
+we are seeing rapid development in the area of digitalization. Semiconductors are
+essential in order to overcome the energy challenges of our time and help shape the
+digital transformation. They are the building blocks of technological progress and
+the engine of sustainable global development. At Infineon, we are actively doing
+everything possible to drive forward decarbonization and digitalization. We are a
+global leader in power systems and IoT. Together with our partners, we enable game-
+changing solutions in three growth areas: green and efficient energy, clean and safe
+mobility, and a smart and secure IoT.
+Five core applications are particularly strong drivers for our business: electromobility,
+renewable energy, automated driving, data centers - propelled by the ever-increasing
+use of artificial intelligence - and IoT. These applications will account for around
+60 percent of our expected revenue growth over the coming years. So that Infineon
+can make the most of these major growth opportunities, we are setting the course
+and laying the groundwork early on.
+Investments in manufacturing capacities and security of supply
+will set Infineon up for long-term growth
+Our manufacturing strategy is based on clear principles. We focus on expanding our
+in-house manufacturing in those areas in which added value for our customers
+and differentiation for Infineon is created. This is the case, for example, for power
+semiconductors and sensors. However, in the case of highly integrated digital
+products such as microcontrollers and connectivity and security components, we
+prefer to work together with contract manufacturers, as the design and software
+are the main sources of differentiation in those areas. We also pursue this strategy
+when making our investment decisions.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Letter to shareholders
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Digitalization is a crucial lever for our company. I am very much looking forward to
+working together with Elke Reichart. She will bring new perspectives and impetus to
+the Management Board team and use her extensive experience to help lead Infineon
+into an even more successful future.
+5 Q = 4 6
+The great importance of the project for Infineon, the region, Germany and Europe has
+become clear, not least due to visits to the Dresden site by high-ranking politicians
+- especially the President of the European Commission and the German Federal
+Chancellor - and the resulting high level of media interest. Support provided by the
+German Federal Government as funding body and the European Chips Act is giving
+our project a tailwind. The additional capacity provided by the fab will enable us to
+meet increasing demand from our customers in the second half of the decade and
+will reinforce our position as a world-leading supplier of power systems.
+Silicon chips of the type we make in Dresden will be the technically appropriate and
+economically viable solution in many applications in the long term. Compound
+semiconductors based on silicon carbide (SiC) and gallium nitride (GaN) expand the
+options presented by silicon-based solutions. They enable particularly efficient,
+fast-switching and compact system solutions that consume less power. We see rising
+demand for these, especially for use in electric cars, charging stations and solar systems.
+We want to lead the way across the whole range of power semiconductors - for silicon
+chips as well as for technologies based on SiC and GaN. We are therefore constantly
+expanding our portfolio for different application areas. We are also increasing our
+manufacturing capacity for both types of technology, while adopting an entrepreneur-
+ial and long-term approach.
+In August 2023, we therefore announced that we would be significantly increasing
+the
+scope of the ongoing expansion of our manufacturing facilities on our Kulim site
+(Malaysia). In a second expansion phase, we want to build the world's largest and
+most competitive SiC power semiconductor factory based on 200-millimeter manufac-
+turing technology there. Together with the planned conversion to 200-millimeter
+production of our existing SiC manufacturing lines at the sites in Villach (Austria) and
+Kulim, this investment offers Infineon annual revenue potential of around €7 billion
+by the end of the decade.
+Our investment decision is backed by numerous long-term agreements with high-
+profile customers in the automotive sector and in the field of renewable energy.
+Additional design wins worth €5 billion and associated advance payments of around
+€1 billion are evidence of the great confidence our customers place in Infineon as
+a reliable partner and driver of innovation.
+In the global competition for the leading position in SiC technologies, certain strengths
+differentiate Infineon from its competitors. First of all, the trench architecture we use
+in chip manufacture has advantages in terms of performance and productivity. Second,
+we offer all markets the most comprehensive product and packaging portfolio. Third,
+we score with our excellent systems understanding and first-class access to customers.
+However, we see few opportunities for differentiation in manufacturing the SiC base
+material used in chip production, so this we buy in. We ensure access to this material
+through a broad and regionally diversified supplier network. Infineon's own laser-
+based cold split technology enables particularly efficient use of the base material.
+Your company has all the key factors at its disposal for sustainable success with SiC
+solutions. We are therefore very well placed to benefit from similar economies of
+scale with SiC as has previously been the case with silicon – both in manufacturing
+and in research and development. We are very confident that we will be able to
+achieve a market share in SiC of 30 percent by the end of the decade.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Letter to shareholders
+Combined Management Report
+Consolidated Financial Statements
+The groundbreaking ceremony for our "Smart Power Fab” at the Dresden site took
+place at the beginning of May 2023. This factory will link our two major growth areas,
+decarbonization and digitalization. We are strengthening our manufacturing base
+for both analog mixed-signal technologies and power semiconductors. Analog mixed-
+signal components are used in power supply systems (such as those in energy-efficient
+chargers), in small motor control units for cars, in data centers and in IoT applications.
+The interaction between power semiconductors and analog mixed-signal compo-
+nents makes particularly energy-efficient and intelligent system solutions possible.
+We therefore want to use our in-house manufacturing to create some of these prod-
+ucts in the future, from both a differentiation and a resilience perspective.
+Having successfully established the Management Board position for Digital Trans-
+formation, our colleague Constanze Hufenbecher decided not to renew her expiring
+contract and has handed over the baton to Elke Reichart on 1 November 2023.
+Constanze Hufenbecher contributed significantly to the good progress made by
+Infineon in the areas of digitalization and sustainability. She has laid important
+foundations with the Digital Agenda and the Sustainability Strategy. Moreover, she
+established a culture of cross-departmental collaboration at Infineon. I would like
+to express my sincere personal gratitude for her achievements.
+Following the last Annual General Meeting, the Supervisory Board elected a new
+Chairman. On behalf of the Management Board, I would like to express my sincere
+thanks to the long-standing Chairman, Dr. Wolfgang Eder, for the good working rela-
+tion we have enjoyed over the past few years. Particular highlights include reorga-
+nizing the Management Board team, setting higher financial targets and preparing
+for the expansion of our manufacturing facilities on our site in Dresden (Germany).
+Dr. Wolfgang Eder was always a trusted guide and support to the Management Board.
+With Dr. Herbert Diess, his successor as Chairman of the Supervisory Board, Infineon
+has gained a proven expert in the major topics affecting the future of our business.
+Our working relation with Dr. Herbert Diess is also respectful, constructive and built
+on trust, which is very important to Infineon maintaining its successful course.
+5 Q = 4 5 →
+Infineon ❘ Annual Report 2023
+58,590
+employees
+Management Board and Supervisory Board
+Letter to shareholders
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = < 4 →
+Letter to shareholders
+Jochen Hanebeck
+Chief Executive Officer
+Neubiberg, November 2023
+Dear readers,
+Infineon can look back on a remarkable 2023 fiscal year. On the one hand, electromo-
+bility and renewable energy and the applications associated with them have ensured
+a continuing high level of demand. On the other hand, demand for consumer applica-
+tions, such as PCs and smartphones, has fallen in the wake of the Covid pandemic.
+In this challenging market environment, your company has set new records for both
+revenue and profitability. Our revenue rose to €16.3 billion, and we achieved a Segment
+Result Margin of 27.0 percent.
+Both figures exceeded our original annual forecast and are an initial confirmation
+on the more ambitious course we have adopted as a company. A year ago, we raised
+our long-term financial targets through the semiconductor cycle. Now we have proven
+that we are also delivering at this higher level of expectation.
+In our target markets, we are expecting strong growth drivers to continue and we
+are anticipating big opportunities for Infineon. We want to grow and be sustainably
+profitable, advance at a rapid rate, and make full use of strategic investments to lay
+the important groundwork for Infineon's future.
+I would like to express my gratitude to all the 58,600 people working for Infineon for
+their exceptional commitment in the past fiscal year. I would also like to thank you,
+our shareholders, for your continuing confidence in our company. At our forthcoming
+Annual General Meeting, we will propose an increase in the dividend payment to
+€0.35 per share. Thus, we would like to ensure that you participate appropriately in
+Infineon's success while at the same time retaining the financial headroom we need
+for the future development of your company.
+Management Board and Supervisory Board
+Letter to shareholders
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Segment Result
+and Margin
+3,986
+44
+Net cash position
+(List of references on p. 87)
+Reference
+(Chart overview on p. 184)
+Chart reference
+Page reference
+3,962
+186 Imprint
+List of abbreviations
+Financial calendar 2024
+185
+Reference to external documents
+184
+172 Responsibility Statement by
+the Management Board
+173 Independent Auditor's Report
+180 Applications and product range
+Further information
+82 Corporate Governance
+87 List of references
+79 Infineon Technologies AG
+Infineon | Annual Report 2023
+172
+Financial Statements
+62 Report on outlook, risk and
+opportunity
+Notes to the Consolidated
+184 Chart overview
+This interactive pdf is optimized for use
+with Adobe Acrobat.
+Contents
+Management Board and Supervisory Board
+€ in
+millions
+millions
+€ in
+2022
+2023
+Change in
+%
+revenue
+in % of
+€ in
+millions
+revenue
+in % of
+€ in
+millions
+Fiscal year from 1 October to
+30 September
+2023
+2022
+30 September
+Fiscal year from 1 October to
+Infineon key data¹
+Further information
+Consolidated Financial Statements
+Combined Management Report
+95
+Change in
+%
+Changes in Equity
+93
+4 Management Board and
+Consolidated Statement of
+Profit or Loss
+Group strategy
+27
+3 Infineon at a glance
+89
+20 Business model
+88 Consolidated Financial Statements
+19 Combined Management Report
+34
+2 Infineon key data
+Main table of contents
+Last page viewed
+Navigation in the report per mouse click
+← 1 →
+III
+Ó
+www.infineon.com
+Infineon
+Infineon Technologies AG
+Next page
+Research and development
+Supervisory Board
+37
+58 Infineon on the capital market
+61 Overall statement on Infineon's
+financial condition
+Consolidated Statement of Cash Flows
+92
+2023 fiscal year
+42
+12 Report of the Supervisory Board
+to the Annual General Meeting
+→
+Financial Position
+industry
+The Management Board
+10
+Previous page
+←
+91 Consolidated Statement of
+40 Review of the semiconductor
+4 Letter to shareholders
+=
+Search
+Q.
+90 Consolidated Statement of
+Comprehensive Income
+Internal management system
+Consolidated Statement of
+Revenue by segment
+Further information
+14,218
+45.5
+7,413
+Gross profit/Gross margin
+Depreciation and amortization
+Adjusted Free Cash Flow as percentage of revenue
+Adjusted Free Cash Flow5
+operations key data
+Selected results of
+Corporate and Eliminations
+6,131
+(10)
+20
+0
+18
+Other Operating Segments
+Free Cash Flow4
+12
+13
+1,822
+13
+0
+2,046
+43.1
+Investments4
+39
+2,845
+3,948
+Operating profit
+Gross cash position4
+(2)
+11.0
+(1,565)
+9.8
+21
+(1,599)
+Selling, general and
+€ in millions (unless otherwise stated)
+(10)
+16,309
+(1,798)
+12.2
+(1,985)
+development expenses
+Research and
+administrative expenses
+Connected Secure Systems
+12.6
+Cash flows from investing activities
+23
+1,790
+13
+2,205
+Green Industrial Power
+Cash flows from operating activities
+26
+45
+6,516
+51
+8,242
+Automotive
+Selected liquidity key data
+15
+Cash flows from financing activities
+from continuing operations
+Power & Sensor Systems
+13
+3,798
+4,070
+29
+(7)
+23
+5 Q = < 91 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+(37)
+30 Sep-
+2,441
+Shareholders and hybrid capital investors of Infineon Technologies AG
+(37)
+(1,421)
+3,862
+2,441
+Total comprehensive income (loss), net of tax
+Attributable to:
+(2,379)
+3,862
+(1,421)
+27
+382
+€ in millions
+in %
+Change
+absolute
+30 Sep-
+tember
+2022
+2023
+Notes
+30 Sep-
+tember
+€ in millions
+tember
+2023
+Consolidated Statement of Financial Position
+30 Sep-
+tember
+2022
+Change
+1,683
+absolute
+in %
+ASSETS
+LIABILITIES AND EQUITY
+Cash and cash equivalents
+1,820
+1,438
+Notes
+(696)
+(718)
+1,373
+Change
+€ in millions
+Notes
+2023
+2022
+absolute
+in %
+20
+Short-term financial debt and current portion
+Profit (loss) for the period
+Actuarial gains (losses) on pensions and similar commitments
+Total items that will not be reclassified subsequently to profit or loss
+Currency effects
+Gains (losses) resulting from hedge accounting
+Cost of hedging
+Total items that may be reclassified subsequently to profit or loss
+Other comprehensive income (loss), net of tax
+3,137
+2,179
+958
+Consolidated Statement of Comprehensive Income
+(2,086)
+Further information
+Combined Management Report
+(713)
+(4)
+(4)
++++
+5
+4
+9
+(2,087)
+1,369
+(95)
+(293)
+310
+17
+(95)
+(293)
+310
+17
+44
+Management Board and Supervisory Board
+Consolidated Financial Statements
+Financial investments
+Pensions and similar commitments
+1,770
+2,612
+6,579
+3,506
+1,060
+7
+Cost of
+hedging
+Own shares
+Equity
+attributable to
+shareholders
+of Infineon
+Technologies
+Equity
+Total equity
+attributable to
+hybrid capital
+investors
+Hedges
+AG
+13,741
+1,203
+14,944
+3,098
+3,098
+39
+3,137
+17
+(718)
+9
+(4)
+(696)
+(23)
+Currency
+effects
+Other reserves
+Retained
+earnings
+27
+Cash flows from operating activities
+from discontinued operations
+(2)
+(6)
+4
+67
+Cash flows from operating activities
+3,960
+3,980
+(20)
+(1)
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Consolidated Statement of Changes in Equity
+for the fiscal year ended 30 September 2023
+€ in millions
+Balance as of 1 October 2022
+Total comprehensive income (loss), net of tax
+Profit (loss) for the period
+Other comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Notes
+Share capital
+Capital
+reserves
+(696)
+3,115
+(718)
+9
+82
+82
+10
+10
+10
+23
+23
+10
+(302)
+(302)
+10
+(302)
+(302)
+(39)
+(39)
+(39)
+(39)
+2,612
+6,684
+6,204
+342
+16
+(4)
+(13)
+15,841
+1,203
+17,044
+(417)
+382
+(417)
+Balance as of 30 September 2023
+(4)
+2,402
+39
+2,441
+Transactions with owners
+Contributions by and distributions to owners
+Dividends
+Share-based payment
+20
+(417)
+20,22
+82
+Disposal (purchase) of own shares
+20
+Other contributions and distributions
+20
+23
+Total contributions by and distributions to owners
+105
+(417)
+Total transactions with owners
+105
+(417)
+Transactions with hybrid capital investors
+Compensations to hybrid capital investors
+20
+Total transactions with hybrid capital investors
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+1,438
+Cash and cash equivalents at end of period
+(185)
+(307)
+122
+40
+Payments for lease liabilities
+15
+(86)
+(84)
+(2)
+(2)
+Change in inventories
+11
+10
+(1,014)
+(248)
+(32)
+Change in cash deposited as collateral
+(2)
+2
++++
+Change in trade payables
+547
+640
+(93)
+(15)
+Payments for other financial liabilities
+(766)
+Change in trade receivables
+60
+1,140
+receivables and payables
+25
+19
+19
++++
+(30)
+(30)
+Proceeds from issuance of
+Share-based payment
+22
+92
+62
+30
+48
+long-term financial debt
+16
+500
+(500)
+Other non-cash result
+(46)
+(45)
+(1)
+(2)
+Repayments of long-term financial debt
+16
+(753)
+(1,893)
+(25)
+(25)
+Change in provisions
+17
+(149)
+21
+14
+Income taxes paid
+6
+(533)
+(350)
+(183)
+(52)
+Net change in cash and cash equivalents
+Currency effects on cash and cash equivalents
+Cash and cash equivalents at beginning of period
+395
+(330)
+725
++++
+(13)
+19
+(32)
+1,438
+1,749
+(311)
+(18)
+Cash flows from operating activities
+from continuing operations
+3,962
+3,986
+(24)
+(1)
+(128)
+1,820
+4
++++
+(138)
+89
+(227)
+Dividend payments
+20
+Change in other assets and other liabilities
+(359)
+266
+(625)
+Cash outflow to hybrid capital investors
+Cash flows from financing activities
+20
+22
+(417)
+(351)
+(66)
+(19)
+(39)
+(39)
+(1,301)
+(1,869)
+568
+30
+Interests received
+4
+57
+10
+47
+Interests paid
+Losses (gains) from sales of businesses,
+interests in subsidiaries and investments
+Combined Management Report
+Further information
+none
+IFRS 7
+IAS 8
+IAS 12
+Definition of accounting estimates (amendments to IAS 8)
+Deferred tax relating to assets and liabilities arising from
+1 January 2023
+none
+1 January 2023
+none
+a single transaction (amendments to IAS 12)
+IAS 12
+International tax reform - pillar two model rules
+(amendments to IAS 12)
+1 January 2024
+1 January 2023
+IFRS 16
+IFRS 17
+Lease liability in a sale and leaseback (amendments to IFRS 16)
+Insurance contracts including amendments to IFRS 17
+1 January 2024
+none
+1 January 2023
+none
+IAS 21
+Lack of exchangeability (amendments to IAS 21)
+1 January 2025
+none
+Individual provisions of the amendments to IAS 12 (International tax reform - pillar
+two model rules) published on 23 May 2023 are in principle applicable retrospectively
+for the prior fiscal year as a result of the adoption by the EU on 8 November 2023.
+No deferred taxes in connection with pillar two income taxes were recorded.
+immaterial
+(amendments to IAS 1 and IFRS Practice Statement 2)
+1 January 2023
+Disclosure of accounting policies
+(amendments to IAS 37)
+IFRS 3
+References to the conceptual framework
+(amendments to IFRS 3)
+1 January 2022
+Annual IFRS improvement cycle 2018-2020
+1 January 2022
+none
+immaterial
+none
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Financial reporting rules issued not yet applied
+The following new or amended Standards have been issued by the IASB and will
+be relevant to Infineon from today's perspective. They have not been applied in the
+Consolidated Financial Statements as of 30 September 2023 since they are not yet
+mandatory or, alternatively, have not yet been endorsed by the EU. The new or
+amended Standards are applicable for fiscal years beginning on or after their respec-
+tive effective date. As a general rule, they are not applied before their effective date,
+even if this is permitted for certain Standards.
+Standard/amendment/interpretation
+IAS 1
+Classification of liabilities as current or non-current
+(amendments to IAS 1)
+IAS 7 and Supplier finance arrangements
+(amendments to IAS 7 and IFRS 7)
+Effective date
+Impact on
+Infineon
+none
+immaterial
+1 January 2024
+IAS 1
+2 Summary of significant accounting policies
+Basis of consolidation
+The Consolidated Financial Statements presented here include the individual financial
+statements of Infineon Technologies AG and its direct and indirect subsidiaries on
+a consolidated basis. A subsidiary is defined as an entity, that is directly or indirectly,
+controlled by Infineon Technologies AG.
+Control exists when Infineon is subjected to variable returns arising from its engage-
+ment with the subsidiary or has a right to such and has the ability to influence these
+returns as a result of its power over the subsidiary. Power means that Infineon has
+existing rights that give Infineon the ability to direct the relevant activities of the
+subsidiary, that is the activities that significantly affect the aforementioned returns.
+Infineon's business model for managing financial asset portfolios reflects how the
+company controls its financial assets in order to generate cash flows. Depending
+on the business model, cash flows arise from the receipt of contractual cash flows,
+the sale of financial assets or both.
+In order for a financial asset in the form of a debt instrument to be classified and
+measured at amortized cost or at fair value through other comprehensive income,
+cash flows may only arise from the repayment of principal and interest payments on
+the outstanding principal amount. This assessment is referred to as a cash flow or
+SPPI test ("solely payments of principal and interest") and is carried out at the level
+of the individual financial instrument.
+On this basis, Infineon's financial asset measurement categories are as follows:
+Financial assets measured at amortized cost include all assets whose contractual
+provisions result in cash flows at fixed times that represent only interest and repay-
+ments of the outstanding principal amount, provided that those assets are held with
+the intention of collecting the contractual cash flows expected over their respective
+duration. In subsequent periods, financial assets measured at amortized cost are
+measured using the effective interest method. Interest income, currency gains and
+losses, impairments, and gains or losses from the derecognition of such financial
+assets are recognized through profit or loss.
+As of the reporting date, Infineon did not hold any financial assets with the intention
+to collect contractual cash flows and sell them. Therefore, there was no allocation
+of financial assets in the form of debt instruments to the category "fair value through
+other comprehensive income".
+Financial assets in the form of debt instruments that are measured at fair value
+through profit or loss include all financial assets of Infineon whose cash flows are not
+solely payments of principal and interest.
+At Infineon, financial assets in the form of equity instruments are consistently
+measured at fair value through profit or loss.
+Net gains and losses, including interest and dividend income, from financial assets
+that are measured at fair value through profit or loss (debt and equity instruments)
+are recognized in the Consolidated Statement of Profit or Loss.
+"Designated hedging instruments (cash flow hedges)" also belong to financial assets.
+> Impairment of financial assets
+Infineon determines an allowance for expected credit losses for financial assets in
+the form of debt instruments that are measured at amortized cost or at fair value
+through other comprehensive income. The calculation of the expected future credit
+losses is generally determined by multiplying the probability of default by the carry-
+ing amount of the financial asset (exposure at default) and the expected loss ratio
+(loss given default).
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Infineon determines allowances for expected credit losses primarily for cash and
+cash equivalents, financial investments, trade receivables, and contract assets. The
+expected credit losses are adjusted at each reporting date to reflect changes in credit
+risk since the instrument was first recognized.
+For cash and cash equivalents and financial investments measured at amortized cost,
+Infineon determines credit losses expected in the next twelve months (twelve-month
+expected credit loss) in accordance with the general approach. Due to their short-term
+maturity, this corresponds to the lifetime expected credit losses. Infineon rates the
+credit risk for cash and cash equivalents and financial investments as low. Infineon
+assumes that a financial asset has a low credit risk if it has an investment grade rating
+or a corresponding internal investment grade rating. In order to assess whether
+there has been a significant increase in credit risk since initial recognition, Infineon
+considers appropriate and robust information that is relevant and available without
+disproportionately high levels of effort. This includes both quantitative and qualitative
+information and analyses, which are based on the company's historical experience
+and a sound credit assessment as well as forward-looking information. Macroeconomic
+information is taken into account in the internal rating model (information on Infineon's
+financial risk management is included in note 28, p. 150 ff.). Irrespective of the
+above analysis, a significant increase in credit risk is assumed if a debtor is more
+than 30 days overdue with the settlement of a contractual payment.
+For trade receivables and contract assets, Infineon recognizes lifetime expected
+credit losses using a simplified approach. The estimate of expected credit losses on
+trade receivables and contract assets is based primarily on the analysis of customer
+financial data, ratings, credit default spreads, past payment behavior of customers
+and forward-looking information.
+In the case of objective indications that expected future cash flows are affected, a
+financial asset is classified as credit-impaired and adjusted to its individual value. As
+a rule, this is the case for financial assets (unless it is a trade receivable) no later than
+90 days after the due date. Trade receivables are not automatically determined as
+credit-impaired in the event of a payment overdue by more than 90 days but always
+on the basis of the individual assessment of credit management.
+A default event occurs when Infineon concludes that the other party would most
+likely not be able to meet the payment obligations, or not in full.
+Financial assets are partly or completely written off, together with previously
+recognized impairments, if there is no reasonable expectation of repayment. This is
+generally the case when Infineon finds that the debtor does not have assets or revenue
+sources that could generate sufficient cash flows to repay the amounts subject to
+derecognition. Even when financial assets are written off, Infineon continues to con-
+duct enforcement measures to recover them. Amounts recovered are recognized in
+profit or loss.
+Financial liabilities
+Infineon classifies financial liabilities into the following categories: “Financial liabili-
+ties measured at fair value through profit and loss” and “Other financial liabilities”.
+Furthermore, "Designated hedging instruments (cash flow hedges)" belong to financial
+liabilities.
+Liabilities measured at fair value through profit or loss by Infineon include derivatives
+to hedge currency risks for which hedge accounting is not applied.
+Infineon | Annual Report 2023
+Upon initial recognition, financial assets are classified for subsequent measurement
+either as at amortized cost, fair value through other comprehensive income or fair
+value through profit or loss. This classification depends on the characteristics of
+the contractual cash flows of the financial assets and Infineon's business model for
+managing its financial assets.
+1 January 2022
+› Classification and measurement of financial assets
+Further information
+An entity is included in the Consolidated Financial Statements from the date on
+which Infineon acquires control. Upon first-time consolidation of an entity, the
+acquired assets and assumed liabilities are basically measured on the basis of their
+fair value at the acquisition date. Any excess of consideration paid (purchase price)
+over the share of the fair value of acquired assets, liabilities and contingent liabilities
+is recognized as goodwill. Any excess of Infineon's share of the fair value of items
+acquired over consideration paid is, after re-examination, recognized as a gain.
+The financial statements of entities included in the Consolidated Financial Statements
+are prepared using uniform valuation and accounting policies.
+The balance sheet effects of intragroup transactions as well as gains and losses
+arising from intragroup business relationships are eliminated on consolidation.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+5 Q = < 97 →
+A list of subsidiaries of Infineon Technologies AG is provided in note 30. □ p. 165 ff.
+In the absence of control over an entity, but where the entity is a joint venture or an
+associated company, this is included in the Consolidated Financial Statements using
+the equity method (see note 5, ☐ p. 110 f.). Where objective indications of impairment
+in the carrying amount of an equity-based investment are present, an impairment test
+is carried out. If the carrying amount exceeds the recoverable amount, an impairment
+loss is recognized in financial expenses.
+Functional currency and foreign currency translation
+The functional and reporting currency of Infineon Technologies AG is the euro.
+Foreign currency transactions of subsidiaries are translated into the functional
+currency of the relevant entity using the spot rate prevailing at the transaction date.
+Monetary foreign currency assets and liabilities are translated at the spot rate
+prevailing at the reporting date. Exchange rate gains and losses from the translation
+of foreign currency transactions are recognized in the Consolidated Statement of
+Profit or Loss.
+The assets and liabilities of subsidiaries with functional currencies other than the
+euro are translated into euros for consolidation purposes using the spot rate at the
+end of the reporting period. Income and expenses of these entities are translated
+using the average spot rate of the reporting period. All currency translation differences
+are recognized directly in equity and presented as "Other reserves".
+Recognition and measurement principles
+Cash and cash equivalents
+Cash and cash equivalents represent cash and all financial resources with a maturity
+at acquisition date of three months or less. Cash equivalents partly include invest-
+ments in money market funds. The valuation is recorded at amortized acquisition cost
+or at fair value through profit or loss.
+Financial instruments
+Financial instruments are initially recognized at their fair value. Transaction costs
+directly attributable to the acquisition or issuance of financial instruments are only
+included in the carrying amount if the financial instruments are not measured at fair
+value through profit or loss.
+Trade receivables are recognized based on the amount to which Infineon has an
+unconditional right to receive. With the exception of matters that result in a partial
+refund of the purchase price to the customer, this corresponds to the transaction
+price determined in accordance with IFRS 15. The subsequent measurement of trade
+receivables is carried out at amortized cost.
+Purchases and sales of financial assets are recognized on the settlement date.
+Financial assets are derecognized when the rights to receive payments from the
+investments have expired or have been transferred and Infineon has transferred all
+risks and rewards associated with ownership. Financial liabilities are derecognized
+when they are extinguished, that is, when the contractual obligation is discharged,
+canceled, or expired.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Financial assets
+Consolidated Financial Statements
+Onerous contracts - costs of fulfilling a contract
+none
+(351)
+Share-based payment
+20,22
+57
+Disposal (purchase) of own shares
+20
+Other contributions and distributions
+20
+9
+Total contributions by and distributions to owners
+66
+(351)
+20
+Total transactions with owners
+(351)
+Transactions with hybrid capital investors
+Compensations to hybrid capital investors
+20
+Total transactions with hybrid capital investors
+Balance as of 30 September 2022
+Infineon | Annual Report 2023
+Cost of
+hedging
+Own shares
+Equity
+attributable to
+shareholders
+of Infineon
+Technologies
+Equity
+attributable to
+Total equity
+66
+Dividends
+Contributions by and distributions to owners
+4
+5 Q = < 94 →
+Consolidated Statement of Changes in Equity
+for the fiscal year ended 30 September 2022
+€ in millions
+Balance as of 1 October 2021
+Total comprehensive income (loss), net of tax
+Profit (loss) for the period
+Other comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+Transactions with owners
+Notes
+Share capital
+Capital
+reserves
+Retained
+earnings
+Other reserves
+Currency
+effects
+Hedges
+2,612
+6,513
+1,407
+(309)
+3
+2,140
+310
+1,369
+4
+2,450
+1,369
+hybrid capital
+investors
+AG
+(28)
+10,198
+1,060
+7
+(23)
+13,741
+1,203
+14,944
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Notes to the Consolidated Financial Statements
+The Infineon Group ("Infineon”), comprising Infineon Technologies AG (hereafter
+also referred to as "the Company”) and its direct and indirect subsidiaries, develops,
+manufactures and markets a wide variety of semiconductors and semiconductor-
+based solutions. The focus is on the key markets: automotive as well as industrial and
+consumer-related segments. The product portfolio ranges from standard components,
+to special components for digital, analog and mixed-signal applications, as well as
+customer-specific solutions, together with the appropriate software. Research and
+development sites, manufacturing facilities, investments and customers are located
+mainly in Europe, Asia and North America.
+Infineon Technologies AG is a listed company under German law and the ultimate
+parent company of Infineon. The principal office of the Company is Am Campeon 1–15,
+85579 Neubiberg (Germany). The Company is registered in the Commercial Register
+of the local court of Munich (Germany) under the number HRB 126492.
+1 Basis of the Consolidated Financial Statements
+The Consolidated Financial Statements for the year ended 30 September 2023,
+prepared by Infineon Technologies AG as the ultimate parent company, have been
+prepared in accordance with International Financial Reporting Standards (“IFRS”)
+and related interpretations effective as of 30 September 2023 as issued by the Inter-
+national Accounting Standards Board ("IASB”) to the extent to which the IFRS and
+interpretations have been endorsed by the European Union (“EU”). The Consolidated
+Financial Statements also comply with the supplementary requirements set out in
+section 315e, paragraph 1 of the German Commercial Code ("Handelsgesetzbuch"
+or "HGB"). The aforementioned standards were complied with in full.
+The Consolidated Statement of Profit or Loss is presented using the cost of sales
+method.
+The fiscal year-end for both Infineon and the Company is 30 September of each year.
+The Group's reporting currency is the euro ("€").
+Deviations between amounts presented are possible due to rounding. Negative
+amounts are presented in parentheses.
+The Company's Management Board presented the Consolidated Financial Statements
+on 21 November 2023.
+The IASB has issued the following Standards or amendments to Standards, which are
+required to be applied in the Consolidated Financial Statements for the year ended
+30 September 2023:
+Standard/amendment/interpretation
+Effective date
+Impact on
+Infineon
+IAS 16
+Property, plant and equipment - income before intended use
+(amendments to IAS 16)
+1 January 2022
+3,506
+IAS 37
+6,579
+(39)
+1,203
+11,401
+2,140
+39
+2,179
+1,683
+1,683
+3,823
+39
+3,862
+(351)
+(351)
+57
+57
+5
+59
+5
+9
+5
+(280)
+(280)
+5
+(280)
+(280)
+(39)
+(39)
+(39)
+2,612
+9
+Net change in related party financial
+(6)
+Deferred tax assets
+6
+268
+527
+(259)
+(49)
+Total liabilities
+11,395
+11,968
+(573)
+(5)
+Other non-current assets
+27
+389
+314
+75
+24
+Equity:
+20
+Total non-current assets
+17,747
+17,459
+288
+2
+Ordinary share capital
+(10)
+2,612
+(654)
+5,726
+15
+405
+405
+Non-current lease liabilities
+15
+309
+310
+(1)
+Investments accounted for
+using the equity method
+5
+114
+100
+14
+14
+Other non-current liabilities
+27
+192
+203
+(11)
+(5)
+Non-current income tax receivables
+2
+2
+Total non-current liabilities
+6,380
+Right-of-use assets
+2,612
+6,684
+1,527
+6
+Total liabilities and equity
+28,439
+26,912
+1,527
+6
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = < 92 →
+Consolidated Statement of Cash Flows
+(25)
+Change
+€ in millions
+Notes
+2023
+2022
+absolute
+in %
+€ in millions
+Notes
+2023
+26,912
+Additional paid-in capital
+28,439
+14
+6,579
+105
+2
+Retained earnings
+6,204
+3,506
+2,698
+77
+Other reserves
+354
+1,067
+(713)
+(67)
+Own shares
+(13)
+(23)
+10
+43
+Hybrid capital
+1,203
+1,203
+Total equity
+17,044
+14,944
+2,100
+Total assets
+4
+11
+289
+983
+(184)
+(19)
+Current income tax receivables
+63
+58
+5
+9
+Current income tax payables
+418
+356
+62
+17
+Current lease liabilities
+Contract assets
+115
+85
+30
+35
+Other current liabilities
+18, 27
+བག
+72
+76
+(4)
+799
+(5)
+17
+29
+2,279
+(509)
+(22)
+of long-term financial debt
+16
+330
+752
+(422)
+(56)
+Trade receivables
+10
+1,991
+1,887
+104
+6
+Trade payables
+2,765
+2,260
+505
+22
+Inventories
+11
+3,974
+3,081
+893
+Current provisions
+1,285
+1,161
+124
+268
+297
+(29)
+(10)
+Goodwill
+14
+6,547
+7,083
+(536)
+(8)
+Deferred tax liabilities
+6
+254
+371
+(117)
+(32)
+Other intangible assets
+13
+2,977
+3,483
+(506)
+(15)
+Other non-current provisions
+17
+300
+19
+27
+1,500
+5,545
+11
+Other current assets
+12,27
+959
+625
+334
+53
+Total current liabilities
+5,669
+5,588
+81
+1
+2022
+Total current assets
+9,453
+1,239
+13
+Long-term financial debt
+16
+4,403
+4,910
+(507)
+(10)
+Property, plant and equipment
+13
+7,045
+10,692
+absolute
+Change
+26
+(33)
+131
+98
+4
+Interest result
+1
+2
+(257)
+(255)
+13
+Purchases of other intangible assets and
+other assets
+46
+245
+(25)
+537
+6
+Income tax
+5
+90
+1,664
+1,754
+13, 15
+Depreciation and amortization
+75
+6
+(8)
+(2)
++++
+782
+Purchases of property, plant and equipment
+13
+(2,739)
+24
+24
+18
+13, 14, 29
+Impairments (reversals of impairments)
+7
+177
+(2,441)
++++
+107
+16
+123
+(2,264)
+Cash flows from investing activities
+17
+1
+6
+7
+5
+Dividends received
+equipment and other assets
+(87)
+(12)
+(99)
+property, plant and equipment
+Proceeds from sales of property, plant and
+Gains on disposals of
+(33)
+(686)
+(2,053)
+91
+in %
+Financial reporting rules applied for the first time
+91
+Proceeds from sales of businesses and
+interests in subsidiaries, net of cash disbursed
+Investments in related companies
+Adjustments to reconcile profit (loss) for the
+period to cash flows from operating activities:
+(71)
+(5)
+7
+2
+39
+14
+(22)
+3
+Acquisitions of businesses, net of cash acquired
+Plus: profit (loss) from discontinued operations,
+net of income taxes
+4
+236
+(36)
+5,738
+5,502
+9
+(5,198)
+(5,605)
+407
+7
+Profit (loss) for the period
+Purchases of financial investments
+2,179
+958
+44
+Proceeds from sales of financial investments
+9
+3,137
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Infineon refrains from disclosing the remaining performance obligations arising
+from contracts with customers within the meaning of IFRS 15 with original expected
+durations of one year or less.
+The increase in expected revenue is mainly due to capacity reservation agreements.
+1 year
+and after
+488
+Less than
+1 year
+1,804
+4,111
+1,257
+Total
+As of 30 September 2023
+As of 30 September 2022
+2,307
+769
+← 109 →
+140
+Cost of materials and purchased services as well as
+personnel expenses
+Change
+2023
+2022
+absolute
+in %
+The Consolidated Statement of Profit or Loss includes the following expenses for
+materials, purchased services, and personnel:
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 108 →
+preparing the Consolidated Financial Statements, so the preliminary results are
+not yet available. The excess purchase price is expected to be primarily attributable
+to goodwill and, downstream, to technologies and customer relationships. Due to the
+proximity of the acquisition to the date of preparation of the Consolidated Financial
+Statements and the resulting insufficient information, other disclosures required by
+IFRS 3 cannot be made.
+Revenue expected in (€ in millions)
+Notes to the Consolidated Financial Statements
+The aggregate amount of the transaction prices of the unsatisfied and partially
+unsatisfied performance obligations, arising from contracts with customers within
+the meaning of IFRS 15 with original expected durations of more than one year, was
+as follows as of 30 September 2023 and 2022:
+The average number of employees by geographic region was as follows for the 2023
+and 2022 fiscal years:
+600
+130
+Research and development expenses
+23
+14
+61
+75
+Cost of goods sold
+of Profit or Loss in:
+Included in the Consolidated Statement
+in %
+absolute
+2022
+2023
+Change
+€ in millions
+Acquisition of Imagimob AB and 3db Access AG
+Infineon has received grants from various governmental institutions under government
+business development programs, including grants for the construction of manufac-
+turing facilities, research and development activities and employee development.
+Grants included directly in profit or loss in the Consolidated Financial Statements
+during the 2023 and 2022 fiscal years were as follows:
+4
+183
+4,170
+4,353
+Total
+(3)
+(2)
+71
+69
+8
+45
+555
+Social insurance levies and employee benefits
+Expenses for pensions
+4
+On 15 May 2023, Infineon acquired Imagimob AB in full. The startup, based in Stock-
+holm (Sweden), is a platform provider for Machine Learning solutions for edge devices.
+Infineon further advances its position as a provider of machine learning solutions
+with this acquisition and, once again, significantly supplements its artificial intelli-
+gence offering.
+The last two acquisitions mentioned have only minor or no financial impacts during
+the reporting period, therefore no further disclosures in accordance with IFRS 3
+are required.
+9
+316
+3,433
+3,749
+(4)
+(229)
+5,470
+5,241
+Americas
+therein: USA
+21
+2,788
+3,372
+3
+17
+653
+670
+Japan
+13
+298
+584
+2,313
+3,734
+(174)
+3,544
+3,684
+Wages and salaries
+in %
+absolute
+2022
+2023
+€ in millions
+Change
+3,908
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+3,376
+54,286
+57,662
+Total
+14
+900
+6,221
+7,121
+(4)
+6
+2,611
+therein: Mainland China, Hong Kong
+in %
+1,833
+21,703
+23,536
+Europe
+113
+17
+15
+Selling, general and administrative expenses
+3
+8
+2
+50
+Total
+208
+176
+32
+18
+Infineon | Annual Report 2023
+Of the grants included in profit or loss in the 2023 fiscal year, €3 million relate to
+expenses incurred in the prior year (prior year: €0 million).
+4 Notes to the Consolidated Statement
+of Profit or Loss
+1
+therein: Germany
+14,609
+13,687
+absolute
+2022
+2023
+Total
+Cost of purchased services
+and purchased goods
+Cost of raw materials, supplies
+€ in millions
+12
+326
+2,698
+3,024
+Greater China¹
+Change
+Grants
+1,429
+23,762
+25,191
+Asia-Pacific (excluding Japan, Greater China)
+7
+922
+On 4 October 2023, Infineon also acquired all shares in the startup 3db Access AG,
+based in Zurich (Switzerland). The startup is a pioneer in secured low power
+ultra-wideband technology. The acquisition strengthens Infineon's portfolio of
+secure and intelligent access control, precise localization and enhanced sensing.
+6
+Revenue
+Infineon | Annual Report 2023
+Invoices for sales of products are issued at the time of delivery or withdrawal by
+the customer from the consignment warehouse and have a short payment term.
+The amount of revenue corresponds to the expected transaction price to be settled
+by the customer.
+The transaction price can include variable components such as rebates or discounts.
+Infineon can reliably estimate these in accordance with the contractual agreements
+and historical experience. Variable consideration is only taken into account in so
+far as it is highly probable that there will be no significant reversal of the revenue.
+If Infineon expects that the consideration received from the customer is to be partially
+reimbursed due to subsequent discounts, a reimbursement obligation is recognized
+as a reduction to revenue, and is disclosed within other current liabilities.
+Infineon recognizes revenue for deliveries to distributors by using the "sell in" method,
+that is, when a product is delivered, to the extent that revenue has not already been
+recognized over time. The transaction price for sales to distributors, in particular,
+contains variable components. In accordance with established business practices in
+the semiconductor industry, distributors can request price adjustments under certain
+circumstances. This allows distributors to receive a credit (debit) note for unsold
+products held in inventory, where Infineon has reduced (increased) the standard list
+price of certain products. In addition, in certain cases and for certain products, dis-
+tributors may request what is referred to as a ship and debit credit note. As with all
+product sales, Infineon recognizes revenue based on the transaction price and records
+an obligation for the estimated consideration to be reimbursed to the customer during
+the period in which the relevant revenue is recognized. In the case of price adjustments
+and ship and debit, the determination of the transaction price, and thus also the
+refund obligation, is based on rolling historical price trends in the difference between
+contract prices and standard list prices to the distributors. The refund liability is
+disclosed as part of other current liabilities.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Infineon generates revenues mainly from the sale of semiconductor products, related
+system solutions and relevant software. Revenue is recognized when control over the
+products is transferred to the customers in accordance with IFRS 15 (power of disposal),
+and where the receipt of consideration from the customer is probable. Typically,
+Infineon's customer contracts only contain one performance obligation which is ful-
+filled either over a period of time or at a specific point in time, with fulfillment at a
+specific point in time being the far more common case. For sales of customer-specific
+products with no alternative use for Infineon, for which Infineon has a legal right to
+payment for services rendered prior to delivery, revenue is recognized over time. Per-
+formance progress is determined using an input-based method and is based on the
+ratio of costs already incurred to the estimated total cost. If product revenue is not
+recognized over time, then it is generally recognized upon delivery. The recognition
+of revenue for deliveries into consignment warehouses depends on the individual
+contractual arrangement. Revenue recognition at the point of delivery into the con-
+signment warehouse takes place in cases where the customers gain contractual
+power of control over the products at the point of delivery. Accordingly, in such cases,
+a contract asset is recorded. Otherwise, revenue is recognized when the products are
+withdrawn by the customer.
+Further information
+Distributors can, subject to certain conditions, return a limited amount of inventory
+(stock return) or request scrap allowances. The estimation of the transaction price is
+based on the expected stock returns in accordance with the contractual agreement,
+combined with historical experience. Distributor scrap allowances are taken into
+account based on the contractual agreement when determining the transaction price
+and, upon submission of a valid claim, are granted up to a certain maximum based
+on turnover in a given period. Infineon monitors such product returns on an ongoing
+basis and adjusts estimate assumptions accordingly. In the case of stock returns and
+scrap allowances, the consideration to be refunded to the customer is recognized as
+a reimbursement obligation within other current liabilities. Other returns are only
+permitted for quality defects within the ordinary warranty period. These obligations
+are taken into consideration through corresponding warranty provisions.
+The additional costs to obtain a contract are immediately recognized as an expense
+as soon as they arise, providing the otherwise resulting depreciation period would
+not exceed one year. Costs to fulfill a contract are capitalized at the earliest when an
+expected, specifically identifiable contract exists.
+Cost of goods sold
+Cost of goods sold includes the manufacturing costs of products sold during the
+reporting period. In addition, cost of goods sold contains idle costs, inventory risks,
+the cost of warranty cases, as well as the amortization of capitalized development
+costs. Recognized currency translation effects, as well as changes in the fair value of
+undesignated derivative financial instruments that are connected to the operating
+business, are recognized in cost of goods sold.
+Research and development expenses
+Costs of research activities are expensed as incurred. Costs for development activities
+are capitalized if the results lead to a plan or design for the production of new or sub-
+stantially improved products or for improved production processes. Capitalization
+requires that the development costs can be measured reliably, the product or process
+is technically and commercially feasible, and future economic benefits are probable.
+In addition, Infineon must intend, and have the ability, to complete development and
+use or sell the asset. The costs capitalized include the cost of materials, direct labor
+and directly attributable general overhead expenses that serve to prepare the asset
+for use. Such capitalized costs are presented as internally generated intangible assets
+within "Other intangible assets” (see note 13, ☐ p. 118 f.). Development costs, that
+do not fulfill the criteria for capitalization, are expensed as incurred. Capitalized
+development costs are stated at cost less accumulated amortization and impairment
+charges.
+← 105 →
+Revenue recognition
+Contingent liabilities are either possible obligations whose actual existence is depen-
+dent on the occurrence of one or more uncertain future events not wholly within
+Infineon's control, or they are present obligations that will probably not result in the
+outflow of resources or whose outflow of resources cannot be quantified reliably.
+Contingent liabilities are not recognized in the Statement of Financial Position, instead
+they are disclosed in the Notes to the Consolidated Financial Statements (see note 23,
+p. 135 f., and note 24, p. 136 ff.).
+Contingent liabilities
+Defined benefit pension plans
+The net pension obligation recognized with respect to defined benefit pension plans
+comprises the present value of the defined benefit obligation (DBO) at the end of the
+reporting period less the fair value of the plan assets. The present value of the DBO
+and the resulting pension expense are determined annually in accordance with IAS 19
+"Employee Benefits" for each separate plan by independent, qualified actuaries
+using the projected unit credit method. The calculation is subject to, among other
+things, assumptions on increases in salaries, future developments in pensions as well
+as the life expectancy of the beneficiaries. As of the balance sheet date, the obligations
+are discounted using discount rates determined primarily on the basis of market
+yields of high-grade, fixed-interest corporate bonds from issuers carrying a very high
+credit rating.
+All items of income and expense relating to defined benefit plans, with the exception
+of the net interest result, are recognized on a net basis in the functional costs within
+the operating result. The net interest result arising from the multiplication of the
+net pension obligation (pension obligation less plan assets) by the discount rate is
+presented as a financial expense. Actuarial gains and losses arising from changes to
+actuarial assumptions and estimates as well as the difference between the normal-
+ized and actual return on plan assets are recognized directly in equity and recorded
+in the Consolidated Statement of Comprehensive Income in the periods in which they
+arise. Past service costs are recognized immediately in profit or loss.
+Other provisions
+Other provisions are recognized for present legal and/or constructive obligations
+arising from past events that are likely to result in a future outflow of resources, the
+amount of which can be reliably estimated.
+With regard to legal proceedings and litigation, for example, those connected with the
+Qimonda insolvency, Infineon regularly assesses the probability of an unfavorable
+outcome. Infineon records provisions and liabilities, including provisions for signifi-
+cant legal costs, for those obligations and risks relating to legal disputes which it
+assesses at the relevant reporting date are likely to occur. That is where, from Infineon's
+perspective as of the date of assessment, there is compelling evidence that indicates
+an obligation or risk, and the obligation or risk can be quantified with reasonable
+accuracy at the time of assessment. As soon as additional information is available,
+the affected estimates are reviewed and, where necessary, provisions for these pro-
+ceedings are revised.
+Other provisions are measured at their expected settlement amount. The amount
+recognized for a provision is the best estimate of the expenditure required to settle
+the present obligation. Estimates of outcomes and financial effects are dependent
+upon the judgment of management, supplemented by experience gained from similar
+transactions and, where appropriate, the assessment of independent experts. If the
+circumstances to be assessed encompass a large number of possible outcomes,
+the obligation is estimated by weighting all possible outcomes by their associated
+probabilities (expected value method).
+Where cash flows are expected to arise after the next twelve months, the expected
+settlement amount corresponds to the present value of the expected cash outflows.
+Discounting is only carried out if the interest effect is significant.
+If the obligation decreases because of a change in the estimate, the provision is
+adjusted accordingly and the resulting income recognized in the same functional
+cost area of the Consolidated Statement of Profit or Loss in which the original charge
+was recognized.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 104 →
+Grants
+Grants are recognized when it is reasonably assured that Infineon will comply with
+the conditions attached to the grant, and it is reasonably assured that the grant
+will be received. Investment-related grants are deducted from the purchase and pro-
+duction cost of the related asset and thereby reduce depreciation and amortization
+expense in future periods.
+Grants that are related to expenses are presented as a reduction of the related
+expense in the Consolidated Statement of Profit or Loss (see note 4, □ p. 109 f.).
+Infineon | Annual Report 2023
+Further information
+← 107 →
+impact of climate change on the valuation results. For a detailed explanation of
+climate-related risks and opportunities, we refer you to the risk and opportunity
+report in the Combined Management Report as well as to the report "Sustainability
+at Infineon" which can be found under the following link: www.infineon.com/cms/en/
+about-infineon/sustainability/csr-reporting. The reference to the report “Sustainability at
+Infineon" is not audited as part of the audit of the Consolidated Financial Statements
+but is subject to a separate audit to obtain limited assurance and for certain non-
+financial information reasonable assurance.
+Assumptions and estimates regarding cyclical market, industry, and geopolitical
+risks are made to the best of management's knowledge based on current events
+and actions. Actual results may deviate from these estimates. This is especially true
+against the backdrop of the geopolitical risks that continue to exist, particularly due
+to the ongoing war in Ukraine, the conflict over Taiwan, and tensions in the Middle
+East. The war in Ukraine can lead to further price increases and shortages of energy
+and raw materials. An extension of the conflict situation beyond Ukraine would
+further increase the risk of a global economic downturn. Rising inflation and higher
+interest rates could also lead to a significant decline in consumption. Both customs
+disputes and trade restrictions, for example between the USA and China, can affect
+global trade and thus global economic growth, and include the risk of a decline in
+foreign demand from the Chinese perspective and an accompanying decline in the
+Chinese gross domestic product. There is also the risk that semiconductors previously
+supplied to China will increasingly be replaced by locally manufactured products,
+and of growing exports of such semiconductors produced in China. Developments
+in the wake of the geopolitical risks are dynamic, so it cannot be ruled out that the
+actual results deviate significantly from the estimates and assumptions made in the
+preparation of these Consolidated Financial Statements, or that the estimates and
+assumptions made will have to be adjusted in future periods. These could have a sig-
+nificant impact on Infineon's financial position, results of operations and cash flows.
+Areas containing estimates and assumptions and that are consequently most likely to
+be affected when actual results vary from estimates and assumptions are the following:
+> valuation of inventory (see "Inventories”, p. 100, and note 11, □ p. 117),
+> recoverability of non-financial assets, in particular property, plant and equipment
+(see note 13, p. 118 f.) and goodwill (see note 14, □ p. 120 f.),
+> recognition and valuation of provisions (see “Other provisions” notes 17, □ p. 124,
+and 24, p. 136 ff.) and
+> revenue where the transaction price contains a variable element (see "Revenue
+recognition", p. 104 f.).
+All assumptions and estimates are based on the circumstances and assessments
+as of the balance sheet date, taking into account the knowledge gained up to the
+approval by the Management Board of the Consolidated Financial Statements on
+21 November 2023.
+3 Acquisitions
+Acquisition of 100 percent of the shares in GaN Systems Inc.
+On 24 October 2023, Infineon acquired all of the shares in GaN Systems Inc. (“GaN
+Systems"), which is based in Ottawa (Canada). GaN Systems develops GaN-based
+power conversion solutions. With this acquisition, Infineon strengthens its leading
+position in the power systems sector. The provisional purchase price is €828 million,
+of which €825 million resulted in a cash outflow at the time of acquisition, and a
+further €3 million will be paid later to former shareholders under a terminated stock
+option program. According to the preliminary opening balance sheet, the net assets
+acquired by the Company amounted to €57 million. The acquired assets mainly relate
+to cash, inventories, rights of use under leasing arrangements, and property, plant
+and equipment. Acquired liabilities primarily relate to trade payables and leasing
+liabilities. The estimated excess of purchase price over assets acquired is around
+€771 million. The purchase price allocation was not yet completed at the time of
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Breakdowns of revenue by segments, product groups and geographic areas are
+disclosed in note 29. ☐ p. 156 ff.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+← 103 →
+Combined Management Report
+Estimates and assumptions are subject to regular review and must be adjusted where
+appropriate. Climate risks and opportunities are also analyzed, reported, and evalu-
+ated for their potential financial and accounting impact as part of the quarterly risk
+management process. They are regularly included in the review of estimates and
+assumptions for accounting purposes. Furthermore, in the case of valuations based
+on longer-term planning assumptions for business development, sensitivity analyses
+of the valuation results are carried out, which appropriately reflect the potential
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+106 →
+Current and deferred taxes
+The current tax expense is calculated in accordance with taxation provisions in force
+at the end of the reporting period.
+Deferred taxes are calculated on temporary differences between the tax base and
+the book value of assets and liabilities and on tax losses available for carry-forward
+and tax allowances. By contrast, generally no deferred tax is recognized on initial
+recognition of goodwill arising in connection with a business combination. Similarly,
+deferred taxes are not recognized on the initial recognition of an asset or liability in
+connection with a transaction that is not a business combination and which, at the
+time of the transaction, affects neither the pre-tax income according to IFRS nor tax-
+able profit. Deferred tax assets and liabilities are measured using applicable tax rates
+and laws that have been enacted by the end of the reporting period or are about
+to be enacted and are to be applied when the related deferred tax asset is realized,
+or the deferred tax liability is settled.
+Deferred tax assets with respect to deductible temporary differences, tax loss
+carry-forwards and tax allowances that exceed deferred tax liabilities in respect of
+taxable temporary differences, are only recognized to the extent that it is probable
+that the relevant Group entity can generate sufficient taxable profit to realize the
+corresponding benefit. Infineon reviews deferred tax assets for impairment at every
+reporting date. The assessment requires management to make assumptions about
+future taxable profits as well as other positive and negative influencing factors. This
+assessment also takes into account insights from the company's five-year plan as
+approved in the fiscal year just ended.
+Deferred tax assets and liabilities are netted to the extent they relate to the same tax
+authority and to the same taxpayer or a group of different taxpayers who are jointly
+assessed for income tax purposes.
+Taxes are recognized in the Consolidated Statement of Profit or Loss, with the
+exception of taxes relating to items recognized directly in equity or in other compre-
+hensive income.
+Tax liabilities are recognized as short-term as they are due immediately, and Infineon
+generally has no option of deferring their due date.
+For uncertain tax positions, a current tax liability is recorded; in the case of a tax
+loss carried forward or a tax allowance, the respective deferred tax asset is reduced
+accordingly. Estimates and assumptions must be made for the recognition and
+valuation, for example, whether an assessment is made separately or together with
+other uncertainties, whether a probable or expected value is used for the uncertainty,
+and whether changes have occurred compared to the previous period. The detection
+risk for the recognition of uncertain tax positions is not relevant. Recognition assumes
+that the tax authorities investigate the matters in question and that they have all
+relevant information.
+Estimates and assumptions
+The preparation of financial statements in accordance with IFRS requires management
+to make estimates and assumptions that have an impact on the presented amounts
+and the associated disclosures.
+Management Board and Supervisory Board
+Further information
+Combined Management Report
+Combined Management Report
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 101 →
+Contract assets
+Contract assets are recognized if Infineon has fulfilled its performance obligations
+arising from contracts with customers and an unconditional entitlement to customer
+consideration does not yet exist.
+At Infineon, contract assets result from revenue arising from over time revenue recog-
+nition for certain types of contracts, as well as from sales to some customers for
+whom Infineon maintains a consignment warehouse and where revenue is recorded
+at the time of delivery to the consignment warehouse, whereas the invoice is only
+issued at the time of withdrawal of the product by the customer.
+Loss allowances for expected credit losses on contract assets are determined in
+accordance with the measurement method for trade receivables (see "Financial
+instruments", p. 97).
+Property, plant and equipment
+Property, plant and equipment are measured at amortized acquisition or construction
+cost, and their value is reduced by depreciation and considering any impairment.
+Depreciation on property, plant and equipment is recorded using the straight-line
+method. Land, property rights and construction in progress are not depreciated
+on a scheduled basis. Depreciation on property, plant and equipment is based on
+the following useful lives, as applied consistently throughout Infineon:
+Buildings
+Technical equipment and machinery
+Other plant and office equipment
+Years
+Management Board and Supervisory Board
+25
+3-10
+Infineon | Annual Report 2023
+Write-downs to net realizable value are recorded on inventories using a consistent
+approach throughout Infineon and are determined at product level for technically
+obsolete and slow-moving inventories on the basis of the amount of revenues
+expected to be generated by the relevant product.
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 100 →
+Upon initial recognition, other financial liabilities are measured at fair value after the
+deduction of transaction costs. In subsequent periods, they are measured at amor-
+tized cost using the effective interest method. The liabilities are derecognized when
+the contractual obligations are discharged, canceled or expired.
+Designated hedging instruments (cash flow hedges)
+Certain derivative financial instruments are used to hedge foreign currency and
+interest risks or risks of commodity price changes (such as gold prices) for firm
+commitments as well as expected and highly probable future transactions in order to
+minimize the associated risk (cash flow hedges).
+Derivative financial instruments are measured at their fair value and included in
+"other current assets" or "other current liabilities".
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+When a hedging instrument expires or is sold, or when a hedging relationship no
+longer meets the criteria for hedge accounting, any cumulative gain or loss existing at
+that time remains in equity until the underlying transaction actually occurs. When a
+forecasted transaction is no longer expected to occur, the cumulative gain or loss that
+was reported in equity is immediately transferred to profit or loss.
+Hybrid bonds
+The recognition of a hybrid bond depends on the specific form of the instrument.
+A hybrid bond is measured and recognized in equity when certain conditions are
+jointly met. These include, but are not limited to, the fact that the hybrid bond has no
+final maturity date, the investors have no rights of termination, and the distributions
+are made at Infineon's discretion. In this case, discounts, transaction costs, tax effects
+and the remuneration of hybrid investors are deducted directly from equity.
+Inventories
+Inventories are measured at the lower of historical acquisition or fully absorbed
+production cost - calculated using the weighted-average method - and net realizable
+value. Net realizable value corresponds to realizable sale proceeds under normal
+business conditions less estimated expected costs to complete and sell. Production
+cost comprises costs of material, production wages and an appropriate portion of
+attributable overheads, along with attributable depreciation and amortization on
+property, plant and equipment and other intangible assets. Overhead mark-ups are
+determined on the basis of normal capacity utilization levels.
+Inventories include an asset resulting from sales with a right of return, representing
+Infineon's right to recover products from customers upon payment of the reimburse-
+ment obligation (see “Revenue recognition”, ☐ p. 104 f.). The valuation is made by
+reference to the previous book value of the products.
+1-10
+The effective portion of changes in the fair value of derivative financial instruments,
+determined in accordance with IFRS 9, that are designated as cash flow hedges
+and are part of hedging relationships that meet the criteria for hedge accounting is
+recognized directly in equity. The gain or loss relating to the ineffective portion is
+recognized in profit or loss. Amounts accumulated in equity are recycled in profit or
+loss in the periods in which the underlying hedged item affects profit or loss, or, if the
+expected transaction subsequently results in the recognition of a non-financial asset,
+included in the acquisition cost upon initial recognition.
+Other intangible assets consist of capitalized development costs and purchased
+intangible assets, for example licenses, technologies and customer relationships.
+These assets have finite useful lives and are valued at their amortized acquisition
+or production costs, with amortization recorded using the straight-line method over
+their expected economic life.
+← 102 →
+The recoverability of an asset is measured by comparing its carrying amount with
+its recoverable amount. To the extent it is not possible to determine the recoverable
+amount of an individual asset, the book value of the cash generating unit to which
+the asset is allocated is compared to its recoverable amount.
+A cash generating unit (“CGU”) represents the smallest identifiable group of assets
+that generates cash inflows from continuing activities and that are largely independent
+of the cash inflows from other assets or group of assets.
+Goodwill arising in connection with a business combination is allocated to the CGUS
+or groups of CGUs that will benefit from the synergies generated by the business
+combination and the going concern element of the business operations acquired.
+The recoverable amount of an asset is defined as the higher of its fair value less costs
+to sell and its value in use. The value in use is calculated based on discounted future
+cash flows. Considerable management judgment is necessary to estimate future
+cash flows.
+If an asset or CGU is considered to be impaired, the impairment recognized is measured
+as the amount by which the carrying value exceeds the recoverable amount.
+Goodwill is impaired when the carrying amount of the operating segment to which
+goodwill is allocated exceeds the recoverable amount of that unit.
+If the carrying amount of the respective operating segment to which goodwill
+is allocated exceeds the recoverable amount of this CGU, the goodwill is impaired
+accordingly.
+In the case of property, plant and equipment or other intangible assets, if the recover-
+able amount of a CGU is less than its carrying value, the impairment loss is allocated
+pro rata to the assets within the scope of IAS 36. An impairment loss recognized in
+prior periods for property, plant and equipment or other intangible assets is reversed
+insofar as, since the last impairment, a change in the underlying assumptions has
+occurred, which leads to a lower impairment requirement. The maximum possible
+reversal of an impairment loss is that which would lead to the carrying amount that
+would have been determined (net of scheduled depreciation and amortization) if
+no impairment loss had been recognized for that asset in prior years. The reversal of
+impairments recognized on goodwill in subsequent periods is not permitted.
+IFRS 16 defines a lease as a contract that conveys the right to use an identifiable asset
+over a specified period of time in exchange for consideration.
+At the beginning of a lease, Infineon capitalizes a right-of-use asset at amortized
+acquisition cost and recognizes as a liability a corresponding lease liability, using the
+present value of the outstanding lease payments. Right-of-use assets are amortized
+on a straight-line basis over the expected useful life (see "Property, plant and equip-
+ment”, □ p. 101), or over the duration of the contract if shorter. In subsequent valua-
+tions, lease liabilities are measured at the current value of the outstanding lease
+payments using the effective interest method and are presented as lease liabilities
+(current and non-current).
+The costs associated with leasing agreements with a term of not more than twelve
+months (provided they do not contain an option to purchase), as well as leasing
+agreements in which the value of the underlying asset in the leasing contract is low,
+are recorded in the profit or loss on a straight-line basis in the functional costs. As
+a general rule, leased assets with an acquisition cost of up to €5,000 are defined as
+low-value assets.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Other intangible assets
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Leased assets
+Combined Management Report
+Capitalized development costs
+Customer relationships
+Technologies
+Licenses and similar rights
+Remaining other intangible assets
+Amortization of other intangible assets is based on the following useful lives:
+3-10
+1-12
+1-12
+Years
+3-5
+3-12
+Infineon did not hold any intangible assets with indefinite useful lives in either the
+2023 or the 2022 fiscal year.
+Recoverability of property, plant and equipment and intangible assets
+(including goodwill)
+Infineon reviews non-current assets, including property, plant and equipment,
+goodwill and other intangible assets for possible impairment whenever events or
+changes in circumstances indicate that the carrying amount of an asset may not be
+recoverable. Regardless of whether an indication of impairment exists, goodwill and
+other intangible assets, including capitalized development costs not yet subject to
+amortization, undergo an annual impairment test (see also "Research and develop-
+ment expenses", p. 105). The impairment test for goodwill is carried out annually
+at the operating segment level.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+279
+(916)
+(9,600)
+13,627
+(79)
+829
+(286)
+1,485
+12,540
+Technical equipment and machinery
+623
+57
+(93)
+3,447
+2,940
+Other plant and office equipment
+1,560
+135
+(147)
+64
+(18)
+1,648
+(1,338)
+1,502
+93
+(10,180)
+(1,124)
+2023
+22
+12
+Depre-
+ciation/
+amorti-
+Disposals
+zation
+Depreciation/amortization
+Impair-
+ments/
+reversals
+of impair-
+ments
+Currency
+effects
+30 Sep-
+tember
+Carrying amount
+30 Sep-
+tember
+2023
+1 October
+2022
+30 Sep-
+tember
+2022
+Land, land rights and buildings
+2,565
+109
+(37)
+28
+(39)
+2,626
+(1,080)
+(80)
+14
+(1,380)
+Combined Management Report
+222
+(10)
+(8)
+1,640
+(547)
+(93)
+10
+(13)
+(643)
+997
+897
+Customer relationships
+1,545
+(14)
+(107)
+1,424
+(841)
+(152)
+Technologies
+2,618
+(11)
+(204)
+2,403
+(892)
+30 Sep-
+tember
+2023
+(245)
+214
+1,444
+Capitalized development costs
+Other intangible assets
+Payments on account and construction in progress
+904
+1,656
+(6)
+(715)
+(4)
+1,835
+(6)
+(1)
+(7)
+1,828
+898
+268
+Total
+2,729
+(422)
+(140)
+19,736
+(12,024)
+(1,143)
+394
+(1)
+83
+(12,691)
+7,045
+5,545
+17,569
+Currency
+effects
+2441
+2022
+Other current assets as of 30 September 2023 and 2022 consisted of the following:
+Change
+30 Septem-
+ber 2023
+30 Septem-
+ber 2022
+absolute
+in %
+347
+58
+289
++++
+204
+Licenses and similar rights
+(40)
+(16)
+186
+1451
+41
+28
+150
+131
+19
+15
+Change
+30 Septem-
+ber 2023
+12 Other current assets
+Total
+Finished goods and merchandise
+Work in progress
+Loss allowances as of the beginning
+of the fiscal year
+Revaluation of loss allowances, net
+Loss allowances as of the end of the fiscal year
+Change
+2023
+2022
+absolute
+in %
+1
+(1)
+(1)
+30 Septem-
+1
+Information on Infineon's credit risk management is contained in note 28. p. 153 f.
+Infineon | Annual Report 2023
+Information about Infineon's credit risk management is contained in note 28. p. 153 f.
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 117 →
+11 Inventories
+Inventories as of 30 September 2023 and 2022 consisted of the following:
+€ in millions
+Raw materials and supplies
++++
+Reclassi-
+fication
+ber 2022
+in %
+5
++++
+62
+42
+20
+48
+959
+625
+334
+53
+1 The previous year's figures for "VAT and other receivables from tax authorities" and "Grants receivables" have been adjusted.
+Further information on Infineon's financial assets can be found in note 27. □ p. 142 ff.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+13 Property, plant and equipment and
+other intangible assets
+The development of property, plant and equipment, as well as other intangible assets
+for the years ended 30 September 2023 and 2022, was as follows:
+€ in millions
+Property, plant and equipment
+Further information
+← 118 →
+Cost
+1 October
+Additions Disposals
+5
+10
+Inventory write-downs as of 30 September 2023 and 2022 amounted to €414 million
+and €282 million, respectively.
+As of 30 September 2023 and 2022, finished goods and merchandise included an asset
+of €22 million and €16 million, respectively, which resulted from sales with a right
+of return.
+€ in millions
+612
+470
+142
+30
+Prepayments
+2,593
+1,949
+644
+33
+VAT and other receivables from tax authorities
+769
+absolute
+662
+16
+Grants receivables
+3,974
+3,081
+893
+29
+Prepaid expenses
+Derivative financial instruments
+(see note 27, p. 147 ff.)
+Other
+Total
+Cost of goods sold consisted mainly of inventory-related expenses in the 2023 and
+2022 fiscal years.
+107
+338
+zation
+(5)
+(222)
+188
+17,569
+(11,090)
+(1,050)
+216
+(100)
+(12,024)
+5,545
+4,443
+Other intangible assets
+Capitalized
+development costs
+1,220
+209
+15
+1,444
+(448)
+(94)
+(4)
+(1)
+(547)
+897
+772
+Customer relationships
+9
+1,333
+2,061
+Total
+131
+(85)
+38
+19
+1,560
+(1,279)
+(138)
+83
+8
+(12)
+(1,338)
+222
+178
+Payments on account and
+construction in progress
+645
+889
+(1)
+(629)
+904
+1
+(1)
+(6)
+898
+645
+15,533
+212
+1,545
+(595)
+Total
+106
+5,179
+20
+126
+(29)
+(11)
+(7)
+(47)
+79
+77
+240
+(5)
+657
+6,071
+(1,830)
+(534)
+5
+(4)
+(225)
+(2,588)
+3,483
+3,349
+Depreciation on property, plant and equipment is presented in the Consolidated
+Statement of Profit or Loss, mainly in cost of goods sold. Amortization of intangible
+assets is mainly presented in cost of goods sold or selling, general and administrative
+expenses. Impairments on property, plant and equipment and other intangible
+assets are reported under other operating expenses.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+intangible assets
+Remaining other
+76
+77
+(156)
+(90)
+(841)
+704
+738
+Technologies
+2,214
+404
+2,618
+(528)
+(243)
+(121)
+1,457
+(892)
+1,686
+Licenses and similar rights
+306
+31
+(5)
+6
+338
+(230)
+(30)
+5
+(6)
+(261)
+1,726
+office equipment
+Other plant and
+2,307
+(40)
+(332)
+5,954
+(2,588)
+(531)
+31
+(13)
+124
+(2,977)
+2,977
+3,483
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+← 119 →
+Notes to the Consolidated Financial Statements
+€ in millions
+Property, plant
+1 October
+2021
+Cost
+Depreciation/amortization
+Additions
+Additions
+255
+6,071
+Total
+79
+(3)
+371
+(261)
+(31)
+915
+50
+(934)
+490
+704
+7
+68
+(1,062)
+Disposals Reclassi-
+1,341
+3
+87
+77
+Remaining other intangible assets
+126
+(10)
+116
+(47)
+(10)
+3
+(54)
+62
+1,726
+41
+through
+Currency
+effects
+2,565
+(989)
+(83)
+5
+6
+(19)
+(1,080)
+1,485
+1,313
+Technical equipment
+and machinery
+11,129
+972
+6
+(130)
+455
+108
+12,540
+(8,822)
+(829)
+127
+(8)
+(68)
+(9,600)
+2,940
+61
+136
+(6)
+3
+business
+30 Sep-
+tember
+2022
+1 October
+2021
+Depre-
+Disposals Reclassi-
+Impair-
+ciation/
+fication
+amorti-
+ments/
+reversals
+Currency
+effects
+combi-
+fication
+€ in millions
+nation
+ments
+Carrying amount
+30 Sep-
+tember
+2022
+30 Sep-
+tember
+2022
+30 Sep-
+tember
+2021
+and equipment
+Land, land rights
+and buildings
+2,302
+69
+69
+of impair-
+(17)
+(284)
+6
+Total
+Deferred
+Deferred
+Change 2022
+30 September 2022
+Change 2023
+30 September 2023
+Deferred tax assets and liabilities as of 30 September 2023 and 2022 comprised the
+following:
+The utilization of tax loss carry-forwards, tax credits and temporary differences for
+which deferred tax assets had not previously been recorded resulted in current tax
+income of €61 million in the 2023 fiscal year (2022: €1 million).
+"Change in valuation allowances on deferred tax assets" consisted of the following:
+In the 2023 fiscal year, amounts recognized in profit or loss included valuation
+allowances or non-recognition of deferred tax assets for tax loss carry-forwards
+of €0 million (2022: €27 million) and tax credits of €20 million (2022: €67 million).
+A write-up of deferred tax assets for tax loss carry-forwards of €10 million was
+recorded (2022: €0 million). Within tax credits, the write-up of deferred tax assets
+amounted to €35 million in the 2023 fiscal year (2022: €10 million) and temporary
+differences amounted to €0 million (2022: €41 million).
+← 112 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Therein through
+Infineon | Annual Report 2023
+Deferred
+Total
+(511)
+23
+profit or loss
+tax liabilities
+tax assets
+profit or loss
+tax liabilities
+tax assets
+Other
+Provisions, pensions and similar commitments
+Inventories
+Property, plant and equipment
+Intangible assets
+€ in millions
+Therein through
+Deferred
+(46)
+(245)
+(537)
+68
+(43)
+25
+on deferred tax assets
+Change in valuation allowance
+(59)
+(233)
+(393)
+(626)
+77
+33
+(43)
+(10)
+Change in permanent balance sheet effects
+in %
++++
+(156)
+(144)
+(12)
+(782)
+Actual income taxes
+(13)
+1
+(12)
+Other
+(46)
+219
+(245)
+(782)
+(26)
+(25)
+96
+71
+Change in available tax credits
+(8)
+(537)
+absolute
+177
+(751)
+19
+16
+186
+Unused tax credits and excess foreign tax credits
+(197)
+(183)
+394
+(240)
+(238)
+156
+Tax loss carry-forwards
+93
+(1)
+(1,015)
+607
+170
+65
+(31)
+Total deferred taxes
+268
+Total
+644
+(644)
+561
+(561)
+Netting
+(144)
+(215)
+(1,015)
+1,171
+(156)
+(142)
+(815)
+829
+(40)
+80
+(815)
+487
+39
+(6)
+(7)
+(28)
+35
+(2)
+(13)
+(165)
+156
+(39)
+(32)
+(207)
+166
+74
+(15)
+(25)
+8
+6
+213
+Total deferred taxes on temporary differences
+(6)
+(5)
+(39)
+29
+14
+13
+44
+(47)
+21
+24
+(35)
+339
+(81)
+(113)
+(22)
+50
+(254)
+2022
+Income tax
+Financial expenses comprised the following in the 2023 and 2022 fiscal years:
+(13)
+(4)
+32
+28
+Total comprehensive income (loss), net of tax
+1 The negative amount in other financial income in the 2022 fiscal year arose from the negative change in the fair value of the
+derivative financial instruments, recorded as a reversal of unrealized gains recognized in previous fiscal years.
+(3)
+3
+Other comprehensive income (loss), net of tax
+(3)
+(1)
+29
+28
+Profit (loss) for the period
+The pro rata result of the joint ventures accounted for using the equity method is not
+part of the Segment Result (see note 29, p. 159).
++++
+€ in millions
+Other financial expenses
+Total
+(168)
+(159)
+96
+25
+(26)
+(1)
+(11)
+(16)
+(142)
+(158)
+in %
+absolute
+2022
+2023
+Change
+Interest expenses
+98
+7
++++
+Change
+For the 2023 and 2022 fiscal years, Infineon's proportion of selected items from the
+statement of comprehensive income of the joint ventures accounted for using the
+equity method were aggregated as follows:
+As of 30 September 2023 and 2022, the carrying amounts of joint ventures accounted
+for using the equity method were €74 million and €56 million, respectively.
+Summarized financial information for joint ventures
+The investments accounted for using the equity method comprise shares in joint
+ventures and in associated companies.
+5 Investments accounted for using
+the equity method
+€ in millions
+Financial income comprised the following in the 2023 and 2022 fiscal years:
+Financial income and expenses
+For compliance with the conditions attached to the grants received and potential
+repayment requirements in case of nonfulfillment, see note 23. □ p. 135 f.
+In the 2023 fiscal year, investment grants of €45 million (adjusted previous fiscal
+year amount: €22 million) were deducted from acquisition or construction costs for
+property, plant and equipment and intangible assets. In the 2023 fiscal year, Infineon
+received investment grants of €27 million (2022: €22 million).
+← 110 →
+Further information
+(1)
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+2023
+2022
+absolute
+in %
+49
+(4)
+45
+105
+Total
+Other financial income¹
+in %
+absolute
+5
+2022
+€ in millions
++++
+49
+11
+60
+Interest income
+Change
+2023
+2023
+Further information on Infineon's financial income and expenses is contained in
+note 27. p. 146 f.
+Management Board and Supervisory Board
+Income tax from continuing operations for the fiscal years ending 30 September 2023
+and 2022 amounted to:
+12
+9
+77
+86
+(36)
+8
+(28)
+local and functional currency
+Previous year taxes
+6 Income tax
+Effects from the difference between
+(14)
+13
+(1)
+Effects due to changes in tax rates
+therein: current tax income
+46
+69
+(4)
+Deferred tax income
+Current tax expense
+€ in millions
+32
+23
+73
+96
+Tax-exempt income
+Change
+10
+5
+(52)
+(47)
+Non-deductible expenses
+(5)
+73
+43
+93
+136
+10
+(1)
+Profit (loss) for the period
+in %
+absolute
+2022
+2023
+Change
+€ in millions
+For the 2023 and 2022 fiscal years, Infineon's proportion of selected items from the
+statement of comprehensive income of the associated companies accounted for
+using the equity method were aggregated as follows:
+Summarized financial information for associated companies
+As of 30 September 2023 and 2022, the carrying amount of the associated companies
+accounted for using the equity method was €40 million and €44 million, respectively.
+← 111 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+(11)
+Other comprehensive income (loss), net of tax
+Total comprehensive income (loss), net of tax
+(1)
+(44)
+(338)
+(760)
+in %
+absolute
+2022
+2023
+(1,098)
+Infineon | Annual Report 2023
+Expected income tax expense
+Tax rate differential
+€ in millions
+Change
+The reconciliation of income taxes from continuing operations for the fiscal years
+ended 30 September 2023 and 2022, based on the German combined statutory income
+tax rate of 28 percent for the 2023 and 2022 fiscal years, is as follows:
+Taxable income earned by foreign subsidiaries is determined on the basis of the
+tax laws applicable in the relevant countries and is taxed based on the respective
+country-specific tax rates.
+The German combined statutory tax rate for Infineon Technologies AG was 28 percent
+for both the 2023 and 2022 fiscal years. This is based on a corporate income tax rate of
+15 percent, plus a solidarity surcharge of 5.5 percent and a trade tax rate of 12 percent.
+(11)
+10
+The pro rata result of the associated companies accounted for using the equity method
+is not part of the Segment Result (see note 29, p. 159).
+(142)
+9
+527
+1.65
+2.38
+from continuing operations
+Earnings per share (in euro)
+Diluted earnings per share (in euro): 2
+44
+0.73
+1.65
+2.38
+(0.01)
+(0.01)
+Earnings (loss) per share (in euro)
+from discontinued operations
+Earnings per share (in euro) - basic
+44
+0.73
+1.66
+0.73
+2.39
+44
+from discontinued operations
+Financial investments as of 30 September 2023 and 2022 comprised the following:
+Financial investments comprise fixed-term deposits with banks and investment
+funds. Fixed-term deposits with banks are categorized as financial assets and mea-
+sured at amortized cost. Investment funds are categorized as financial assets and
+measured at fair value through profit or loss (see also note 2, ☐ p. 98 f., and note 27,
+p. 142 ff.).
+9 Financial investments
+= ← 116 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+2 The calculation of earnings per share is based on unrounded figures.
+1 Including the cumulative tax effect.
+44
+0.73
+1.65
+2.38
+Earnings per share (in euro) - diluted
+Earnings (loss) per share (in euro)
+Basic earnings per share (in euro): 2
+Earnings per share (in euro)
+from continuing operations
+0
+2.2
+1,305.9
+Ordinary share capital
+Weighted-average number of shares
+outstanding (in millions):
+Infineon | Annual Report 2023
+thereof from continuing operations
+thereof from discontinued operations
+71
+5
+(7)
+(2)
+༥
+44
+953
+2,157
+3,110
+45
+1,305.9
+Adjustment for own shares
+(2.9)
+(4.1)
+1,303.6
+1,305.8
+56
+10
+1.0
+1.8
+2.8
+10 Trade receivables
+Effect of share-based payment
+Weighted-average number of shares
+outstanding - diluted
+0
+1.2
+1,301.8
+1,303.0
+Weighted-average number of shares
+outstanding - basic
+29
+1.2
+Adjustments for:
+958
+Trade receivables result from contracts with customers that are due within one year.
+As of 30 September 2023 and 2022, they consisted of the following:
+Trade receivables, third parties
+Trade receivables, related parties
+€ in millions
+(22)
+(509)
+2,279
+1,770
+Financial investments, net
+Loss allowances
+Changes in the loss allowances for trade receivables in the 2023 and 2022 fiscal years
+were as follows:
+(22)
+(509)
+2,279
+1,770
+Financial investments, gross
+(13)
+(269)
+Change
+2,039
+2023
+absolute
+5
+(156)
+Loss allowances as of the end of the fiscal year
+(2)
+1
+(1)
+Current year's loss allowance, net of reversals
+20
+1
+5
+6
+of the fiscal year
+The loss allowances on financial investments that are measured at amortized cost
+changed as follows during the 2023 and 2022 fiscal years:
+Loss allowances as of the beginning
+in %
+2022
+1,770
+Investment funds
+(240)
+1,893
+90
+9
+10
+19
+1,996
+5
+94
+1,883
+1,977
+in %
+absolute
+30 Septem-
+ber 2022
+ber 2023
+30 Septem-
+Change
+103
+5
+(5)
+1,991
+(6)
+1,887
+Fixed-term bank deposits
+Trade receivables, net
+in %
+absolute
+ber 2022
+ber 2023
+€ in millions
+€ in millions
+30 Septem-
+Loss allowances
+Change
+Trade receivables, gross
+6
+104
+17
+1
+30 Septem-
+2,150
+240
+(29)
+625
+509
+local tax loss carry-forwards (particularly
+US state tax loss carry-forwards) - foreign
+Tax credits
+156
+14
+(49)
+22
+(26)
+(13)
+5
+5
+(1)
+Deferred taxes, net as of the end of the fiscal year
+Corporate tax loss carry-forwards and
+Deferred taxes recognized in other comprehensive income
+Currency effects
+(116)
+(49)
+(19)
+714
+53
+(16)
+(67)
+412
+345
+Corporate tax loss carry-forwards and
+local tax loss carry-forwards (particularly
+US state tax loss carry-forwards) - foreign
+Thereof expire within the next five years
+Tax credits
+in %
+absolute
+2022
+2023
+€ in millions
+Change
+No deferred taxes were recorded for the following items (gross amounts):
+(11)
+(82)
+632
+(958)
+1,940
+982
+2023
+€ in millions
+The change in the net amount of deferred tax assets and liabilities is as follows:
+Taxable losses brought forward and tax credits amount to the following:
+Infineon assessed the need for a valuation allowance of its deferred tax assets. Based
+on the results of this assessment, considering all positive and negative factors and
+information relating to the foreseeable future based on business plans, Infineon
+recognized deferred tax assets, after netting, of €268 million as of 30 September 2023
+(30 September 2022: €527 million).
+= ← 113 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+3,108
+(144)
+(215)
+(371)
+2022
+156
+371
+Deferred taxes, net as of the end of the previous fiscal year
+Deferred tax income (expense), recognized through profit or loss:
+(716)
+716
+Corporate tax loss carry-forwards - Germany
+Trade tax loss carry-forwards - Germany
+G
+Deferred taxes recognized directly in equity
+in %
+absolute
+87
+2022
+€ in millions
+Deferred tax arising from business acquisitions
+Change
+Change of deferred taxes, recognized directly in equity:
+From discontinued operations
+(156)
+From continuing operations
+2023
+(34)
+(144)
+446
+Infineon | Annual Report 2023
+In the 2023 and 2022 fiscal years, adjustments to individual provisions arose as a
+result of recent developments in connection with the insolvency of Qimonda, which
+resulted in a loss from discontinued operations, net of income taxes of €2 million
+and €7 million, respectively.
+The current risks and provisions relating to Qimonda's insolvency are described in
+note 24 "Proceedings in relation to Qimonda”. ☐ p. 136 ff.
+On 23 January 2009, Qimonda AG (“Qimonda”), a majority-owned company, filed
+an application at the Munich local court to commence insolvency proceedings. On
+1 April 2009, the insolvency proceedings formally opened. Insolvency proceedings
+were also opened for further domestic and foreign subsidiaries of Qimonda. Some
+of these insolvency proceedings have already been completed. The impacts of these
+proceedings are reported as discontinued operations in Infineon's Consolidated
+Statement of Profit or Loss and Consolidated Statement of Cash Flows to the extent
+that the underlying events occurred before the commencement of insolvency pro-
+ceedings.
+7 Disposals and discontinued operations
+Qimonda - discontinued operations
+The income taxes recognized in other comprehensive income in the 2023 fiscal year
+comprise mainly actuarial gains and losses arising from pension commitments of
+€15 million (2022: €25 million).
+As in the previous fiscal year, income taxes recognized directly in equity in the 2023
+fiscal year were the result of tax effects in connection with the compensation for
+hybrid capital and with share-based compensation.
+Management Board and Supervisory Board
+(39)
+(554)
+54
+14
+(26)
+(12)
+(771)
+Income taxes
+other comprehensive income
+(217)
+Income taxes recognized in
+Combined Management Report
+Further information
+2,179
+958
+44
+(29)
+(39)
+3,137
+in %
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+absolute
+2023
+€ in millions (unless otherwise stated)
+Profit (loss) for the period - basic and diluted
+Remuneration of hybrid capital investors'
+Profit (loss) for the period attributable to
+shareholders of Infineon Technologies AG -
+basic and diluted
+Change
+Basic and diluted earnings per share are calculated as follows for the fiscal years
+ended 30 September 2023 and 2022:
+Basic earnings per share are calculated by dividing profit (loss) for the period by
+the weighted-average number of shares outstanding during the reporting period.
+The calculation of the diluted earnings per share is based on the assumption that
+all potentially dilutive instruments are converted into ordinary shares, resulting
+in a corresponding increase in the number of shares.
+8 Earnings per share
+← 115 →
+2022
++++
+The hybrid bond issued in the 2020 fiscal year is classified as equity (see note 20,
+p. 130 f.). The related hybrid investors' remuneration (after tax) represents payments
+for a component of equity that reduces the earnings available to shareholders for
+distribution and was therefore taken into account in determining earnings per share
+(basic and diluted).
+13
+← 114 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+In connection with investments in subsidiaries, there were temporary taxable differ-
+ences of €299 million (2022: €242 million) for which no deferred taxes have been
+recognized because the timing of the reversal can be controlled, and it is not probable
+that the temporary differences will reverse in the foreseeable future.
+Infineon | Annual Report 2023
+25
+(18)
+36
+45
+'
+544
+Thereof expire within the next five years
+Deductible temporary differences
+(98)
+Including the items recognized directly in equity and in other comprehensive income
+and the expense/benefit from continuing and discontinued operations, the income
+tax consisted of the following:
+€ in millions
+9
+2023
+Change
+22
++++
+1
+Income taxes from discontinued operations,
+recognized in profit or loss
+(46)
+(245)
+1
+(782)
+(537)
+2022
+absolute
+Income taxes recognized directly in equity
+in %
+Income taxes from continuing operations,
+recognized in profit or loss
+9
+16
+12
+Total
+23
+ber 2022
+ber 2023
+Long-term financial debt
+30 Septem-
+30 Septem-
+18
+€ in millions
+weighted average interest rate 2.88%, due 2027-2033
+Infineon | Annual Report 2023
+Due after more than five years
+Total
+Due after one year to five years
+Due within one year
+958
+552
+639
+640
+742
+743
+745
+69
+1
+Drawn
+41
+Total
+746
+Long-term
+80
+3
+83
+69
+69
+Short-term
+Available
+Drawn
+Aggregate
+facility
+29
+Available
+Aggregate
+facility
+Term, € in millions
+30 September 2022
+30 September 2023
+The total lines of credit as of 30 September 2023 and 2022 are summarized in the
+following table:
+A €750 million bond maturing on 24 June 2023 was repaid as scheduled.
+5,662
+4,733
+4,910
+4,403
+1,329
+1,224
+69
+497
+117
+752
+(3)
+(4)
+113
+Total
++++
+6
+5
+11
+Interest payments
+2
+2
+84
+21
+86
+The allocation of discounted and undiscounted lease liabilities by maturity as of
+30 September 2023 and 2022 was as follows:
+(17)
+17
+Payments for lease prepayments
+45
+5
+11
+16
+and low-value leases
+83
+Payments for short-term leases
+405
+Payments for lease liabilities
+498
+389
+6
+330
+330
+749
+3
+30 Septem-
+ber 2022
+30 Septem-
+ber 2023
+weighted average interest rate 4.18%, due 2026-2028
+USPP notes US$1,300 million,
+Short-term financial debt and current portion of long-term financial debt
+Bond €500 million, coupon 0.625%, due 2025
+Bond €750 million, coupon 1.125%, due 2026
+Bond €750 million, coupon 1.625%, due 2029
+Bond €650 million, coupon 2.00%, due 2032
+USPP notes US$585 million,
+USPP note US$350 million, interest rate 3.94%, due 2024
+Bond €750 million, coupon 0.75%, due 2023
+Short-term financial debt and current portion of long-term financial debt,
+weighted average interest rate 2022: 0.87%
+€ in millions
+The Consolidated Statement of Cash Flows includes the following amounts in the
+2023 and 2022 fiscal years that are attributable to leases:
+Financial debt as of 30 September 2023 and 2022 consisted of the following:
+The expected non-discounted future minimum lease payments from operating leases
+for land and buildings owned by Infineon and in which Infineon acts as lessor are as
+follows:
+The lease contracts, in which Infineon subleases and acts as a lessor, are not material
+from the Group's point of view.
+Future payment obligations relating to short-term leases with a term of twelve months
+or less are immaterial in value.
+In addition, there are future payment obligations for leases that have not yet started
+but have already been contracted amounting to €48 million.
+Some leases contain renewal options that may be exercised by Infineon prior to
+the expiration of the non-cancelable lease term. Infineon has possible future (undis-
+counted) leasing payments amounting to €45 million that are not included in
+lease liabilities because it is not sufficiently certain that the leases will be renewed.
+123
+=
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+16 Financial debt
+3
+Contract liabilities
+Management Board and Supervisory Board
+300
+289
+VAT payables
+799
+983
+Accrued interest expense
+1,099
+(55)
+(782)
+664
+1,272
+thereof non-current
+thereof current
+Total provisions
+52
+3
+(36)
+15
+70
+Other
+Payroll and similar obligations to employees
+50
+(13)
+(6)
+30
+Other
+39
+Total
+Infineon | Annual Report 2023
+50
+21
+38
+(2)
+(2)
+93
+91
++++
+73
+26
+99
+(3)
+(7)
+248
+241
+16
+95
+593
+688
+in %
+absolute
+30 Septem-
+ber 2022
+ber 2023
+30 Septem-
+Change
+Obligations to employees included, among others, costs of variable remuneration,
+outstanding vacation and flextime, service anniversary awards, other personnel costs
+and social security costs.
+Warranties
+Reimbursement obligations
+212
+4,760
+2,616
+143
+2,297
+Due after more than five years
+Total
+2,327
+319
+2,133
+Due after one year to five years
+753
+108
+330
+Interest
+Financial
+debt
+Interest
+Financial
+debt
+Due within one year
+€ in millions
+30 September 2022
+30 September 2023
+Nominal amounts of financial debt and interest maturing in the coming years were
+as follows:
+5α = 124
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+570
+5,696
+17 Provisions
+Provisions for warranties mainly represented the estimated future cost of fulfilling
+contractual requirements associated with products sold.
+(5)
+(3)
+9
+211
+and note 24, p. 136 ff.)
+(see note 7, p. 114,
+€ in millions
+Provisions related to Qimonda
+785
+(40)
+(737)
+610
+80
+952
+30 Septem-
+ber 2023
+2022
+€ in millions
+Reversal
+Usage
+Addition
+1 October
+Current and non-current provisions as of 30 September 2023 consisted of the following:
+Other current liabilities as of 30 September 2023 and 2022 consisted of the following:
+18 Other current liabilities
+Of the total provisions as of 30 September 2023 and 2022, cash outflows of €799 million
+and €983 million, respectively, were expected to occur within one year. For the non-
+current provisions, the cash outflow was expected to occur after more than one year.
+Besides the provisions in connection with Qimonda, €49 million as of 30 September
+2023 and €42 million as of 2022 of non-current provisions were attributable to length-
+of-service related anniversary awards.
+Other provisions comprised mainly provisions for litigations (other than those relating
+to Qimonda), asset retirement obligations and miscellaneous other liabilities.
+Obligations to employees
+(80)
+14.1
+127
+10.7
+11.1
+14.2
+2,011
+1,843
+Connected Secure Systems
+Power & Sensor Systems
+1.5
+1.5
+10.0
+11.0
+15.2
+261
+244
+1.5
+1.5
+9.9
+10.7
+13.2
+14.5
+1,686
+1,556
+2022
+2023
+2022
+1.5
+1.5
+2,902
+3,123
+Leases concluded relate mainly to the rental of office and warehouse space, IT equip-
+ment, other plant and office equipment, as well as vehicles for selected employees.
+15 Leases
+122 →
+=
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+In addition, up to the date of preparation of the Consolidated Financial Statements,
+there was no indication that the recoverable amount of an operating segment to which
+goodwill had been allocated could have fallen below the book value.
+account, no impairment on goodwill was observed as a result of the sensitivity
+analyses at operating segment level.
+Business planning is affected, among other things, by uncertainties regarding the
+assessment of markets and the macroeconomic environment. Therefore, sensitivity
+analyses were carried out at operating segment level, taking into account changes
+considered possible in the main assumptions. Even taking these changes into
+2023
+As a result of the impairment tests carried out, Infineon concluded that none of the
+operating segments gave rise to an impairment of goodwill in the year under report.
+7,083
+6,547
+Total
+2
+2
+Corporate
+1.5
+1.5
+10.0
+10.6
+12.9
+14.0
+1 Valuation parameters as of 30 June 2023 and 2022 for the respective impairment test in the fourth quarter.
+€ in millions
+2022
+2022
+Currency effects
+Disposals
+Impairments
+Balance as of the beginning of the fiscal year
+Accumulated impairments and other changes
+6,547
+Balance as of the end of the fiscal year
+(10)
+(553)
+Currency effects
+Disposals
+7,083
+27
+2022
+2023
+Additions through business combination
+Balance as of the beginning of the fiscal year
+Cost
+€ in millions
+Changes in goodwill during the 2023 and 2022 fiscal years were as follows:
+14 Goodwill
+120 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+(12)
+Balance as of the end of the fiscal year
+Carrying amount
+Balance as of the beginning of the fiscal year
+Balance as of the end of the fiscal year
+2023
+Green Industrial Power
+Automotive
+Operating segment
+Terminal growth rate¹
+in %
+After-tax WACC¹
+in %
+Pre-tax WACC'
+in %
+€ in millions
+Book value of allocated goodwill
+The following table shows the allocation of the carrying amount of goodwill to the
+segments, as well as the valuation parameters used:
+← 121 →
+Further information
+2023
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+The discount rate for future cash flows is based on the after-tax weighted-average
+cost of capital ("WACC") for the CGU in question. The Capital Asset Pricing Model
+("CAPM") is used to calculate the cost of equity. The relevant pre-tax WACC used to
+discount future pre-tax cash flows in line with IAS 36 is derived from estimated future
+after-tax cash flows and the after-tax WACC using a typical tax rate for each operating
+segment. The risk-free interest rate is derived using the Svensson method taking
+into account risk premiums, the beta factor and debt ratio are derived from a group
+of companies comparable to the operating segment. In this way, the discount rate
+derived reflects the current market rate of return as well as the specific risks attached
+to the respective operating segment.
+Cash flows, including the underlying parameters such as revenue growth and margins,
+are projected based on past experience, current operating results and the business
+plan approved in the fiscal year just ended, which is calculated bottom-up based on
+certain central assumptions applied consistently throughout Infineon. Cash flows over
+a five-year period are used to derive the value in use. The derivation of the terminal
+value is based on a stable business state, reflecting synergies resulting from the
+acquisition of Cypress. The average revenue growth rates over the planning period
+are between 10.5 percent and 16.4 percent, which is in part higher than the average
+historical growth rates of the sectors in which the relevant segments operate because,
+among other things, the segments benefit to varying degrees from the businesses
+acquired with Cypress and the related revenue synergies. Investments to increase
+capacity for which no cash outflow has taken place are not taken into account. Cash
+flows for periods beyond the planning horizon are estimated using a terminal value.
+Infineon determines the recoverable amount of a particular cash generating unit to
+which goodwill has been allocated on the basis of its value in use. The value in use is
+measured by estimating the present value of future cash flows that will be generated
+by the continuing operations of the CGU discounted using an appropriate discount rate.
+Infineon carried out the annual goodwill impairment test at the operating segment
+level in the fourth quarter of the 2023 fiscal year.
+7,083
+7,083
+6,547
+5,962
+7,083
+1,093
+5,962
+28
+Combined Management Report
+1
+Due within one year
+Due after one year to five years
+11
+5
+5
+Expenses for low-value leases
+405
+(23)
+(80)
+103
+405
+Total
+with a term of twelve months or less
+Expenses for short-term leases
+11
+(1)
+5|སྱེ
+(7)
+9
+10
+office equipment
+Other plant and
++++
+6
+5
+11
+80
+6
+5
+83
+The 2022 fiscal year
+336
+in %
+absolute
+2022
+2023
+Change
+€ in millions
+10
+(6)
+7
+9
+(3)
+80
+(71)
+119
+319
+Total
+office equipment
+Other plant and
+1
+8
+ment and machinery
+Technical equip-
+23
+and buildings
+Land, land rights
+1
+€ in millions
+in %
+2022
+230
+197
+81
+76
+82
+72
+Undiscounted
+lease liabilities
+Discounted lease
+liabilities
+Undiscounted
+lease liabilities
+lease liabilities
+30 September 2022
+30 September 2023
+Discounted
+nations
+combi-
+business
+amount
+changes
+Carrying
+Other
+Depreciation
+Additions
+through
+Additions
+Starting
+balance
+Due after more than five years
+Total
+The changes in the right-of-use assets in the 2023 and 2022 fiscal years were as follows:
+209
+235
+112
+133
+2023
+Change
+Interest expenses
+5
+(3)
+2
+6
+ment and machinery
+Depreciation
+Technical equip-
+€ in millions
+389
+absolute
+(22)
+92
+389
+and buildings
+Land, land rights
+The 2023 fiscal year
+The Consolidated Statement of Profit or Loss includes the following amounts in the
+2023 and 2022 fiscal years that are attributable to leases:
+431
+386
+445
+381
+115
+101
+(70)
+(24)
+13.4
+151
+190
+818
+of one year
+In order to determine the present value as of the balance sheet date, the Willis Towers
+Watson RATE:Link approach was applied, which is based on high-grade fixed-interest
+Increase in life expectancy
+961
+180
+781
+968
+185
+783
+of pension increase
+lower expected rate
+a 50 basis points
+2.9
+2.3
+2.8
+2.1
+Projected future pension increases
+1,011
+186
+825
+1,012
+191
+821
+1,008
+820
+185
+1,005
+Quoted
+in an
+30 September 2023
+Infineon | Annual Report 2023
+Total
+Other
+Property
+Reinsurance policies
+Cash and cash equivalents
+Equity securities
+Corporate bonds
+Government bonds
+€ in millions
+of pension increase
+Amounts recognized in the Consolidated Statement of Profit or Loss
+and in the Consolidated Statement of Comprehensive Income
+The expenses and income of defined benefit plans for the 2023 and 2022 fiscal years
+comprised the following:
+The market value of the land and real estate leased to Infineon group companies by
+the legally independent pension trust amounted to €29 million and €30 million as of
+30 September 2023 and 2022 respectively.
+Government and corporate bonds are traded in liquid markets and the majority have
+an investment grade rating. The geographical allocation of the equity component
+of plan assets is globally diversified. As a matter of policy, Infineon's pension plans
+do not invest in the shares or debt instruments of Infineon. The position “Other” in
+the previous table comprises exchange-traded commodities (ETC) and other invest-
+ment funds. The market value of the ETC held domestically was €36 million as of
+30 September 2023 (previous year: €35 million).
+As of 30 September 2023 and 2022, the allocation of invested plan assets to the major
+asset categories was as follows:
+Plan asset allocation
+The pension plans' assets are invested with several fund managers. The investment
+guidelines require a mix of active and passive investment management programs
+covering different asset classes. Taking the duration of the underlying liabilities into
+account, a portfolio of investments of plan assets in equity, debt and other securities,
+as well as real estate and reinsurance policies, is targeted to maximize the total long-
+term return on assets for a given level of risk. Investment risk is monitored on an
+ongoing basis through periodic portfolio reviews, in coordination with investment
+managers and annual liability measurements. Investment policies and strategies are
+periodically reviewed as part of detailed studies of assets and liabilities by indepen-
+dent investment advisors and actuaries to ensure the objectives of the plans are met,
+taking into account any changes in benefit plan structure, market conditions or other
+material items. The aim is to optimize the risk-return profile of plan assets against
+the liabilities using a diversified portfolio of investments within a defined risk budget
+and to thereby increase the funding ratio in the long term.
+Investment strategy
+128 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+The realized return on plan assets in the fiscal year ended 30 September 2023 was
+positive €29 million (30 September 2022: negative €89 million).
+active market
+5.0
+5.7
+1,001
+193
+808
+of salary increase
+higher expected rate
+a 50 basis points
+The weighted-average assumptions used in calculating the actuarial values for the
+pension plans were as follows:
+1,050
+193
+857
+1,049
+198
+851
+lower discount rate
+Actuarial assumptions
+a 50 basis points
+926
+173
+753
+935
+179
+756
+higher discount rate
+a 50 basis points
+Present value of defined
+benefit pension plans with:
+809
+187
+996
+30 September 2023
+2.4
+higher expected rate
+4.8
+3.8
+5.1
+4.1
+a 50 basis points
+975
+179
+796
+978
+183
+2.5
+795
+lower expected rate
+a 50 basis points
+30 September 2022
+Foreign
+plans
+plans
+plans
+plans
+Rate of salary increase
+Discount rate at the end of the fiscal year
+in %
+Domestic
+Foreign
+Domestic
+of salary increase
+Not quoted
+in an
+active market
+30 September 2022
+Quoted Not quoted
+in an
+in an
+active market active market
+2023
+Defined contribution plans
+Due after more than five years up to ten years
+Total
+Due after more than one year to five years
+Due within one year
+€ in millions
+The following table shows the expected disbursements for defined benefit plans for
+the next ten fiscal years as of 30 September 2023 and 2022:
+The weighted-average duration of defined benefit plans was around 12 and 13 years
+as of 30 September 2023 and 2022, respectively.
+In the 2024 fiscal year, payments of €38 million are expected to be made to plan
+assets, of which €35 million relate to benefits paid directly to pension recipients by
+the Group companies.
+As of 30 September 2023 and 2022, cumulative actuarial losses amounted to €39 million
+and €71 million, respectively.
+Actuarial gains before taxes of €32 million and €332 million for the 2023 and
+2022 fiscal years, respectively, had been recognized outside of profit (loss) for the
+period in other comprehensive income.
+Service costs were recorded within cost of goods sold, research and development
+expenses or selling, general and administrative expenses. Interest costs and expected
+return on plan assets were recorded net as part of financial expenses.
+129 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+86
+602
+93
+628
+16
+36
+21
+37
+30
+30 Septem-
+ber 2023
+30 Septem-
+ber 2022
+48
+128
+Infineon | Annual Report 2023
+The pro rata expense for share-based payments resulted in an increase in additional
+paid-in capital of €92 million in the 2023 fiscal year (2022: €62 million). Due to the
+transfer of own shares within the framework of share-based payment to employees
+and members of the Management Board, additional paid-in capital, as well as the line
+Additional paid-in capital
+As of 30 September 2023, the ordinary share capital amounted to €2,611,842,274 and
+was fully paid up. It was divided into 1,305,921,137 no par value registered shares,
+each representing €2 of the Company's ordinary share capital. Each share grants the
+holder one vote and an equal portion of the profits in the form of a dividend, as
+resolved by the Annual General Meeting. Own shares held by the Company as of the
+date of the Annual General Meeting carry no voting rights and are not entitled to
+a dividend.
+855,701
+1,302,231,236
+3,689,901
+1,305,921,137
+1,301,375,535
+2022
+1,518,875
+1,303,750,111
+2,171,026
+1,305,921,137
+1,302,231,236
+2023
+Shares issued at the end of the fiscal year
+3
+Shares outstanding at the beginning of the fiscal year
+Transfer of own shares under the Performance Share
+and Restricted Stock Unit Plans (see note 22, p. 133 ff.)
+Shares outstanding at the end of the fiscal year
+Repurchased own shares
+The following table shows a reconciliation of the number of ordinary shares issued as
+of 30 September 2023 and 2022:
+Ordinary share capital
+20 Equity
+Additionally, the Group makes contributions to government pension schemes.
+Expenses for defined contribution plans amounted to €333 million and €309 million
+in the 2023 and 2022 fiscal years.
+In connection with defined contribution plans, fixed contributions are made to external
+insurance providers or funds. Infineon has no further performance obligations or
+risks with regard to these pension plans in excess of the fixed contributions paid.
+563
+620
+325
+354
+192
+218
+46
+quantity
+29
+3
+(43)
+Past service (cost) benefit
+173
+159
+(35)
+(7)
+(28)
+(28)
+(8)
+(20)
+Current service cost
+1
+130
+(1)
+1
+plans
+plans
+plans
+plans
+€ in millions
+Total
+Foreign
+Domestic
+Total
+Foreign
+Domestic
+2022
+146
+985
+2
+Interest cost
+(8)
+(35)
+(39)
+10
+2
+8
+26
+33
+(13)
+(26)
+23
+Pension cost
+1
+on plan assets
+42
+Expected return
+29
+22
+(19)
+(5)
+(14)
+(37)
+(8)
+(29)
+231
+261
+39
+183
+120
+385
+215
+720
+989
+New plans created and plan amendments
+386
+53
+333
+72
+72
+32
+32
+1
+1
+13
+(10)
+23
+(44)
+(8)
+(36)
+(19)
+(5)
+(14)
+(37)
+(8)
+(29)
+1
+2
+(1)
+(4)
+(4)
+Benefits paid
+26
+71
+617
+Fair value of plan assets as of the beginning of year
+Change in fair value of plan assets:
+(985)
+(183)
+(802)
+(989)
+(188)
+(801)
+Present value of defined benefit obligation as of the end of year
+(7)
+(1,381)
+(35)
+(7)
+6
+Currency effects
+(10)
+(10)
+(8)
+(8)
+Employee contributions
+35
+11
+24
+38
+12
+6
+688
+(7)
+(28)
+1,285
+1,161
+11
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+125 →
+Contract liabilities amounted to €126 million and €32 million as of 30 September 2023
+and 2022, respectively. Of this amount, €27 million (30 September 2022: €6 million)
+related to non-current contract liabilities reported under other non-current liabilities.
+The increase in contract liabilities mainly results from advance payments from
+customers based on capacity reservation agreements.
+Further information on Infineon's financial liabilities can be found in note 27. ☐ p. 142 ff.
+19 Pension plans
+Defined benefit pension plans
+Infineon's employee benefit plans consist of domestic and foreign defined benefit
+and defined contribution pension plans providing retirement, disability and
+surviving dependents' benefits. For Infineon, the significant benefit plans in
+Germany pertain to Infineon Technologies AG and, within the foreign benefit plans,
+to Infineon Technologies Austria AG, Austria.
+In Germany, Infineon primarily offers defined contribution benefits which provide
+for the employees when they reach retirement age, or in the event of disability or
+death. The statutory framework is provided by the Company Pension Act (in German:
+Betriebsrentengesetz or "BetrAVG") and by employment law in general. With the
+Infineon pension plan, new entrants receive a defined contribution benefit, which is
+funded by Infineon. Payments by the Infineon pension plan are generally made in
+twelve annual installments. For active employees who were entitled to benefits in the
+form of an annuity before the Infineon Pension Plan came into force, this commitment
+was transferred into the Infineon Pension Plan and thereby the possibility of an
+annuity is guaranteed. Together with former employees whose pension benefit obli-
+gations were not transferred into the Infineon Pension Plan, this group makes up the
+largest part of the obligation at this time. A corresponding provision is recorded for
+the German defined benefit pension plans, which are partly backed by plan assets.
+Individual agreements are in place for the members of the Management Board, which
+are backed by plan assets. The major portion of the plan assets is managed by a pen-
+sion trust in the legal form of a registered association. This is composed of executives
+of Infineon Technologies AG, and the investment strategy is defined by Infineon
+Technologies AG.
+The benefit obligation of some foreign plans is measured according to the income
+in the last month or year of service; others are dependent on average income over
+the service period. Foreign pension plans are managed by country-specific external
+pension funds or other pension schemes. The obligations arising from foreign defined
+benefit pension plans are partly covered by plan assets. The management of existing
+foreign plan assets is performed by the respective pension scheme.
+The valuation date of the pension plans is 30 September.
+The Group-defined benefit pension plans are exposed to risks arising from changes
+to actuarial assumptions such as discount factors, salary and pension trends,
+investment risks and longevity risks. A lower discount rate leads to higher pension
+liabilities. Lower than expected growth in plan assets could lead to a deterioration
+of the funded status.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+126 →
+(15)
+(23)
+802
+The development of Infineon's German (domestic) and non-German (foreign) pension
+plans and the plan assets as of 30 September 2023 and 2022 is presented in the
+following table:
+(8)
+(20)
+「8 '
+(220)
+(1,161)
+(985)
+(183)
+(802)
+Adjustments to financial assumptions
+Adjustments to demographic assumptions
+Experience adjustments
+Actuarial gains (losses) for:
+(28)
+Interest cost
+Current service cost
+Present value as of the beginning of year
+Change in defined benefit obligations taking into account future salary increases:
+€ in millions
+Total
+Foreign plans
+Domestic plans
+Total
+Foreign plans
+Domestic plans
+2022
+2023
+Past service income (cost)
+671
+124
+764
+Total
+Foreign
+plans
+plans
+Domestic
+Total
+Foreign
+plans
+plans
+Domestic
+30 September 2022
+30 September 2023
+€ in millions
+The funding of the defined benefit obligations as of 30 September 2023 and 2022 was
+as follows:
+Since no asset ceilings applied, the funded status of the Infineon pension plans
+corresponded to the amounts reported in the Consolidated Statement of Financial
+Position as of 30 September 2023 and 2022.
+Pension obligations are reported in the Consolidated Statement of Financial Position
+under "Pensions and similar commitments". p. 91
+127 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+(51)
+(51)
+(58)
+(58)
+thereof: Infineon Technologies Austria AG
+corporate bonds from issuers carrying a very high credit rating, with the same maturity
+and in the same currency as the pension obligations to be assessed.
+The 2018 G mortality tables by Dr. Klaus Heubeck were used for Germany as in the
+previous year, and for Austria, the AVÖ 2018-P tables were applied.
+Sensitivity analysis
+The following sensitivity analysis table shows how the present value of all defined
+benefit pension obligations would be affected by changes in the aforementioned
+actuarial assumptions. In each case, they reflect the effect of changes in one actuarial
+assumption while all other assumptions remain constant.
+93
+188
+801
+Total
+855
+101
+754
+849
+96
+753
+or partly funded
+Total
+(167)
+Foreign
+plans
+30 September 2022
+30 September 2023
+Foreign
+plans
+Domestic
+plans
+€ in millions
+Plans that are wholly
+130
+82
+48
+140
+92
+48
+Plans that are wholly
+unfunded
+Total
+(167)
+Domestic
+plans
+(128)
+10
+10
+8
+8
+33
+11
+22
+33
+10
+23
+(99)
+(29)
+Benefits paid
+(70)
+(5)
+8
+10
+2
+26
+3
+23
+Employee contributions
+Contributions from Infineon
+Actuarial gains (losses)
+(128)
+Expected return on plan assets
+3
+(26)
+8
+(38)
+(297)
+(12)
+thereof: Infineon Technologies AG
+(112)
+(185)
+(268)
+(144)
+Net pension liability
+688
+71
+617
+721
+64
+(124)
+4
+(35)
+657
+Reclassification of fair value of plan assets
+(24)
+4
+Currency effects
+(11)
+(3)
+(3)
+5
+5
+Fair value of plan assets as of the end of year
+in number of shares (in millions)
+Costs for share-based payment
+Outstanding restricted stock units as of the end of the fiscal year
+Forfeited
+Allocated
+Granted
+Outstanding restricted stock units at the beginning of the fiscal year
+2023
+278,708
+278,708
+4th tranche
+17.31
+18.62
+29 February 2024
+2020 fiscal year:
+4th tranche
+3rd tranche
+36.16
+2022
+35.29
+34.87
+The development of the restricted stock units is as follows:
+4.3
+In addition to provisions and liabilities, there were other financial obligations that
+were not recognized in the Consolidated Statement of Financial Position. These
+resulted, in particular, from legal risks (see note 24, □ p. 136 ff.) and unconditional
+purchase commitments, which are explained in more detail below.
+3.7
+136 →
+Further information
+31 March 2025
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Through certain sales and other agreements, Infineon may be obligated in the normal
+course of business to indemnify or compensate its counterparties under certain con-
+ditions for warranties, patent infringement or other matters. The maximum amount
+of potential future payments under these types of agreements is not predictable with
+any degree of certainty since the potential obligations are contingent on events that
+may or may not occur in the future and depend on certain facts and circumstances
+In the course of its investing activities, Infineon also receives government grants
+related to the construction and financing of certain of its manufacturing facilities.
+Grants are also received for selected research and development projects, and for
+employee development initiatives. Certain grants have been received contingent upon
+Infineon complying with particular project-related requirements, such as creating
+a specified number of jobs over a defined period of time. From today's perspective,
+Infineon expects to comply with these requirements. Nevertheless, should such
+requirements not be met, as of 30 September 2023, a maximum of €290 million
+(30 September 2022: €275 million) of subsidies already received could be refundable.
+1.8
+Furthermore, Infineon has committed to invest €500 million in the "European Semi-
+conductor Manufacturing Company (ESMC) GmbH" in Dresden (Germany), 100 percent
+of whose shares are currently held by Taiwan Semiconductor Manufacturing Company
+Limited (TSMC). Infineon's participation will amount to 10 percent.
+23 Other financial commitments
+The costs for share-based payment amounted to €92 million in the 2023 fiscal year
+(2022: €62 million).
+4.3
+6.5
+(0.3)
+(0.3)
+(0.5)
+(1.2)
+3.3
+Contracts already entered into for commenced or planned investments in property,
+plant and equipment (purchase commitments) as of 30 September 2023 amounted
+to €2,921 million (30 September 2022: €2,344 million). Commitments arising from
+orders placed for investments in intangible asset projects amount to €1 million as of
+30 September 2023 (30 September 2022: €6 million).
+36.16
+31 March 2025
+3rd tranche
+37.68
+920,464
+37.68
+31 March 2024
+1st tranche
+2023 fiscal year:
+restricted
+stock unit
+in €
+Fair value per
+Number of
+restricted
+stock units
+as of 30 Sep-
+tember 2023
+920,464
+Price of an
+Infineon share
+as of the
+grant date in €
+2nd tranche
+Tranche
+The following is an overview of the allocations made:
+135 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+specific to each agreement. Historically, payments made by Infineon under these
+types of agreements have not had a material effect on Infineon's financial condition,
+liquidity position and results of operations.
+Management Board and Supervisory Board
+End of the
+waiting period
+31 March 2024
+3rd tranche
+37.68
+2021 fiscal year:
+30.33
+29.96
+29.56
+721,280
+30.99
+31 March 2026
+4th tranche
+721,280
+30.99
+31 March 2025
+31 March 2026
+721,280
+31 March 2024
+2nd tranche
+2022 fiscal year:
+37.34
+36.53
+36.16
+35.77
+920,464
+37.68
+31 March 2027
+4th tranche
+920,464
+30.99
+24 Legal risks
+Trade and other receivables
+Financial receivables
+Trade and other payables
+Financial payables
+Smart card chips antitrust litigation
+1
+2
+1
+8
+2
+35
+1
+2
+8
+Sales and service charges to and products and services received from related
+companies in the 2023 and 2022 fiscal years consisted of the following:
+1
+16
+12
+30
+Other
+related
+companies
+Associates
+Joint
+ventures
+Other
+related
+companies
+Associates
+Joint
+ventures
+30 September 2022
+30 September 2023
+3
+€ in millions
+2023
+Joint
+ventures
+Infineon | Annual Report 2023
+As of 30 September 2023, sales and services relationships with related companies
+resulted in purchase commitments of €36 million (30 September 2022: €37 million).
+Infineon | Annual Report 2023
+19
+100
+21
+120
+services received
+1
+2022
+21
+1
+29
+132
+Sales and service charges
+Products and
+Other
+related
+companies
+Joint Associates
+ventures
+Other
+related
+companies
+€ in millions
+Associates
+115
+Litigation and government inquiries
+Related companies receivables and payables as of 30 September 2023 and 2022
+consisted of the following:
+Related companies
+Infineon was a shareholder with personal liability of Qimonda Dresden until the
+carve-out of the memory business; as a result, certain long-standing creditors have
+residual liability claims against Infineon. These claims can only be exercised by the
+insolvency administrator acting in the name of the creditors concerned. In the mean-
+time, settlements have been concluded with most of the major liability creditors.
+Liabilities, provisions and contingent liabilities relating to Qimonda
+Infineon recognizes provisions and liabilities for such obligations and risks, which it
+assesses at the end of each reporting period, are more likely than not to be incurred
+(that is where, from Infineon's perspective at the end of each reporting period, the
+probability of having to settle an obligation or risk is greater than the probability of
+not having to) and the obligation or risk can be estimated with reasonable accuracy
+at this time.
+Residual liability of Infineon as former shareholder of
+Qimonda Dresden GmbH & Co. OHG
+The parties are exchanging further written submissions. It is not clear at this stage
+if the legal dispute can be resolved with an out-of-court settlement, or, if this is not
+the case,
+when a first-instance court decision would be reached.
+On 21 September 2018, in consultation with the parties, the independent expert
+appointed by the court presented an interim report on his preliminary assessment
+of the value of the contribution in kind. The Company is in principle prepared to
+conduct discussions about an out-of-court settlement of the legal dispute on the
+basis of the interim report.
+The legal dispute is being pursued with great effort by both parties, and many
+extensive written submissions have already been exchanged between the parties.
+Both sides have engaged numerous specialists and experts who are supporting the
+respective parties with assessments and opinions.
+The legal dispute has, in the meantime, focused on the claims asserted for alleged
+lack of value. On 29 August 2013, the court appointed an independent expert to
+clarify the valuation issues raised by the insolvency administrator and to address
+technical matters.
+The alleged impairment of capital runs contrary to two valuations prepared as part
+of the preparatory documentation for the capital increase by independent auditing
+companies, one of which had been engaged by Infineon and the other of which was
+acting in the capacity of a court-appointed auditor of contributions in kind and
+post-formation acquisitions. The auditing company engaged by Infineon concluded
+in its valuation that the business area contributed had a value of several times the
+lowest issue price of the shares issued, while the court-appointed auditor of contribu-
+tions in kind and post-formation acquisitions confirmed to the court that the lowest
+issue price of the shares issued was covered - as legally required - by the value of
+the contributions in kind. Additionally, in the course of its defense against the claims
+asserted by the insolvency administrator, Infineon has commissioned several expert
+opinions, all of which arrived at the same conclusion that the objections raised by
+the insolvency administrator against the valuation of the contribution in kind are
+not valid.
+137 →
+Further information
+As described above, Infineon faces certain risks in connection with the insolvency
+proceedings relating to the assets of Qimonda and that entity's subsidiaries. In con-
+sideration of the interim report from the court-appointed expert, Infineon recorded
+provisions relating to Qimonda of €212 million in total as of 30 September 2023. This
+comprises mainly provisions for the still pending legal dispute over the alleged acti-
+vation of a shell company and liability for impairment of capital, including legal costs.
+As of 30 September 2022, provisions relating to Qimonda amounted to €211 million.
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+In addition to the request for declaratory judgment against Infineon in an unspecified
+amount, on 14 February 2012 the insolvency administrator also lodged a request for
+payment based on an alternative claim (in German: "Hilfsantrag"), as well as making
+other additional claims. In conjunction with this alternative claim, the insolvency
+administrator has requested the payment of at least €1.71 billion plus interest in con-
+nection with the alleged activation of a shell company. On 15 June 2012, the insolvency
+administrator increased his request for the payment of 14 February 2012 on the
+grounds of activation of a shell company to at least approximately €3.35 billion plus
+interest. Furthermore, the insolvency administrator continues to base a substantial
+part of his alleged payment claims, as already asserted out of court against Infineon
+in August 2011 for an unspecified amount, on liability for impairment of capital (in
+German: "Differenzhaftung”). This claim is based on the allegation that, from the
+very beginning, the carved-out memory products business had a negative billion
+euro value. The insolvency administrator therefore asserts that Infineon is obliged
+to make good the difference between this negative value and the lowest issue price
+(in German: "geringster Ausgabebetrag") of the subscribed stock. Additionally, the
+insolvency administrator has asserted a claim for repayment of allegedly unjustly
+charged consultancy fees in the amount of €10 million in connection with the flotation
+of Qimonda.
+Infineon Technologies Holding B.V. and Infineon Technologies Investment B.V., at the
+Regional Court Munich I in November 2010. This requested that Infineon be deemed
+liable to make good the deficit balance of Qimonda as it stood when the insolvency
+proceedings with respect to the assets of Qimonda began, i.e., to refund to Qimonda
+the difference between the latter's actual business assets when the insolvency pro-
+ceedings began and its share capital (in German: "Unterbilanzhaftung"). The insolvency
+administrator contended that the commencement of operating activities by Qimonda
+amounted to what is considered in case law to be the activation of a shell company
+(in German: "Wirtschaftliche Neugründung”), and that this activation of a shell com-
+pany was not disclosed in the correct manner. On 6 March 2012, with respect to
+another matter, the German Federal High Court issued a ruling on principle that any
+liability resulting from the activation of a shell company only depends on the situa-
+tion at the date of the activation of a shell company and not, as asserted by the insol-
+vency administrator, on the situation at the date on which insolvency proceedings
+are opened.
+Alleged activation of a shell company and liability for impairment of capital
+The insolvency administrator filed a request for declaratory judgment in an unspeci-
+fied amount against Infineon Technologies AG and, by way of third-party notice,
+All significant assets, liabilities and business activities attributable to the memory
+business (Memory Products) were carved out from Infineon and transferred to
+Qimonda in the form of a contribution in kind with economic effect from 1 May 2006.
+Qimonda filed an application at the Munich local court to commence insolvency
+proceedings on 23 January 2009. On 1 April 2009, the insolvency proceedings were
+formally opened. The insolvency of Qimonda has given rise to various disputes
+between the insolvency administrator and Infineon.
+Proceedings in relation to Qimonda
+In July 2019, a direct customer filed a lawsuit against Infineon Technologies UK Limited
+and several Renesas entities in London (United Kingdom) relating to the aforemen-
+tioned EU antitrust case. The London court dismissed the complaint for being time-
+barred. The dismissal was confirmed by the Court of Appeal. The plaintiff filed a further
+appeal to the UK Supreme Court. In December 2022, the UK Supreme Court finally
+dismissed the complaint.
+In October 2008, the EU Commission initiated an investigation into the Company and
+other manufacturers of chips for smart cards for alleged violations of antitrust laws.
+In September 2014, the EU Commission imposed a fine of €83 million on Infineon,
+which in July 2020 was reduced to €76.9 million by the General Court of the European
+Union.
+Combined Management Report
+Infineon purchases certain raw materials and services from and sells certain products
+and services to related companies.
+Infineon | Annual Report 2023
+Combined Management Report
+Infineon has transactions in the normal course of business with joint ventures, asso-
+ciates and other related companies (collectively "related companies"). The related
+companies are disclosed in note 30, p. 165 ff.. Related persons are persons in key
+management positions, in particular members of the Management and Supervisory
+Board (see note 30, ☐ p. 162 f.) and their close relatives (collectively "related persons").
+25 Transactions with related companies and persons
+A settlement or adverse judicial decision in any of the matters described above
+could result in significant financial liabilities for Infineon and other adverse effects,
+and these in turn could have a material adverse effect on its business and financial
+condition, liquidity position and results of operations. Irrespective of the validity
+of the allegations and the success of the aforementioned claims and other matters
+described above, Infineon could incur significant costs in the defense of these matters.
+139 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Provisions relating to legal proceedings and other uncertain legal issues are recorded
+when it is probable that a liability has been incurred and the associated amount can
+be reasonably estimated. To the extent that liabilities arising from legal disputes and
+other uncertain legal positions are not probable or cannot be reliably estimated, then
+they qualify as contingent liabilities. Any potential liability is reviewed again as soon
+as additional information becomes available and the estimates are revised if necessary.
+Provisions with respect to these matters are subject to future developments or changes
+in circumstances in each of the matters, which could have a material adverse effect
+on Infineon's financial condition, liquidity position and results of operations.
+As part of an audit finding relating to the tax treatment of losses from the repurchase
+of convertible bonds in the 2011, 2012 and 2014 fiscal years, there were contingent
+liabilities of €63 million as of 30 September 2023 (2022: €63 million) for withholding
+tax on capital gains to be paid in arrears as well as corporate income tax and trade
+tax of €3 million (2022: €3 million), in each case plus interest. Suspension of enforce-
+ment was granted as part of the ongoing appeal proceedings for 2011 and 2012. After
+completion of the current tax audit, suspension of enforcement will also be applied
+for 2014 and the appeal proceedings will be extended accordingly. Infineon expects
+that there is a sufficient degree of likelihood of winning any potential appeal or
+legal action.
+Furthermore, in connection with its existing or previous business operations, Infineon
+is also exposed to numerous legal risks, which until now have not resulted in legal
+disputes. These include risks related to product liability, environment, capital market,
+anti-corruption, competition and antitrust legislation as well as export control and
+other compliance regulations. Claims could also be made against Infineon in connec-
+tion with these matters in the event of breaches of law committed by individual
+employees or third parties.
+Based on its current knowledge, Infineon does not believe that the ultimate resolution
+of these other pending legal disputes and proceedings will have a material adverse
+effect on Infineon's financial condition, liquidity position and results of operations.
+However, future revisions to this assessment cannot be ruled out, and any reassess-
+ment of the miscellaneous legal disputes and proceedings could have a material
+adverse effect on the financial condition, liquidity position and results of operations,
+particularly in the period in which reassessment is made.
+Infineon is also involved in various other legal disputes and proceedings in connection
+with its existing or previous business activities. These can relate, in particular, to
+products, services, patents, export control and environmental issues and other matters.
+Other
+There can be no certainty that the provisions recorded for Qimonda will be sufficient
+to cover all of the liabilities that could ultimately be incurred in relation to the insol-
+vency of Qimonda and, in particular, the matters discussed above. In addition, it is
+possible that liabilities and risks materialize that are currently considered to be unlikely
+to do so and, accordingly, represent contingent liabilities that are not included in
+provisions. Should the alleged claims relating to the activation of a shell company and
+liability for impairment of capital prove to be valid, substantial financial obligations
+above the provisions already recorded could arise for Infineon, which could have an
+adverse effect on its business and its financial condition, liquidity position and results
+of operations.
+138 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Provisions and contingent liabilities for legal proceedings
+and other uncertain legal issues
+28.87
+73,146
+22.82
+00
+3
+5
+hedge accounting
+(417)
+Dividends to shareholders of Infineon Technologies AG
+Compensation of hybrid capital investors
+resulting from
+3,137
+and hybrid capital investors of Infineon Technologies AG
+Realized gains (losses)
+Profit (loss) for the period attributable to shareholders
+(2)
+(2)
+1
+(1)
+2
+hedge accounting
+3,506
+As of 30 September 2022
+resulting from
+Unrealized gains (losses)
+310
+Actuarial gains (losses) on pensions and similar commitments
+net of tax of minus €25 million
+8
+7
+(1)
+(39)
+Infineon's main capital management objective is to ensure financial flexibility at all
+times on the basis of a solid capital structure. It is of prime importance that sufficient
+cash funds are available to finance operating activities and planned investments
+throughout all phases of the business cycle. On the other hand, debt should only
+constitute a modest portion of the financing mix.
+21 Capital management
+132 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+6,204
+17
+As of 30 September 2023
+1,369
+net of tax of minus €16 million
+(1)
+1,374
+(713)
+3
+(716)
+Total
+Actuarial gains (losses) on pensions and similar commitments
+(4)
+1
+(5)
+Cost of hedging
+1,373
+Infineon derives its long-term key objectives for capital management based on these
+principles and the clear target to remain investment grade. For liquidity, the gross
+cash should amount to €1 billion, plus at least 10 percent of revenue. Gross financial
+debt should not exceed two times EBITDA.
+1,369
+(718)
+5 Q = <131>
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon Annual Report 2023
+Infineon Technologies AG issued a perpetual hybrid bond on 1 October 2019 to
+refinance the acquisition of Cypress, which is an equity instrument under IAS 32.
+The term is not contractually limited; the bond has no final maturity date. The hybrid
+bond can only be canceled by Infineon subject to certain conditions. The investors
+have no cancellation rights and cannot trigger a premature repayment liability for
+Infineon. Distributions are at Infineon's sole discretion.
+Hybrid capital
+> Pursuant to section 4, paragraph 6 of the Articles of Association the share capital
+is conditionally increased by up to €260,000,000 through the issue of up to
+130,000,000 new no par value registered shares for the granting of shares to
+creditors or the holders of warrants or convertible bonds, which due to the autho-
+rization by the Annual General Meeting on 20 February 2020 are issued by the
+Company or a subsidiary company (Conditional Capital 2020/1).
+As of 30 September 2023, the Company's Articles of Association provided for a
+conditional capital amounting to up to €260,000,000:
+Conditional capital
+> Section 4, paragraph 7 of the Articles of Association provides that the Manage-
+ment Board is authorized, with the approval of the Supervisory Board, to increase
+the share capital in the period up to 24 February 2026 - either once or in partial
+amounts - by a total of up to €30,000,000 by issuing new no par value registered
+shares against contributions in cash for the purpose of increasing the issue to
+employees and members of the Executive Board of the Company or its Group
+companies. The subscription rights of the shareholders are excluded in relation
+to these shares. The shares may be issued to employees in such a manner that the
+contribution to be paid on such shares is covered by the portion of the profit for
+the year that the Management Board and Supervisory Board could transfer to
+retained earnings in accordance with section 58, paragraph 2 of the German Stock
+Corporation Act. The Management Board, with the approval of the Supervisory
+Board, decides on the additional content of the share rights and the conditions of
+share issue (Authorized Capital 2021/1).
+-
+> Section 4, paragraph 4 of the Articles of Association provides that the Management
+Board is authorized, with the approval of the Supervisory Board, to increase the
+share capital in the period until 19 February 2025 once or in several partial amounts
+by a total of up to €640,000,000 through the issue of new no par value registered
+shares, against contributions in cash or in kind (Authorized Capital 2020/1). The
+new shares participate in profits from the beginning of the fiscal year of their issue.
+To the extent legally permissible, the Management Board may, with the approval
+of the Supervisory Board, and contrary to section 60, paragraph 2 of the German
+Stock Corporation Act, stipulate that the new shares participate in the profits from
+the beginning of an already ended fiscal year for which no resolution of the Annual
+General Meeting on the use of the distributable profit has yet been made at the
+time of their issue. The originally authorized capital 2020/1 of €750,000,000 was
+reduced to €640,000,000 by the capital increase of €110,000,000 as decided by the
+Management Board and the Supervisory Board on 26 May 2020 and entered in
+the Commercial Register on 27 May 2020. Within the framework of the Authorized
+Capital 2020/1, the Management Board is authorized, with the approval of the
+Supervisory Board, to exclude the subscription rights of the shareholders in certain
+cases. Cash capital increases with subscription rights excluded pursuant to section
+186, paragraph 3, sentence 4 of the German Stock Corporation Act, are not permit-
+ted to exceed 10 percent of a company's share capital – neither at the time of the
+resolution of the authorization in the Annual General Meeting, nor at the effective
+date of the authorization, or its exercise. The capital increase of 26/27 May 2020
+utilized around 4 percent of this framework. For share capital increases against
+contributions in kind or a combination of cash contributions and contributions in
+kind, the authorization further provides an upper limit of 10 percent of the share
+capital in place at the date of the authorization in the Annual General Meeting.
+As of 30 September 2023, the Company's Articles of Association provided for two
+authorized share capitals amounting to up to €670,000,000:
+Authorized share capital
+item for own shares, decreased by €10 million (2022: €5 million). Tax effects totaling
+€23 million (2022: €9 million) increased the additional paid-in capital.
+← 130 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+178,213
+Combined Management Report
+Management Board and Supervisory Board
+In the 2023 fiscal year, €39 million (2022: €39 million) was recognized in equity as
+compensation to hybrid capital investors. For the purpose of calculating earnings per
+share, the profit (loss) for the period attributable to the shareholders and hybrid
+capital investors of Infineon Technologies AG of €3,137 million (2022: €2,179 million)
+was reduced by compensation to the hybrid capital investors of €29 million (2022:
+€29 million; net of tax), to €3,108 million (2022: €2,150 million) (see note 8, ☐ p. 115).
+The hybrid capital investors' compensation is paid in arrears on 1 April of each year,
+subject to repayment or redemption. On 1 April 2023, €39 million (2022: €39 million)
+was paid out to the hybrid capital investors.
+Retained earnings
+The following table shows a reconciliation of retained earnings as of 30 September 2023
+and 2022:
+Currency effects
+(39)
+Compensation of hybrid capital investors
+Net of tax
+Tax
+Pre-tax
+Net of tax
+Tax
+Pre-tax
+€ in millions
+(351)
+(718)
+2022
+2,179
+Changes in other reserves during the 2023 and 2022 fiscal years were as follows:
+1,407
+and hybrid capital investors of Infineon Technologies AG
+Dividends to shareholders of Infineon Technologies AG
+Profit (loss) for the period attributable to shareholders
+As of 1 October 2021
+€ in millions
+Other reserves
+For the 2022 fiscal year, a cash dividend of €0.32 per share (total amount: €417 million)
+was paid. For the 2021 fiscal year, a cash dividend of €0.27 per share (total amount:
+€351 million) was paid.
+Dividends
+"Actuarial gains (losses) on pensions and similar commitments" contain the share of
+profit (loss) of associates and joint ventures accounted for using the equity method in
+the 2023 fiscal year of €0 million (2022: €3 million).
+2023
+Infineon is not subject to any statutory capital requirements, nor are any such
+defined in the Articles of Association.
+With regard to the 2023 fiscal year, a dividend of €0.35 for each share entitled to a
+dividend shall be proposed to be paid from the €710 million of distributable profits
+of Infineon Technologies AG. This would result in an expected distribution of approxi-
+mately €456 million. The payment of this dividend depends on the approval of the
+Annual General Meeting on 23 February 2024.
+The gross cash position decreased from €3,717 million as of 30 September 2022,
+to €3,590 million as of 30 September 2023 (for details, see the chapter "Review
+of liquidity" in the Combined Management Report, p. 56). Based on revenues of
+€16,309 million, the ratio of gross cash to revenue as of 30 September 2023 was
+€1 billion, plus an additional 15.9 percent of revenue (30 September 2022: €1 billion,
+plus 19.1 percent of revenue).
+2023 fiscal year: Employees
+The fair value of the restricted stock units at the date of allocation was determined
+by an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model for the prediction of share price developments). The fair value of
+the instruments granted is determined, taking into account future dividends.
+Under this plan, (virtual) restricted stock units are initially provisionally granted on
+1 April (up to the 2020 fiscal year: 1 March) of the fiscal year according to a predeter-
+mined LTI grant amount in euros. With the allocation of a (virtual) restricted stock
+unit, the plan participants acquire the right to receive a (real) Infineon share after the
+expiry of the vesting period, provided that the employees are still employed by Infineon
+at this time. The final allocation is made in stages (each representing 25 percent of
+the provisionally allocated restricted stock units) after the expiry of the vesting period
+of one year following allocation.
+3.2
+3.2
+(0.5)
+(0.5)
+(0.3)
+(0.4)
+0.7
+0.9
+3.3
+3.2
+2022
+2023
+Restricted Stock Unit Plan
+Outstanding performance shares as of the end of the fiscal year
+Forfeited
+Allocated
+Outstanding performance shares at the beginning of the fiscal year
+Granted
+in number of shares (in millions)
+The development of the performance shares is as follows:
+Fair value per
+performance
+share in €
+31 March 2027
+25.00
+683,239
+32.31
+Members of the Management Board
+28.87
+Capital management, as well as the corresponding targets and definitions, are based
+on indicators derived from the consolidated IFRS financial statements. Gross cash
+is defined as the total of cash and cash equivalents and financial investments. Gross
+financial debt comprises short-term and long-term financial debt. Infineon defines
+EBITDA as earnings from continuing operations before interest, taxes and depreciation
+and amortization.
+31 March 2025
+500,510
+22.82
+31 March 2025
+2021 fiscal year: Employees
+2021 fiscal year:
+27.63
+148,737
+34.85
+Number of
+performance
+shares
+outstanding
+as of 30 Sep-
+tember 2023
+31 March 2026
+2022 fiscal year:
+27.63
+464,798
+34.85
+2022 fiscal year: Employees
+32.31
+207,343
+25.00
+31 March 2027
+Members of the Management Board
+2023 fiscal year:
+Members of the Management Board
+days before
+the start of the
+performance
+period in €
+31 March 2026
+Average share
+price in the
+Average share
+price in the
+nine months
+before grant
+End of the
+waiting period
+Tranche
+The following is an overview of the allocations made:
+simulation model for the prediction of share price and index developments). The
+fair value of the instruments granted was determined, taking into account future
+dividends as well as the payment cap.
+The fair value of the performance shares at the date of allocation was determined by
+an external expert using a recognized financial-mathematical method (Monte Carlo
+For the tranches up to and including 1 March 2020, the performance shares are split
+between 50 percent performance-related shares and 50 percent that are not dependent
+on performance. The performance-related shares are finally granted only when the
+Infineon share outperforms the Philadelphia Semiconductor Index (SOX) during
+the period between the date of the provisional allocation and the end of the vesting
+period. If at the end of the vesting period the requirements for an allocation of perfor-
+mance shares - either all or only those that are not performance-related – are fulfilled,
+then entitlement to the transfer of the corresponding number of (real) Infineon shares
+is acquired. The value of the performance shares ultimately assigned to members
+of the Management Board must not exceed 250 percent of the respective LTI grant
+amount; above this cap, performance shares lapse.
+-
+With the granting of a (virtual) performance share, the participants in the plan acquire
+the right to receive (real) Infineon shares once a personal investment in Infineon
+shares - depending on position and LTI grant amount – has reached a four-year
+holding period.
+Plan conditions for tranches up to and including 1 March 2020
+Under this plan, (virtual) performance shares are initially provisionally granted on
+1 April (up to the 2020 fiscal year: 1 March) of the fiscal year according to a predeter-
+mined LTI grant amount in euros.
+in €
+A Long-Term Incentive (LTI) plan, the so-called Performance Share Plan, was developed
+for employees and members of the Management Board.
+22 Share-based payment
+133 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+60 trading
+With gross financial debt of €4,733 million as of 30 September 2023 (30 September
+2022: €5,662 million), and EBITDA of €5,773 million for the 2023 fiscal year (2022:
+€4,518 million), the gross debt to EBITDA ratio was 0.8 as of 30 September 2023
+(30 September 2022: 1.3). Infineon continues to have sufficient financial flexibility
+to ensure that, in addition to financing its planned investments, it is also able to
+regularly pay dividends (see note 20, p. 131).
+The USPP notes totaling US$2,235 million issued in April 2016 and June 2021 contain
+a number of standard covenants, including a debt coverage ratio, which provides
+for a certain relationship between the size of debt (adjusted) and earnings (adjusted).
+In the 2023 fiscal year, Infineon has met the minimum requirements of all covenants.
+Should Infineon not comply with the covenants attached to the USPP notes, then
+all USPP notes outstanding as of 30 September 2023 amounting to US$2,235 million
+(see note 16, p. 123) could become immediately repayable.
+Performance Share Plan
+Number of
+performance
+shares
+outstanding
+as of 30 Sep-
+tember 2023
+The Company makes use of the Performance Share Plan and the Restricted Stock
+Unit Plan in order to provide share-based payments.
+2020 fiscal year: Employees
+2020 fiscal year:
+The following is an overview of the allocations made:
+Tranche
+The fair value of the performance shares at the date of allocation was determined by
+an external expert using a recognized financial-mathematical method (Monte Carlo
+simulation model for the prediction of the share price development and the TSR target
+achievements). The fair value of the instruments granted is determined taking into
+account future dividends as well as the payment cap.
+Fair value per
+performance
+share in €
+End of the
+waiting period
+The final number of performance shares to be allocated after the expiry of the
+vesting period is determined by multiplying the number of provisionally allocated
+performance shares by the overall target achievement of the two performance criteria
+during the performance period. The final allocation of the performance shares
+within an LTI tranche may not result in a profit (before tax) of more than 250 percent
+of the respective LTI grant amount; above this cap, all performance shares still to
+be allocated lapse.
+The tranche is granted on 1 April in the first fiscal year of the performance period
+(allocation day). The vesting period begins on the allocation day. In contrast to the
+performance period, the vesting period ends four years after the allocation day, i.e.,
+on 31 March. At the end of the four-year performance period, the target achievement
+is determined.
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+← 134 →
+Plan conditions for tranches from 1 April 2021
+With the granting of a (virtual) performance share, the participants in the plan
+acquire the right to receive (real) Infineon shares when one of the position-dependent
+personal investments in Infineon shares has reached a four-year holding period.
+The number of real Infineon shares to be transferred depends on the achievement
+of targets during the performance period.
+The performance period begins on 1 October of the first fiscal year of the perfor-
+mance period and ends four years later on 30 September. Performance during the
+performance period is measured using the relative total shareholder return (TSR)
+financial performance criterion compared to companies in a selected industry peer
+group, together with non-financial performance criterion comprising strategy-derived
+environmental, social and governance (ESG) objectives. The TSR target accounts
+for 80 percent and the ESG targets 20 percent of the overall target achievement. For
+tranches from 1 April 2023, the TSR target accounts for 70 percent to 80 percent and
+the ESG targets for 20 percent to 30 percent of the overall target achievement. TSR and
+the ESG target achievements can be between 0 percent and 150 percent.
+12.95
+29 February 2024
+18.10
+Members of the Management Board
+29 February 2024
+70,850
+12.50
+18.10
+938,666
+Non-current lease liabilities
+Consolidated Financial Statements
+Long-term financial debt
+Non-current liabilities:
+Other current liabilities
+Current lease liabilities
+Short-term financial debt and current portion
+of long-term financial debt
+Current liabilities:
+As of 30 September 2023
+€ in millions
+Notes to the Consolidated Financial Statements
+Carrying amount
+Further information
+← 143 →
+Trade payables
+Categories of financial assets
+330
+At fair value through
+profit or loss
+2
+987
+Combined Management Report
+4
+993
+72
+72
+333
+2,765
+330
+2,765
+2,765
+Fair value
+Others
+(cash flow hedges)
+instruments
+Designated hedging
+993
+Other
+financial liabilities
+(amortized cost)
+Not assignable to any IFRS 9
+measurement category
+Management Board and Supervisory Board
+6,152
+1 The presentation of grants receivables as well as of some of the advance payments made was corrected in the 2023 fiscal year. These are now no longer reported under current or non-current financial assets. The previous year's figures have been adjusted to improve comparability.
+8
+3,090
+3,054
+6,152
+208
+95
+113
+1,438
+208
+8
+353
+2
+363
+Other non-current liabilities
+1,991
+1,991
+363
+1,045
+393
+2,279
+5,902
+205
+93
+1,887
+2,279
+1,438
+2,705
+97
+108
+3,197
+205
+5,902
+88
+5
+93
+1,887
+1,887
+240
+2,039
+Infineon | Annual Report 2023
+Total
+Further information
+4,403
+> Level 2: valuation parameters whose prices are not considered in level 1, but which
+can be observed either directly or indirectly for the asset or liability,
+> Level 1: quoted prices (unadjusted) in active markets for identical assets and
+liabilities,
+Financial instruments measured at fair value are allocated to the following measure-
+ment levels in accordance with IFRS 13. The allocation to the different levels is
+based on the market proximity of the valuation parameters used in the determination
+of the fair values:
+Financial instruments at fair value
+Disclosures about fair value
+In the 2023 and 2022 fiscal years, there were no reclassifications between the
+categories of financial instruments.
+Within financial assets measured at amortized cost, financial assets with a
+carrying amount of €13 million (previous year: €14 million) were included as of
+30 September 2023, which Infineon has pledged mainly as collateral for rental
+liabilities.
+> Level 3: valuation parameters for assets and liabilities that are not based on
+observable market data.
+5 Q = 144 →
+Combined Management Report
+Management Board and Supervisory Board
+8,377
+386
+3
+8,940
+22
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Infineon | Annual Report 2023
+The allocation to the levels as of 30 September 2023 and 2022 was as follows:
+Fair value
+2
+1,991
+10
+Other current assets
+1,770
+1,770
+Financial investments
+1,169
+1,169
+Cash and cash equivalents
+Current assets:
+30 September 2023
+€ in millions
+Level 3
+Level 2
+Level 1
+Fair value by category
+9,350
+4,403
+67
+310
+752
+of long-term financial debt
+Short-term financial debt and current portion
+Current liabilities:
+As of 30 September 2022
+130
+8,136
+381
+Trade payables
+2
+4
+9,002
+130
+130
+309
+309
+3,915
+8,615
+2,260
+752
+2,260
+742
+2,260
+4,333
+310
+67
+4,911
+4,910
+Infineon | Annual Report 2023
+Non-current lease liabilities
+Other non-current liabilities
+Total
+Long-term financial debt
+Non-current liabilities:
+Other current liabilities
+975
+3
+950
+22
+975
+76
+76
+Current lease liabilities
+67
+1,770
+Infineon | Annual Report 2023
+1,770
+Combined Management Report
+Management Board and Supervisory Board
+The references to the Remuneration Report were not audited as part of the audit
+of the financial statements. The Remuneration Report was subjected to a separate
+substantive audit by the auditor in accordance with IDW PS 490. This audit also
+includes the formal audit required by section 162, paragraph 3 of the German Stock
+Corporation Act (AktG).
+With regard to the disclosures on the individual remuneration of the members of the
+Management Board and Supervisory Board pursuant to section 162 of the German
+Stock Corporation Act (AktG), reference is made to the Remuneration Report prepared
+according to stock corporation law, which can be found under the following link:
+www.infineon.com/remuneration-report
+Constanze Hufenbecher resigned from her position on the Management Board with
+effect from 31 October 2023; her contract of employment will end on 14 April 2024.
+The Supervisory Board appointed Elke Reichart to succeed Constanze Hufenbecher
+with effect from 1 November 2023 until 31 October 2026.
+In the 2023 and 2022 fiscal years, there were no significant transactions between
+Infineon and related persons that fell outside of the scope of the existing employ-
+ment, service or appointment terms, or the contractual arrangements for their
+remuneration.
+As of 30 September 2023, pension obligations for former members of the Management
+Board amounted to €63 million (30 September 2022: €63 million).
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Former members of the Management Board received payments of €7 million in the
+2023 fiscal year (2022: €3 million).
+these provisionally allocated (virtual) performance shares amounted to €6 million
+(2022: €4 million).
+The total remuneration of the members of the Management Board for their active
+service pursuant to section 314, paragraph 1, no. 6 in conjunction with section 315e,
+paragraph 1, HGB amounted to €9 million (2022: €15 million). This includes a long-term
+incentive (LTI) in the form of a performance share plan (see note 22, □ p. 133 f.). A total
+of 193,373 (virtual) performance shares (2022: 148,737) were provisionally allocated
+to the members of the Management Board in the 2023 fiscal year. The fair value of
+Total remuneration of the Management Board and Supervisory Board
+pursuant to section 314, paragraph 1, no. 6 in conjunction with
+section 315e, paragraph 1, HGB
+1 The expense includes the fixed remuneration, including fringe benefits and the one-year variable remuneration (STI).
+2 Both Dr. Reinhard Ploss and Dr. Helmut Gassel resigned from the Management Board of Infineon Technologies AG in the 2022 fiscal year.
+Their employment contracts continued until 31 December 2022 and 30 September 2022, respectively. For this period, Dr. Reinhard Ploss
+and Dr. Helmut Gassel were entitled to remuneration in full. In addition, Dr. Helmut Gassel was granted a severance payment and agreed
+to a post-contractual non-competition clause that runs until November 2023, for which Dr. Helmut Gassel received compensation.
+3 Employee representatives on the Supervisory Board who are employed by Infineon also receive a salary for their activities as employees.
+(43)
+(12)
+28
+The total remuneration of the members of the Supervisory Board in the 2023 fiscal year
+amounted to €3 million (2022: €3 million).
+Further information
+141 →
+26 Supplemental cash flow information
+Non-cash-effective changes
+Currency effects
+Acquisitions
+Cash-effective
+changes
+Starting balance
+Infineon | Annual Report 2023
+Current and non-current lease liabilities
+Total
+Related party financial payables
+Short-term and long-term financial debt
+The 2022 fiscal year
+Current and non-current lease liabilities
+Total
+Related party financial payables
+Short-term and long-term financial debt
+The 2023 fiscal year
+€ in millions
+The reconciliation below shows changes in those financial liabilities and hedging
+transactions for which payments received and made are shown under cash flows from
+financing activities in the statement of cash flows.
+of consolidated companies located in countries where the transfer of cash is legally
+restricted, for example, China.
+Cash and cash equivalents reported as of 30 September 2023 and 2022 totaling
+€1,820 million and €1,438 million, respectively, included €50 million and €69 million,
+respectively, which were subject to legal transfer restrictions and so were not avail-
+able for general use by Infineon. This amount represented cash and cash equivalents
+16
+Carrying amount
+Total remuneration of the executive bodies
+3
+in %
+absolute
+2022
+2023
+Change
+Expense for short-term benefits¹
+€ in millions
+9
+The members of the Management Board and Supervisory Board active in the 2023
+and 2022 fiscal years received the following remuneration for their activities in
+accordance with IAS 24.17:
+Related persons
+← 140 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+8
+Total remuneration of the Management Board and Supervisory Board
+according to IAS 24.17
+11
+(2)
+(18)
+Total remuneration of the Supervisory Board³
+(48)
+(12)
+25
+13
+Total remuneration of the Management Board
+(11)
+11
+Expense for termination benefits²
+1
+1
+Expense from post-employment benefits
+50
+1
+2
+3
+Expense for share-based payment
+3
+1,770
+New leases
+5,662
+Other non-current assets
+Non-current assets:
+Other current assets
+Trade receivables
+Financial investments
+Cash and cash equivalents
+Current assets:
+Total
+As of 30 September 2023
+The following tables present the carrying amounts and the fair values of financial
+instruments by their respective classes and a breakdown by category of financial
+instruments as of 30 September 2023 and 2022 according to IFRS 9:
+Categories of financial instruments
+27 Additional disclosures on financial instruments
+142 →
+=
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+€ in millions
+As of 30 September 2022
+Current assets:
+Cash and cash equivalents
+1,820
+651
+1,169
+1,820
+Fair value
+Designated hedging
+instruments
+(cash flow hedges)
+Not assignable to any
+IFRS 9 measurement
+category
+At amortized cost
+At fair value through
+profit or loss
+Categories of financial assets
+Carrying amount
+Total
+Other non-current assets¹
+Non-current assets:
+Other current assets¹
+Trade receivables
+Financial investments
+Combined Management Report
+Other changes
+Management Board and Supervisory Board
+6
+100
+(199)
+381
+(2)
+100
+(17)
+1
+4
+4,733
+(182)
+(839)
+6,049
+(86)
+386
+1
+(753)
+6
+5,115
+6,585
+(1,393)
+122
+478
+3
+(1,478)
+6,918
+386
+122
+17
+(84)
+331
+1
+(1)
+2
+5,662
+6
+461
+3
+6,049
+Non-current assets:
+Short-term financial debt and current portion
+of long-term financial debt
+113
+420
+(4)
+191
+value
+value
+Fair value
+Nominal
+(18)
+Fair value
+30 September 2023
+Nominal value (€ in millions)
+Commodity swaps
+Hedging of other risks
+30 September 2022
+Average price (US dollar/ounce)
+Nominal value (€ in millions)
+Nominal
+Commodity swaps
+Average price (US dollar/ounce)
+2
+Combined Management Report
+Management Board and Supervisory Board
+In order to hedge the foreign currency risks attributable to the purchase price obliga-
+tion arising from the acquisition of GaN Systems (see note 3, □ p. 107 f.), a contingent
+(transaction-dependent) euro/US dollar foreign currency forward (deal contingent
+forward) and a contingent (transaction-dependent) euro/US dollar foreign currency
+option (deal contingent option), each with a nominal value of US$415 million, were con-
+cluded on 2 March 2023 and were accounted for as cash flow hedges. At the inception
+of the hedging transaction, and on a continuing basis, Infineon verifies the existence
+of an economic relationship between the hedged item and the hedging instrument
+(critical term). For the abovementioned hedging transactions, the hedge ratio was 1:1.
+Infineon | Annual Report 2023
+1,797
+51
+2,008
+384
+24
+415
+415
+1.0574
+Short term
+(17)
+(2)
+1
+337
+1.0575
+Hedging of other risks
+Average forward rate (euro/US dollar)
+Nominal value (US dollar in millions)
+5,075
+Total
+Interest expense on financial liabilities measured at amortized cost mainly included
+interest on financial debt and effects from using the effective interest method.
+1,980
+2,353
+4,333
+Long-term financial debt
+3,092
+3
+742
+of long-term financial debt
+Short-term financial debt and current portion
+30 September 2022
+1,878
+2,370
+4,248
+739
+1,983
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Nominal value (US dollar in millions)
+Average forward rate (euro/US dollar)
+Deal contingent option
+Deal contingent forward
+Hedging of foreign exchange risks
+30 September 2023
+Derivative financial instruments designated as a hedging relationship
+As of 30 September 2023 and 2022, Infineon held the following instruments, which
+were designated as cash flow hedges and were used to hedge against foreign
+exchange and commodity price changes:
+30 September 2022
+Forward exchange contracts purchased
+Total
+Forward exchange contracts sold
+€ in millions
+Derivative financial instruments not designated as a hedging relationship
+The nominal values and fair values of Infineon's derivative instruments as of
+30 September 2023 and 2022 that were not designated as cash flow hedges were
+as follows:
+Infineon holds derivative financial instruments exclusively for hedging purposes. This
+includes the use of forward exchange contracts and interest- and commodity swaps.
+The objective is to reduce the impact of the exchange rate, interest rate and commodity
+price fluctuations on future net cash flows.
+Derivative financial instruments and hedging activities
+Infineon does not net financial instruments. The Company conducts derivative
+transactions according to the global netting agreement (Master Agreement) of the
+International Swaps and Derivatives Association (ISDA) and other comparable
+national framework agreements. Under the terms of these agreements, any netting
+arising from the occurrence of certain future events would have had no material
+effect on the balance sheet presentation of these financial instruments.
+← 147 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+148 →
+As part of the hedging, only the spot component of the deal contingent forward and the
+intrinsic value of the deal contingent option were designated as hedging instruments.
+The forward elements of the deal contingent forward, and the time value of the deal
+contingent option, each containing a contingency component, are excluded from the
+designation of hedging instrument and were considered in the recognition of costs
+of hedging and disclosed in equity in a reserve for the costs of hedging, to the extent
+that they can be attributed to the hedged item. No material ineffective elements arising
+from the deal contingent forward or the deal contingent option were recognized in
+the Consolidated Statement of Profit or Loss in the 2023 fiscal year. Any ineffectiveness
+was attributable to changes in the expected timing of the payment of the purchase
+price in US dollars as well as the contingency component contained within the hedg-
+ing instruments and the credit default risk. With the completion of the acquisition
+of GaN Systems on 24 October 2023, the deal contingent forward and deal contingent
+option became due and the hedge was closed. The effective portion of the hedge
+and the cumulative amounts recognized in the reserve for the costs of hedging were
+reclassified as costs of the acquisition of GaN Systems and were therefore taken into
+account in determining the goodwill arising from the transaction.
+1
+Hedging of commodity price risks
+(1)
+1
+1
+Line item of the Statement
+of Financial Position
+or the Statement of
+Profit or Loss affected
+by the reclassification
+(5)
+1
+to the cost of
+non-financial assets
+Amount reclassified
+Changes in fair value
+of cost of hedging
+recognized in other
+comprehensive income
+5
+8
+Changes in fair value
+of the hedging instrument
+recognized in other
+comprehensive income
+Changes in fair value
+for the measurement
+of the ineffectiveness
+in the reporting period
+Carrying amount
+from the hedge reserve
+(1)
+1
+Inventories
+Other non-current assets
+Inventories
+Infineon | Annual Report 2023
+(2)
+(2)
+Total
+(2)
+(2)
+3
+Hedging of commodity price risks
+Other current liabilities:
+30 September 2022
+1
+(5)
+(2)
+7
+Total
+Deal contingent forward
+Total
+Hedging of foreign exchange risks
+Deal contingent option
+5
+Deal contingent option
+(1)
+1
+Deal contingent forward
+Hedging of foreign exchange risk
+Cost of
+hedging reserve
+(before taxes)
+Hedging of commodity price risks
+Total
+Hedge reserve
+(before taxes)
+30 September 2023
+€ in millions
+The amounts relating to positions that were designated as hedged items as of
+30 September 2023 and 2022 are shown in the table below.
+as a hedging relationship
+Effects from derivative financial instruments designated
+Consolidated Statement of Profit or Loss for these hedging relationships. As in the
+previous year, no gains or losses were transferred from other reserves to profit or loss
+as a result of cash flow hedges for future raw material purchases being canceled
+following the decision that the occurrence of the hedged transaction had become
+unlikely.
+To hedge the price risks of highly probable gold purchases in the 2024 fiscal year,
+Infineon entered into swaps, which are designated as cash flow hedges. The designated
+hedged items and the hedging instruments were subject to the same risk. The eco-
+nomic connection was proven by means of a regression analysis. Due to the execu-
+tion of only highly effective hedging transactions, Infineon assumes that significant
+ineffective elements will normally not be generated. Infineon applies a hedging ratio
+of 1:1. Ineffectiveness can be caused mainly by the impact of the credit risks arising
+from the counterparty and Infineon on the fair value of the swap that is not reflected
+in the change in the fair value of hedged cash flows attributable to changes in raw
+material prices. As in the previous year, no hedge ineffectiveness was recorded in the
+Change in the value
+of the hedged item
+used to determine
+ineffectiveness
+1
+(1)
+(2)
+Hedging of foreign exchange risks
+Other current assets:
+30 September 2023
+€ in millions
+The relevant amounts of the derivative financial instruments designated as hedging
+instruments as of 30 September 2023 and 2022 (before taxes) were as follows:
+149 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+In the 2023 and 2022 fiscal years, no balances remained in other comprehensive
+income for which hedge accounting was no longer applied.
+(2)
+(2)
+2
+Hedging of commodity price risks
+Total
+30 September 2022
+(5)
+Other current liabilities:
+86
+(5)
+(184)
+forward
+Deal contingent
+Deal contingent
+option
+The following table shows the reconciliation of financial instruments classified as
+level 3 (before tax):
+€ in millions
+Other non-current assets included equity investments and investments in funds. Where
+these are traded on an active market, the fair value was based on the actual market
+price (level 1). In addition, other non-current assets included derivative financial
+instruments whose fair value was calculated using recognized financial-mathematical
+models, with only observable input parameters included in the measurement (level 2).
+For equity investments where no market price from an active market is available, the
+fair value was determined by considering existing contractual arrangements based
+on externally observable dividend policy (level 3).
+The determination of the fair values of the deal contingent forward and deal contingent
+option designated as cash flow hedges (see “Derivative financial instruments and
+hedging activities”, p. 147 ff.) were determined on the basis of factors observable in
+markets such as forward prices, interest rate curves and volatilities. In addition, the
+assumption about the date of completion of the acquisition was taken into account
+as a non-observable factor (level 3).
+Equity
+investments
+Other current assets and other current liabilities contained derivative financial instru-
+ments (including cash flow hedges). Their fair value was determined by discounting
+future cash flows according to the discounted cash flow method. Where possible,
+valuation parameters observed on the reporting date in the relevant markets (such
+as currency rates, interest rates, or commodity prices) drawn from reliable external
+market data providers were used (level 2). Where fair values are determined on the
+basis of non-observable factors, these are assigned to level 3.
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Cash equivalents and financial investments included investments in money market
+funds and investment funds (level 1).
+25
+25
+← 145 →
+16
+(2)
+14
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+A hypothetical change in the material on the market non-observable valuation
+parameters at the balance sheet date of ± 10 percent or one month would have resulted
+in a theoretical reduction in fair values of €1 million or an increase of €1 million
+(previous year: both €1 million).
+1 This relates to gains recognized in financial income or losses recognized in financial expenses.
+10
+(1)
+(1)
+8
+(5)
+(4)
+30 September 2023
+Unrealized losses recognized in profit or loss¹
+Losses in equity
+13
+Acquisitions (including additions)
+Unrealized losses recognized in profit or loss¹
+30 September 2022
+1 October 2021
+25
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+25
+Current liabilities:
+5
+1
+5
+6
+6
+Total
+Other current liabilities
+1
+Current liabilities:
+2
+3,042
+3,062
+Total
+10
+103
+158
+18
+30 September 2022
+Current assets:
+Cash and cash equivalents
+1,045
+14
+5
+3,178
+3,197
+Total
+14
+94
+108
+Other non-current assets
+Non-current assets:
+5
+5
+Other current assets
+2,039
+2,039
+Financial investments
+1,045
+Total
+Further information
+Other current liabilities
+Financial instruments at amortized cost
+Level 3
+Level 2
++++
+591
+(414)
+177
+therein currency effects
+therein other financial expenses
+Level 1
+2
+3
+(129)
+(126)
+therein interest expenses
+Fair value by category
+Fair value
+€ in millions
+1
++++
+30 September 2023
+Total
+(26)
+← 146 →
+1,545
+2,370
+3,915
+Long-term financial debt
+(135)
+118
+(17)
+therein currency effects
+333
+333
+(135)
+118
+(17)
+Financial assets or liabilities measured at fair value
+through profit and loss - held for trading
++++
+595
+(1)
+in %
+11
+therein interest income
+(312)
+255
+(57)
+Financial assets measured at amortized cost
+absolute
+2022
+2023
+Change
+€ in millions
+The net gain or loss on financial instruments (including interest income and expense)
+in the Consolidated Statement of Profit or Loss amounted to the following as of
+30 September 2023 and 2022:
+Gains and losses in relation to financial instruments
+(544)
+The allocation to the levels of current and non-current financial debt measured at
+amortized cost as of 30 September 2023 and 2022 was as follows:
+The fair value of current and non-current financial debt that is measured at amortized
+cost is based either on quoted prices as of the reporting date (level 1) or is determined
+based on expected future cash flows discounted using a current market interest rate
+(level 2).
+For assets allocated to the category "At amortized cost”, it is assumed that the
+fair values correspond to their carrying amounts. The same assumption applies to
+liabilities resulting from trade payables and other current liabilities categorized as
+"Other financial liabilities (amortized cost)".
+31
++++
+42
+1
+51
+Financial liabilities measured at amortized cost
+77
+10
+(13)
+(3)
+Financial assets measured at fair value
+through profit and loss
+therein currency effects
+therein impairment losses
+therein other financial expenses
+1
+1
+(344)
+243
+(101)
+1
++++
+2,205
+Green Industrial Power
+1,790
+2,205
+1,790
+Power & Sensor Systems
+3,798
+4,070
+2023
+3,034
+332
+330
+469
+706
+Connected Secure Systems
+Subtotal
+2,046
+743
+1,822
+2,997
+696
+2023
+710
+2,046
+2022
+€ in millions
+2022
+2023
+2022
+2023
+2022
+2023
+Revenue from contracts with customers:
+Automotive
+8,242
+6,516
+4,040
+3,298
+2,796
+1,742
+733
+1,822
+(276)
+14,198
+Automotive
+2,380
+1,490
+890
+60
+Green Industrial Power
+662
+384
+Segment Result:
+278
+Power & Sensor Systems
+861
+1,137
+(24)
+Connected Secure Systems
+488
+378
+2022
+72
+16,291
+in %
+2022
+9,242
+8,122
+5,174
+3,894
+1,179
+1,439
+696
+743
+absolute
+18
+Other Operating Segments
+Corporate and Eliminations
+Total
+16,309
+14,218
+There were limited levels of trading relationships between the operating segments
+during the 2023 and 2022 fiscal years. Costs are generally recharged without impact
+on profit or loss.
+€ in millions
+Change
+2023
+20
+Memory ICs for
+specific applications
+2,645
+RF & sensors
+2,946
+596
+596
+(557)
+(557)
+10,120
+4,172
+554
+473
+681
+473
+2,946
+Future cash flows from derivative financial instruments (see note 27, ☐ p. 147 ff.) may
+differ from the amounts shown in the table, since exchange rates or relevant factors
+are subject to change.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+1,294
+← 156 →
+1,294
+554
+(526)
+9,592
+4,216
+705
+1,246
+456
+324
+110
+681
+2,645
+2023
+2024
+2025
+2026
+2027
+Beyond 2027
+10,081
+4,133
+Total
+& connectivity
+Notes to the Consolidated Financial Statements
+Identification of segments
+The Management Board, as joint Chief Operating Decision Maker, decides how
+resources are allocated to the segments.
+Based on revenue and Segment Result, the Management Board assesses performance
+and defines operating targets and budgets for the segments.
+Segment Result is defined as operating profit excluding certain net impairments
+and reversal of impairments (in particular on goodwill), the impact on earnings of
+restructuring and closures, share-based payment, acquisition-related depreciation/
+amortization and other expense, impact on earnings of sales of businesses or interests
+in subsidiaries, and other income (expense).
+Decisions relating to financing and the investment of cash funds are taken at a
+Group level and not at a segment level. For this reason, neither financial income nor
+financial expense (including interest income and expense) is allocated internally to
+the segments.
+Neither assets, liabilities nor cash flows per segment is reported to the Management
+Board on a regular basis, nor is segment performance assessed on this basis.
+The exception to this approach is certain inventory information which is regularly
+analyzed at a segment level. Infineon also allocates depreciation and amortization
+expense to the operating segments based on production volume and products
+produced using standard costs.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Chief Operating Decision Maker, definition of Segment Result and
+allocation of assets and liabilities to the individual segments
+Combined Management Report
+Further information
+← 158 →
+Notes to the Consolidated Financial Statements
+Segment information
+Total
+Power semiconductors
+Product category
+Embedded control
+Consolidated Financial Statements
+29 Segment reporting
+Furthermore, raw materials and supplies are mostly not under the control or respon-
+sibility of the operating segment management and are therefore mostly allocated
+to corporate functions. Work in progress and finished goods are almost entirely
+allocated to the operating segments.
+The elimination of intragroup revenue and profits/losses to the extent that these
+arise between the segments is presented in Corporate and Eliminations.
+The basis for identifying the reporting segments is the differences between the
+products and applications. In the 2023 fiscal year, Infineon's business was structured
+into the four operating segments Automotive, Green Industrial Power, Power & Sensor
+Systems and Connected Secure Systems. In addition, Infineon differentiates Other
+Operating Segments as well as Corporate and Eliminations.
+Automotive
+The Automotive segment designs, develops, manufactures and markets semicon-
+ductor products for automotive applications. These include powertrain and energy
+management, connectivity and infotainment, body and comfort electronics, safety
+and data security. The product portfolio ranges from sensors, microcontrollers,
+software solutions, reliable power supplies, storage systems for specific applications,
+Si and SiC power semiconductors, as well as components for human-machine
+interaction and vehicle connectivity.
+Green Industrial Power
+The Industrial Power Control segment was renamed Green Industrial Power with
+effect from 1 April 2023. Decarbonization, electrification and energy efficiency are key
+business drivers in this segment. This focus, together with the decisive contribution
+that the segment makes to CO2 reduction, is reflected in the new name. The name
+change has no impact on the organizational structure, the strategy, or the scope of
+the business. The Green Industrial Power segment specializes in semiconductor solu-
+tions for the intelligent management and efficient conversion of electrical energy
+across the entire conversion chain, comprising the generation, transmission, storage
+and use of electricity. The product portfolio comprises mainly IGBT power transistors
+and the driver ICs to control them, as well as power semiconductors based on SiC.
+Power & Sensor Systems
+The Power & Sensor Systems segment comprises a wide range of power semiconductor,
+radio frequency and sensor technologies. The portfolio of products consists of control
+ICs, drivers and MOSFET power transistors, USB controllers and radio frequency
+products such as RF antenna switches, RF power transistors and signal amplifiers.
+Connected Secure Systems
+Similarly, certain items are included in Corporate and Eliminations which are not
+allocated to the other segments. These include certain corporate headquarters costs
+and selected topics, which are not allocated to the segments since they arise from
+corporate decisions and are not within the direct control of segment management.
+The Connected Secure Systems segment provides comprehensive systems which are
+based on microcontrollers as well as on wireless connectivity and security solutions.
+Notably, this includes microcontroller, Wi-Fi, Bluetooth and combined connectivity
+solutions (so-called combo chips), hardware-based security technologies, and a
+powerful software environment for programming and configuring microcontrollers
+and connectivity components, covering a wide range of applications including:
+devices for loT applications, home appliances and smart home appliances, IT equip-
+ment, consumer electronics, cloud security and connected vehicles, as well as credit
+and debit cards, electronic passports and national identity cards.
+Other Operating Segments comprise the remaining activities of divested businesses
+and other business activities. Since the sale of the Wireless mobile phone business,
+services to Intel Mobile Communications and MaxLinear are included in this segment.
+Also included are supplies of LDMOS wafers and related components and services
+to Wolfspeed, Inc. (formerly Cree, Inc.), since the sale of the major part of Infineon's
+Radio Frequency Power Components business.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+157 →
+Corporate and Eliminations
+Other Operating Segments
+29
+Depreciation and amortization
+5
+ber 2023
+30 Septem-
+ber 2022
+absolute
+in %
+Financial income
+105
+7
+98
+30 Septem-
++++
+Financial expenses
+(159)
+(168)
+9
+5
+Automotive
+2,039
+1,337
+Inventories:
+702
+Change
+39
+1,664
+(32)
+90
+(7)
+5
+Gains (losses) on sales of businesses,
+or interests in subsidiaries
+30
+30
+€ in millions
++++
+71
+7
+64
++++
+Operating profit
+3,948
+2,845
+1,103
+Other income and expenses
+480
+53
+Green Industrial Power
+1,198
+44
+Other Operating Segments
+Corporate and Eliminations
+1
+3
+(67)
+401
+342
+2,723
+59
+Total
+3,974
+3,081
+893
+29
+Of the €464 million (2022: €484 million) "Acquisition-related depreciation/amortization
+and other expenses” incurred in the 2023 fiscal year, €276 million (2022: €288 million)
+was attributable to cost of goods sold, €9 million (2022: €12 million) to research and
+development expenses, €168 million (2022: €177 million) to selling, general and
+administrative expenses and €11 million (2022: €7 million) to the balance of other
+operating income and expense.
+Impairment losses on assets in the 2023 fiscal year amounted to €0 million (2022:
+€4 million) in the Automotive segment, €12 million (2022: €0 million) in the Green
+Industrial Power segment, €5 million (2022: €20 million) in the Power & Sensor
+Systems segment, and €1 million (2022: €7 million) in Corporate and Eliminations.
+Also allocated to Corporate and Eliminations in the 2023 fiscal year was €0 million
+(2022: €7 million) of reversal of impairments to assets.
+Infineon | Annual Report 2023
+17
+Share of profit (loss) of associates
+3,921
+150
+336
+290
+46
+16
+and joint ventures accounted for using
+the equity method
+27
+39
+(12)
+48
+(31)
+736
+798
+(62)
+(8)
+Profit (loss) from continuing operations
+before income taxes
+Connected Secure Systems
+461
+311
+Power & Sensor Systems
+Other Operating Segments
+448
+1,754
+4
+absolute
+in %
+Change
+€ in millions
+Segment Result:
+Plus/minus:
+Certain reversal of impairments (impairments)
+(in particular on goodwill)
+2022
+2023
+absolute
+in %
+Depreciation and amortization:
+Automotive
+716
+631
+85
+13
+Green Industrial Power
+2022
+200
+2023
+Change
+5
+Corporate and Eliminations
+3
+(16)
+19
++++
+Total
+4,399
+€ in millions
+3,378
+30
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 159 →
+The following table provides the reconciliation of Segment Result to profit (loss) from
+continuing operations before income taxes:
+1,021
+Total depreciation and amortization
+187
+7
+4
++++
+Depreciation and amortization
+allocated to the segments
+1,306
+1,184
+122
+10
+Share-based payment
+4
+(92)
+(30)
+(48)
+not allocated to the segments
+Acquisition-related depreciation/
+amortization and other expenses
+(464)
+(484)
+20
+(62)
+13
+restructuring and closures
+2
+4,399
+3,378
+1,021
+30
+Power & Sensor Systems
+295
+279
+16
+Gains (losses) on earnings of
+6
+93
+85
+8
+9
+6
+(6)
+Other Operating Segments
+2
+Connected Secure Systems
+(2)
+(526)
+Euro/Singapore dollar
+Euro/US dollar
+Euro/Singapore dollar
+Euro/Malaysian ringgit
+Euro/British pound
+Forward exchange contracts
+Net risk position
+The following table shows the effects on profit or loss for the 2023 and 2022 fiscal years
+of a ±10 percent shift in exchange rates. The assumed exchange rate changes relate
+only to financial instruments within the meaning of IAS 32.
+€ in millions
+30 September 2023
+Euro/US dollar
+Euro/Japanese yen
+Euro/Singapore dollar
+Profit or Loss
+Equity
+plus 10%
+minus 10%
+plus 10%
+minus 10%
+(9)
+(2)
+(709)
+58
+(91)
+193
+Euro/British pound
+(7)
+Financial position exposure
+(135)
+(618)
+(101)
+(330)
+(44)
+Euro/Japanese yen
+82
+53
+50
+107
+102
+5
+5
+129
+(106)
+(12)
+(44)
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 152 →
+Interest rate risk
+In accordance with IFRS 7, interest rate risk is defined as the risk that the fair value
+or future cash flows of a financial instrument will fluctuate because of changes in
+interest rates.
+Infineon is exposed to interest rate risk through its financial investment instruments
+and financial debt resulting from bond issuances and debt financing. Due to the
+cyclical nature of its core business and the need to maintain high operational flexibil-
+ity, Infineon holds a relatively high level of liquid financial assets that are invested
+in short-term fixed-interest instruments. These financial assets generally are invested
+with a contract duration of between one day and twelve months maturity at interest
+rates achievable in the short-term. The associated interest rate risk is compensated
+to a certain extent by financial liabilities, which generally have fixed interest rates.
+To reduce the net remaining risks caused by changes in interest rates, Infineon is able
+to make use of interest rate derivatives in order to align the fixed interest periods of
+assets and liabilities.
+IFRS 7 requires a sensitivity analysis showing the effect of possible changes in market
+interest rates on profit or loss. Infineon prepares this using the iteration method.
+Changes in market interest rates affect Infineon's interest income and expenses from
+variable-yield financial instruments as well as from fixed-yield financial instruments
+that were measured at fair value through profit or loss.
+The following table shows the effects on profit or loss for the 2023 and 2022 fiscal years
+of a ±100 basis points shift in market interest rates:
+€ in millions
+30 September 2023
+Variable-interest financial assets
+30 September 2022
+Variable-interest financial assets
+Other price risk
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+(4)
+72
+4
+(5)
+(1)
+1
+30 September 2022
+65
+2
+(79)
+57
+(69)
+Euro/Japanese yen
+5
+(6)
+Euro/Singapore dollar
+3
+Euro/US dollar
+(104)
+Euro/Malaysian ringgit
+(82)
+(2)
+of Profit or Loss
+8
+8
+30 September 2022
+(41)
+(3)
+(44)
+Change in fair value
+(6)
+3
+(3)
+Amount reclassified to Statement
+of Profit or Loss
+Amount reclassified to the
+(2)
+(50)
+(1)
+(49)
+574
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 150 →
+The following table shows the reconciliation for the reserve for cash flow hedges
+(before taxes) by risk category:
+cost of non-financial items
+€ in millions
+Change in fair value
+Amount reclassified to Statement
+Hedging of
+foreign
+exchange
+Hedging of
+interest risks
+Hedging of
+commodity
+price risks
+Total
+risks
+1 October 2021
+30 September 2023
+7
+7
+← 151 →
+Although Infineon prepares the Consolidated Financial Statements in euros, a varying
+but significant portion of its revenue, as well as cost of goods sold, research and
+development and product distribution costs, are denominated in currencies other
+than the euro, primarily the US dollar. Fluctuations in the exchange rates of these
+currencies compared to the euro had an effect on the results of Infineon in the 2023
+and 2022 fiscal years.
+The Management Board has established policies that require Infineon's individual
+legal entities to manage the foreign exchange risk with respect to their functional
+currency. Group entities prepare a monthly rolling cash flow forecast by currency
+in order to determine foreign exchange risks. The net foreign exchange positions
+determined in these forecasts are required to be hedged, usually by entering into
+internal hedging contracts. Infineon's policy with respect to limiting short-term
+foreign currency exposure is to hedge at least 75 percent of its estimated net cash
+flow for the following two months, at least 50 percent of its estimated net cash flow
+for the third month and, depending on the nature of the underlying transactions,
+a certain additional portion for the periods thereafter. Part of the foreign currency
+risk cannot be mitigated due to differences between actual and forecasted amounts.
+Infineon calculates this remaining risk based on net cash flows considering items
+in the Statement of Financial Position, actual orders received or placed and all other
+planned cash receipts and payments.
+In order to hedge the foreign currency risks arising from the purchase price obligation
+arising from the acquisition of GaN Systems, a deal contingent forward and a deal
+contingent option were concluded by Infineon in the 2023 fiscal year and were
+accounted for as cash flow hedges (see note 27, p. 145).
+For the net result related to foreign currency hedging transactions and foreign currency
+transactions included within profit (loss) for the period, see note 27. p. 142 ff.
+Foreign exchange risk at Infineon arises predominantly from main foreign currency
+positions. The following table shows the value of the net risk position as of
+30 September 2023 and 2022:
+Further information
+€ in millions
+30 Septem-
+ber 2022
+30 Septem-
+ber 2023
+187
+(292)
+(171)
+(131)
+(47)
+Euro/US dollar
+Euro/Japanese yen
+Nominal
+value
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Management Board and Supervisory Board
+(1)
+(1)
+(6)
+(34)
+(1)
+(41)
+28 Financial risk management
+Combined Management Report
+Infineon's activities are exposed to a variety of financial risks: market risk (including
+foreign exchange risk, interest rate risk and price risk), credit risk, financing and
+liquidity risk. Infineon's financial risk management seeks to minimize potential
+adverse effects on its profitability and liquidity. Infineon uses derivative financial
+instruments to hedge certain risks to which it is exposed. Financial risk management
+is undertaken by the central Finance & Treasury (FT) department in accordance
+with policies approved by the Chief Financial Officer. The FT department identifies,
+evaluates and hedges financial risks in close cooperation with the operating units.
+Developments in cyclical market and segment risks as well as geopolitical risks are
+dynamic and can have direct and indirect effects on financial risks. The course of
+events and their impact on Infineon's risk position is continually monitored and
+taken into account in the methods, models and processes used to control financial
+risks. Possible longer-term effects on Infineon and the associated volatility in the
+financial markets cannot actually be estimated more precisely.
+Market risk
+Market risk is defined as the risk of losses resulting from adverse changes in the
+market prices of financial instruments, including those related to foreign exchange
+rates, interest rates and other price risks.
+Infineon is exposed to various market risks in the ordinary course of business, primar-
+ily resulting from changes in foreign exchange rates and interest rates. Infineon enters
+into a range of derivative financial transactions with various counterparties to limit
+such risks. Derivative instruments are used only for hedging purposes and not for
+trading or speculative purposes.
+Foreign exchange risk
+Foreign exchange risk within the meaning of IFRS 7 is the risk arising from changes
+to foreign exchange rates. Accordingly, foreign exchange risks are associated with
+financial instruments that are denominated in a foreign currency that does not
+correspond to the functional currency, and the foreign currency represents the
+relevant risk variable. Risks arising from the translation into Infineon's reporting
+currency are not risks within the meaning of IFRS 7.
+Infineon | Annual Report 2023
+The FT department's policies contain principles for overall risk management as well
+as guidance covering specific areas such as foreign exchange risk, interest rate risk,
+credit risk, the use of derivative and non-derivative financial instruments, and the
+investment of excess liquidity.
+Profit or loss
+72
+minus 100
+490
+714
+450
+559
+304
+221
+102
+62
+3
+4
+43
+23
+1,978
+1,883
+Expected credit losses on trade receivables (see note 10, ☐ p. 116) amounted to €2 million
+for all risk classes in both the 2023 and 2022 fiscal years. The individual allowances
+on trade receivables (no rating) amounted to €3 million as of 30 September 2023
+(30 September 2022: €4 million).
+300
+586
+30 September 2022
+30 September 2023
+3
+average risk
+above average risk
+A- to AAA
+BBB to BBB+
+BB+ to BBB-
+4
+increased risk
+5
+Developments in cyclical market and segment risks as well as geopolitical risks are
+dynamic, so it cannot be ruled out that the actual credit losses deviate significantly
+from the expected credit losses recognized based on current estimates and assump-
+tions or that the affected estimates and assumptions will have to be adjusted in future
+periods and this could have a significant impact on Infineon's expected credit losses.
+high risk
+Total
+BB-to BB
+C to B+
+none
+none
+At amortized cost
+Basis for the determination
+of the loss allowance
+individual
+others
+plus 100
+basis points
+Management Board and Supervisory Board
+Combined Management Report
+1 Cash inflows from derivative financial liabilities that arise upon settlement of the instrument.
+Due in the fiscal year
+Total
+2024
+2025
+2026
+2027
+Total
+2028
+9,544
+4,168
+705
+1,246
+456
+324
+574
+Beyond 2028
+2
+Cash inflow¹
+Derivative financial liabilities:
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 155 →
+Financing and liquidity risk
+Financing and liquidity risk is the risk that an entity will encounter difficulties in
+meeting obligations associated with financial liabilities.
+Liquidity risk could arise from a potential inability of Infineon to meet maturing
+financial obligations. Infineon's liquidity management provides that sufficient
+levels of cash and other liquid assets are available and ensures the availability
+of funding through adequate levels of committed credit facilities.
+The following table discloses the maturity profile for non-derivative financial liabilities
+and a cash flow analysis for derivative financial instruments with negative fair values.
+The table shows the undiscounted contractually agreed cash flows that result from
+the respective financial liability. Cash flows are recognized at the date when Infineon
+becomes a contractual partner to the financial instrument. Amounts in foreign cur-
+rencies were translated using the closing rate at the reporting date. The cash outflows
+of financial liabilities that can be repaid at any time are assigned to the period in
+which the earliest redemption is possible.
+Cash outflow
+€ in millions
+Non-derivative financial liabilities
+Derivative financial liabilities:
+Cash outflow
+Cash inflow¹
+Total
+30 September 2022
+Non-derivative financial liabilities
+30 September 2023
+low risk
+Infineon | Annual Report 2023
+External rating
+Further information
+← 153 →
+The following table presents the effect on equity of a change in the relevant market
+prices by ± 10 percent as of 30 September 2023 and 2022.
+€ in millions
+30 September 2023
+Commodity swaps
+30 September 2022
+Commodity swaps
+Combined Management Report
+Credit risk
+Equity
+plus 10%
+minus 10%
+24
+2
+(2)
+51
+Nominal
+value
+5
+Management Board and Supervisory Board
+Additionally, Infineon is exposed to price risks with respect to raw materials upon
+which it is dependent. Infineon seeks to minimize these risks through its procure-
+ment policy (including the use of multiple sources, where possible) and its operating
+procedures. In line with these measures, Infineon concluded additional financial
+derivative contracts for certain commodity supplies (gold) for the following fiscal year
+in order to mitigate the remaining risk arising from the fluctuation of commodity
+prices (see note 27, p. 147).
+basis points
+1
+2,940
+29
+(29)
+2,940
+29
+Infineon | Annual Report 2023
+(29)
+31
+(31)
+3,084
+31
+(31)
+According to IFRS 7, other price risk is defined as the risk that the fair value or future
+cash flows of a financial instrument could fluctuate because of changes in market prices
+(other than those arising from interest rate risk or exchange rate risk), irrespective
+of whether those changes are caused by factors specific to the individual financial
+instrument or its issuer, or by factors affecting all similar financial instruments traded
+in the market.
+In the 2023 and 2022 fiscal years, Infineon held financial instruments that were
+exposed to market price risks. A change in the relevant market prices would have had
+no significant impact on the results of the 2023 and 2022 fiscal years.
+3,084
+(5)
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+Expected lifetime
+credit loss
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+← 154 →
+As in the previous year, Infineon had no financial assets that were overdue or impaired
+as of 30 September 2023. There was no reclassification between the impairment
+levels in the 2023 and 2022 fiscal years.
+credit loss
+Infineon had slightly reduced the distribution of its cash investments over around
+ten banks as of 30 September 2023. As of 30 September 2023, no financial institution
+was responsible for more than 18 percent (30 September 2022: 13 percent) of
+Infineon's cash investments. This gave rise to a maximum risk position of €76 million
+(30 September 2022: €55 million) in the event of the default of a single financial
+institution, assuming no deposit insurance scheme is in place. In addition, to spread
+the risk of investment, investments were made in money market funds with the
+best rating and in money market investment funds. Infineon also held derivative
+financial instruments with a positive fair value of €10 million as of 30 September 2023
+(30 September 2022: €5 million).
+Infineon assigns trade receivables to different risk classes based on external ratings,
+the analysis of customer balance sheet figures, default probabilities (credit default
+swaps), customer payment behavior and country risks. The simplified method is used
+to determine the expected losses from trade receivables. The expected losses over
+the entire term of the trade receivables are determined. The allowance is calculated
+for each customer using a weighted-probability method. In calculating the expected
+credit losses, for each customer, Infineon takes into account a forward-looking
+probability of default provided by a credit rating agency. Individual allowances are
+recorded based on case-by-case facts or other risk indicators.
+The following table provides information about the credit risk position for trade
+receivables from third parties as of 30 September 2023 and 2022:
+€ in millions
+Credit risk arises when a customer or other counterparty of a financial instrument
+fails to discharge its contractual obligations. Infineon is exposed to this risk as a con-
+sequence of its ongoing operations, its financial investments and certain financing
+activities. Infineon's credit risk arises primarily from cash and cash equivalents, finan-
+cial investments, trade receivables and derivative financial instruments. Excluding
+the impact of any collateral received, in the case of financial investments, cash and
+cash equivalents, trade receivables, and financial assets measured at amortized cost,
+the carrying amount corresponds to the maximum credit risk.
+Infineon rating
+Risk class
+Infineon manages the credit risk with respect to trade receivables through a com-
+prehensive credit evaluation for all major customers, the use of credit limits and
+continual monitoring procedures. New customers are evaluated for creditworthiness
+in accordance with Infineon guidelines. Credit limits are also in place per customer,
+and creditworthiness and credit limits are constantly monitored. A further measure
+taken to reduce credit risk is the use of reservation of title clauses. However, despite
+continuous monitoring, Infineon cannot fully exclude the possibility of a loss arising
+from the default of one of its contract parties.
+Expected 12-month
+non-credit-impaired
+At amortized cost
+Foreign exchange hedging contracts, as well as the investment of liquid assets in cash
+equivalents and financial investments, are entered into with major financial institu-
+tions worldwide that have high credit ratings. Infineon assesses the creditworthiness
+of banks using a methodology that establishes investment limits for individual banks
+that are updated on a daily basis according to current external ratings and credit
+default swap premiums. Possible breaches of stipulated investment thresholds result
+in immediate notification and the requirement to reduce the risk. This methodology
+is also used to identify a significant increase in credit risk in the context of the recog-
+nition of expected credit losses within the meaning of IFRS 9 at the balance sheet date.
+Infineon applies the general impairment model in accordance with IFRS 9 for cash and
+cash equivalents as well as financial investments. Since Infineon invests exclusively
+in high-quality financial assets from issuers with a rating of at least investment grade
+in order to minimize default risk, Infineon assumes that its financial assets carry low
+credit risk arising from the creditworthiness of its contract parties, so that any impair-
+ment loss recorded at first-time recognition is limited to the twelve-month expected
+credit losses. Infineon considers low credit risk to be an internal credit rating "Holding
+Quality 1". A change in the internal rating from “Holding Quality 1" to "Holding Qual-
+ity 0" indicates a significant increase in credit risk. The impairment is calculated using
+a weighted-probability method. This impairment is calculated as a measure of the
+probability of default based on the exposure at the balance sheet date, the loss ratio
+for that exposure, and the credit default swap spread.
+The following table provides information on the credit risk for cash and cash equivalents
+measured at amortized cost, as well as financial investments as of 30 September 2023
+and 2022:
+€ in millions
+Infineon rating
+30 September 2023
+Holding Quality 1
+Holding Quality 0
+Total
+Basis for the
+determination of
+the loss allowance
+AA- to BBB
+External rating
+651
+30 September 2022
+Holding Quality 1
+Holding Quality 0
+AA- to BBB
+633
+Total
+633
+651
+Other companies (not consolidated):1
+CHIL Semiconductors Corporation
+SAIC Infineon Automotive Power Modules (Shanghai) Co., Ltd
+Infineon Technologies Bipolar GmbH & Co. KG
+pmdtechnologies ag
+Joint ventures:
+SkyHigh Memory Limited
+Associated companies:
+Deca Technologies, Inc.
+IR International Holdings China, Inc.
+Notes to the Consolidated Financial Statements
+168 →
+=
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Cypress Envirosystems, Inc.
+Management Board and Supervisory Board
+Name of company
+EPOS embedded core & power systems GmbH & Co. KG
+Infineon Technologies South America Ltda
+Futurium gGmbH
+8
+KAI Kompetenzzentrum Automobil- und Industrieelektronik GmbH
+Infineon Technologies Vietnam Company Ltd.
+Infineon Technologies Polska Sp. z o.o.
+Infineon Technologies Romania s.r.l.
+Infineon Technologies Mantel 29 GmbH
+Infineon Technologies Mantel 27 GmbH
+Infineon Technologies Mantel 26 AG
+Infineon Technologies Israel Ltd.
+Infineon Technologies Iberia, S.L.U.
+Infineon Technologies Holding GmbH
+Infineon Technologies Gamma GmbH
+Infineon Technologies Delta GmbH
+Infineon Technologies Campeon Verwaltungsgesellschaft mbH
+Infineon Technologies Bipolar Verwaltungs GmbH
+Industrial Analytics IA GmbH
+Imagimob AB
+Hitex (UK) Limited
+EPOS embedded core & power systems Verwaltungs GmbH
+1.09
+0
+100
+14.34
+0
+100
+Tijuana, Mexico
+6,24
+0.00
+0.00
+0
+100
+Wilmington, Delaware, USA
+6
+1.41
+24.87
+100
+Batam, Indonesia
+Infineon | Annual Report 2023
+11
+1.99
+0
+6,24
+100
+Melaka, Malaysia
+6,24
+326.82
+1,859.61
+0
+100
+Wilmington, Delaware, USA
+6,24
+56.64
+1,281.11
+0
+100
+Wilmington, Delaware, USA
+6
+12.47
+15.92
+0
+Dresden, Germany
+Registered office
+152
+Thereof Infineon
+Technologies AG
+n.a.
+Berlin, Germany
+6
+0.00
+0.08
+100
+100
+Duisburg, Germany
+6
+0.54
+1.26
+100
+100
+Duisburg, Germany
+18
+n.a.
+n.a.
+n.a.
+0
+n.a.
+18
+0.62
+0.53
+100
+100
+Neubiberg, Germany
+11
+(1.02)
+0.08
+0
+100
+Stockholm, Sweden
+6
+0.85
+2.64
+0
+100
+Coventry, Great Britain
+n.a.
+n.a.
+Wilmington, Delaware, USA
+6
+11, 21
+(13.54)
+4.48
+15
+15
+Siegen, Germany
+11, 23, 24
+(0.85)
+9.31
+0
+42.5
+Dover, Delaware, USA
+(€ in millions)
+(€ in millions)
+Footnote
+Net result
+Equity
+Hong Kong, People's Republic of China
+40
+0
+52.76
+0.00
+0.00
+0
+100
+Wilmington, Delaware, USA
+6,22
+11
+43.11
+53.57
+Shareholdings
+in %
+25
+Shanghai, People's Republic of China
+17.73
+52.67
+60
+60
+Warstein, Germany
+11, 23
+19.23
+49
+1.15
+Aschheim, Germany
+Bangalore, India
+100
+7
+0.00
+0.20
+0
+100
+Nijmegen, The Netherlands
+6
+0.11
+0.31
+0
+100
+10
+0.18
+0.57
+0
+100
+6
+Kista, Sweden
+0.43
+100
+4.87
+0
+100
+Bristol, Great Britain
+6
+4.81
+52.74
+100
+100
+Cheonan, Republic of Korea
+6
+0.52
+0.70
+0
+100
+Muntinlupa City, Philippines
+6
+0.54
+0
+4.68
+0.80
+100
+MoTo Objekt CAMPEON GmbH & Co. KG
+MOLSTANDA Vermietungsgesellschaft mbH
+MOTEON GmbH
+Infineon Technologies Vermögensverwaltungsgesellschaft mbH
+International Rectifier HiRel Products, Inc.
+Infineon Technologies US Investment LLC
+Infineon Technologies US InterCo LLC
+Maia, Portugal
+Taipei, Taiwan
+(0.06)
+Taipei, Taiwan
+Kuala Lumpur, Malaysia
+Tokyo, Japan
+Netanya, Israel
+Registered office
+Infineon Technologies US HoldCo Inc.
+Infineon Technologies UK Limited
+Infineon Technologies Semiconductor India Private Limited
+Infineon Technologies Shared Service Center, Unipessoal Lda.
+Infineon Technologies Taiwan Co., Ltd.
+Infineon Technologies Semiconductor GmbH
+Infineon Technologies Romania & Co. Societate in Comandita
+NoBug Consulting SRL
+0
+PT Infineon Technologies Batam
+Rectificadores Internacionales, S.A. de C.V.
+3
+6.27
+84.64
+0
+100
+(€ in millions)
+(€ in millions)
+Footnote
+Net result
+Equity
+Thereof Infineon
+Technologies AG
+Shareholdings
+in %
+Infineon | Annual Report 2023
+Syntronixs Asia Sdn. Bhd.
+Spansion LLC
+Spansion Inc.
+SILTECTRA GmbH
+Ramtron International Corporation
+0
+1.09
+Bucharest, Romania
+307.76
+0
+100
+Wilmington, Delaware, USA
+6, 13, 15
+0.00
+286.47
+100
+100
+Neubiberg, Germany
+6,24
+19.15
+(0.09)
+0
+100
+Wilmington, Delaware, USA
+6,24
+86.78
+2.10
+6,24
+100
+Bucharest, Romania
+6, 17
+28.40
+93.39
+0
+100
+Neubiberg, Germany
+6
+0.21
+0.31
+100
+100
+Neubiberg, Germany
+6, 15
+0.00
+304.94
+0
+Neubiberg, Germany
+6
+7,889.00
+100
+100
+100
+5
+8.27
+52.03
+0
+100
+4
+2.68
+12.09
+0
+100
+6
+2.55
+6.21
+0
+100
+5.59
+0
+0.86
+100
+Wilmington, Delaware, USA
+6,24
+19.23
+8,648.84
+0
+100
+Wilmington, Delaware, USA
+6
+0.97
+4.33
+0
+100
+Bristol, Great Britain
+6
+2.10
+10.00
+0
+6
+8
+n.a.
+60
+2
+0
+77
+2
+0
+77
+2
+0
+77
+2
+28
+77
+2
+0
+77
+Melaka, Malaysia
+0
+77
+40
+0
+77
+2
+0
+77
+Rotterdam, The Netherlands
+2
+0
+77
+St. Denis, France
+2
+0
+77
+Dresden, Germany
+2
+0
+77
+2
+0
+2
+Shanghai, People's Republic of China
+Vila do Conde, Portugal
+0
+Qimonda Finance LLC (in insolvency)
+Qimonda Dresden Verwaltungsgesellschaft mbH (in insolvency)
+Qimonda Dresden GmbH & Co. OHG (in insolvency)
+Qimonda Bratislava s.r.o. (in liquidation)
+Qimonda Belgium BVBA (in insolvency)
+Qimonda Asia Pacific Pte. Ltd.
+Qimonda AG (in insolvency)
+Qimonda (Malaysia) Sdn. Bhd. (in liquidation)
+Itarion Solar Lda.
+Celis Semiconductor Corp.
+Qimonda AG and its subsidiaries:²
+Lippstadt, Germany
+Kaohsiung, Taiwan
+Neubiberg, Germany
+Registered office
+XMOS Limited
+Virtual Vehicle Research GmbH
+TTTech Auto AG
+Silicon Alps Cluster GmbH
+Munich, Germany
+2
+2
+Singapore, Singapore
+Bratislava, Slovakia
+17
+Colorado Springs, Colorado, USA
+Infineon | Annual Report 2023
+Qimonda North America Corp. (in insolvency)
+Qimonda Memory Product Development Center (Suzhou) Co. (in liquidation)
+Qimonda Licensing LLC
+Qimonda Korea Co. Ltd. (in liquidation)
+Qimonda Italy s.r.l. (in liquidation)
+Qimonda IT (Suzhou) Co., Ltd. (in liquidation)
+Qimonda Investment B.V.
+Qimonda International Trade (Shanghai) Co. Ltd.
+Qimonda Holding B.V. (in insolvency)
+Qimonda France SAS (in liquidation)
+Qimonda Flash GmbH (in insolvency)
+Wilmington, Delaware, USA
+Dresden, Germany
+Dresden, Germany
+Leuven, Belgium
+Schweizer Electronic AG
+77
+2
+28
+961
+3,399
+4,360
+Europe, Middle East, Africa
+25
+1,232
+4,873
+6,105
+Non-current assets:
+Europe
+Revenue:
+in %
+absolute
+2022
+2023
+€ in millions
+€ in millions
+therein: Germany
+Change
+3,621
+717
+Greater China²
+11
+251
+2,343
+2,594
+Asia-Pacific (excluding Japan, Greater China)
+31
+501
+1,627
+2,128
+Asia-Pacific (excluding Japan, Greater China)
+27
+423
+1,594
+2,017
+therein: Germany
+25
+2,904
+0
+in %
+30 Septem-
+ber 20221
+Fort Lauderdale, Florida, USA
+2
+0
+77
+Seoul, Republic of Korea
+2
+0
+77
+Padua, Italy
+2
+0
+77
+Suzhou, People's Republic of China
+2
+0
+77
+Rotterdam, The Netherlands
+77
+absolute
+0
+Suzhou, People's Republic of China
+30 Septem-
+ber 2023
+Change
+Non-current assets as of 30 September 2023 and 2022, by region, were as follows:
+Entity-wide disclosures in accordance with IFRS 8
+Revenue for the 2023 and 2022 fiscal years by region was as follows:
+Notes to the Consolidated Financial Statements
+160 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+2
+0
+77
+Wilmington, Delaware, USA
+2
+0
+77
+2
+R Labco, Inc.
+PT Infineon Technologies Indonesia
+OSPT IP Pool GmbH
+100
+Warsaw, Poland
+6,13
+0.00
+0.03
+100
+100
+Neubiberg, Germany
+6, 13
+0.00
+0.03
+100
+100
+Neubiberg, Germany
+6
+(0.01)
+0.02
+0
+100
+0.15
+6
+0.05
+0.17
+0
+100
+Hanoi, Vietnam
+11
+(0.11)
+(0.03)
+0
+100
+São Paulo, Brasil
+11
+0.01
+0.05
+0
+100
+Bucharest, Romania
+0.02
+6
+100
+9
+Neubiberg, Germany
+6
+0.00
+0.04
+100
+100
+Neubiberg, Germany
+6
+0.02
+0.15
+0
+100
+Neubiberg, Germany
+6
+0.00
+0.03
+60
+100
+Neubiberg, Germany
+100
+0.00
+0.00
+0.00
+0
+100
+Netanya, Israel
+0.06
+0.16
+0
+100
+Madrid, Spain
+6, 13
+0.00
+0.13
+100
+100
+Neubiberg, Germany
+6
+0.03
+Wilmington, Delaware, USA
+100
+0
+18
+n.a.
+n.a.
+0
+n.a.
+Villach, Austria
+11
+(24.89)
+24.23
+9
+9
+Schramberg, Germany
+6
+0.00
+0.00
+0
+100
+Vienna, Austria
+Wilmington, Delaware, USA
+n.a.
+n.a.
+MicroLinks Technology Corp.
+KFE Kompetenzzentrum Fahrzeug Elektronik GmbH
+Name of company
+18
+n.a.
+n.a.
+0
+n.a.
+Bristol, Great Britain
+18
+n.a.
+Infineon Technologies Reigate Limited
+n.a.
+n.a.
+Graz, Austria
+18
+n.a.
+n.a.
+6
+0.04
+0.23
+Thereof Infineon
+Technologies AG
+Shareholdings
+in %
+Notes to the Consolidated Financial Statements
+169 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+11
+0.30
+0.87
+0
+100
+Villach-St. Magdalen, Austria
+6
+0.00
+0.00
+Equity
+(€ in millions)
+Net result
+Footnote
+(€ in millions)
+0
+100
+Jakarta, Indonesia
+6
+(0.01)
+0.03
+100
+100
+Warstein, Germany
+18
+n.a.
+0
+n.a.
+11
+0.09
+1.27
+24
+24
+n.a.
+Infineon Technologies Power Semitech Co., Ltd.
+5.57
+Infineon Technologies Nordic AB
+Member of the Advisory Board
+(since 11 May 2023)
+> MTU Aero Engines AG, Germany
+> Klöckner & Co. SE, Germany (listed)
+> DWS Group GmbH & Co. KGaA, Germany (listed)
+Supervisory Board member
+> Greiner AG, Austria (since 27 June 2023)
+> DWS Group GmbH & Co. KGaA, Germany (listed)
+> Deutsche Telekom AG, Germany (listed)
+> Borussia Dortmund Geschäftsführungs-GmbH,
+Germany
+> Heidelberg Materials AG, Germany (listed)
+> Schlumberger N.V. (Schlumberger Ltd), Curaçao
+(listed)
+Member of the Board of Directors
+and foreign companies
+and other comparable governing bodies of domestic
+Membership of other Supervisory Boards
+Works Council Warstein,
+Infineon Technologies AG
+Member of various
+supervisory bodies
+Supervisor
+frontend production,
+Infineon Technologies
+Dresden GmbH & Co. KG
+Chairwoman of the
+Senior advisor -
+The Blackstone Group,
+member of various advisory
+boards and investor
+Member of various
+supervisory bodies
+Position
+Supervisory Board member
+1 Employee representative.
+The business address of each member of the Supervisory Board is:
+Infineon Technologies AG, Am Campeon 1-15, D-85579 Neubiberg (Germany).
+Management Board and Supervisory Board
+Dr. Herbert Diess (Member and Chairman since 16 February 2023)
+Xiaoqun Clever-Steg
+Strategy and Technology Committee
+Diana Vitale
+Hans-Ulrich Holdenried (Member until 16 February 2023)
+Margret Suckale
+Annette Engelfried
+Dr. Friedrich Eichiner (Member since 16 February 2023)
+Dr. Wolfgang Eder (Member and Chairman until 16 February 2023)
+Johann Dechant
+Dr. Herbert Diess (Member and Chairman since 16 February 2023)
+Executive Committee
+Infineon | Annual Report 2023
+Margret Suckale (Member since 16 February 2023)
+Dr. Wolfgang Eder (Member and Chairman until 16 February 2023)
+Johann Dechant
+Dr. Herbert Diess (Member and Chairman since 16 February 2023)
+Mediation Committee
+Supervisory Board committees
+Notes to the Consolidated Financial Statements
+← 164 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Hans-Ulrich Holdenried (Member until 16 February 2023)
+Jürgen Scholz
+Dr. Wolfgang Eder (Member until 16 February 2023)
+Peter Gruber
+(since 22 April 2023)
+Diana Vitale¹
+> Friedhelm Loh Familienstiftung, Germany
+Member of the Foundation Council
+Margret Suckale
+Analysis Engineer and
+Vice Chairwoman of the
+Works Council Campeon
+Labor union secretary
+Management Consultant
+Jürgen Scholz¹
+Melanie Riedl¹
+Independent
+Dr. Manfred Puffer
+Mirco Synde¹
+Independent
+Management Consultant
+Principal Engineer,
+Infineon Technologies AG
+Chief Financial Officer,
+Holcim Ltd., Switzerland
+(until 30 April 2023)
+Hans-Ulrich Holdenried
+(until 16 February 2023)
+Dr. Susanne Lachenmann'
+> Festo SE & Co. KG, Germany
+> ZF Friedrichshafen AG, Germany
+Supervisory Board member
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Germany
+Member of various
+supervisory bodies
+Infineon Technologies AG
+Chief Financial Officer
+Operations,
+(since 16 February 2023)
+Géraldine Picaud
+(until 2 February 2023)
+Ute Wolf
+> Friedhelm Loh Stiftung, Germany
+> Bridge imp GmbH, Germany
+> BKK of BMW AG, Germany
+Member of the Administrative Board
+> Krones AG, Germany (listed)
+(until 23 May 2023)
+Supervisory Board member
+› Catalina Holdings (Bermuda) Ltd., Bermuda
+> Athene Holding Ltd., Bermuda (listed)
+Member of the Board of Directors
+› Oldenburgische Landesbank AG, Germany
+> Nova KBM Bank, Slovenia (until 6 February 2023)
+Member of the Advisory Board
+> Athora Lebensversicherung AG, Germany
+> Huaxin Cement Co., Ltd., People's Republic of China
+(listed)
+> LafargeHolcim Maroc Afrique SAS, Morocco
+> LafargeHolcim Maroc SAS, Morocco (listed)
+> Lafarge Maroc SA, Morocco
+> Holcim Technology Ltd, Switzerland
+> Holcim Group Services Ltd, Switzerland
+Following Holcim Group mandates (until 30 April 2023):
+> Danone S.A., France (listed)
+Member of the Board of Directors
+Supervisory Board member
+Senior Management
+Klaus Helmrich
+Dr. Susanne Lachenmann
+Dr. Ulrich Spiesshofer (Chairman until 16 February 2023)
+100
+Footnote
+Net result
+Equity
+Thereof Infineon
+Technologies AG
+Shareholdings
+in %
+Registered office
+(€ in millions)
+Austin, Texas, USA
+0
+n.a.
+0.00
+0.00
+6, 19, 24
+Wilmington, Delaware, USA
+100
+0
+0.32
+(2.04)
+6,24
+0
+General Trias, Philippines
+0.00
+6,24
+100
+Dr. Wolfgang Eder
+Chairman
+5
+(0.03)
+0.13
+0
+100
+Ebène, Mauritius
+6
+0.00
+1.05
+0
+100
+Kanata, Ontario, Canada
+6,24
+0.42
+47.35
+0
+100
+Camana Bay (George Town), Cayman Islands
+1.34
+Jürgen Scholz
+40
+1.39
+Name of company
+Subsidiaries, associated companies, joint ventures and other companies (not consolidated)
+as of 30 September 2023
+165 →
+Further information
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Ute Wolf (Member since 22 April 2023)
+Fully consolidated subsidiaries:
+Annette Engelfried
+Johann Dechant
+Dr. Friedrich Eichiner (Chairman)
+Investment, Finance and Audit Committee
+Margret Suckale
+Dr. Manfred Puffer (Member until 16 February 2023)
+Géraldine Picaud (Member until 2 February 2023)
+Dr. Friedrich Eichiner (Chairman until 16 February 2023)
+Dr. Herbert Diess (Member and Chairman since 16 February 2023)
+Nomination Committee
+Dr. Wolfgang Eder (Member until 16 February 2023)
+0
+5200 Ben White Condominiums Association, Inc.
+CYLand Corp.
+0.00
+11, 20
+Wilmington, Delaware, USA
+Infineon | Annual Report 2023
+Infineon Technologies (Thailand) Limited
+Infineon Technologies (Wuxi) Co., Ltd.
+Infineon Technologies (Xi'an) Co., Ltd.
+Infineon Technologies (Shanghai) Co. Ltd.
+Infineon Technologies (Penang) Sdn. Bhd.
+Infineon Integrated Circuit (Beijing) Co., Ltd.
+Infineon Semiconductors (Shenzhen) Co., Ltd.
+Infineon Semiconductors (Wuxi) Co., Ltd.
+Infineon Technologies (Kulim) Sdn. Bhd.
+Infineon Technologies (Malaysia) Sdn. Bhd.
+Cypress Semiconductor World Trade Corp.
+Hitex GmbH
+AgigA Tech, Inc.
+Cypress Semiconductor Technology (Shanghai) Co. Ltd.
+Cypress Semiconductor Technology Ltd.
+Cypress Semiconductor Ukraine LLC
+Cypress Semiconductor México, S. de R.L. de C.V.
+Cypress Semiconductor Ireland Limited
+Cypress Semiconductor International, Inc.
+Cypress Semiconductor Corporation
+Cypress Semiconductor (Switzerland) Sàrl
+Cypress Semiconductor (Mauritius) LLC
+Cypress Semiconductor (Canada), Inc.
+Cypress Manufacturing, Ltd.
+Cypress International, LLC
+Cypress Semiconductor Philippines Headquarters, Ltd.
+Cypress Semiconductor Singapore Pte. Ltd.
+0
+Peter Gruber¹
+Representative of
+Supervisory Board member
+Management Board and Supervisory Board
+Management remuneration in the 2023 fiscal year
+As required by section 314, paragraph 1, no. 6, in conjunction with section 315e
+paragraph 1, HGB, the total remuneration of the Management Board and the Super-
+visory Board is disclosed in note 25, p. 140.
+Disclosure of the renumeration of individual members of the Management Board and
+the Supervisory Board, as required by section 162 of the AktG, can be found in the
+Remuneration Report, which is prepared according to stock corporation law and is
+available under the following link:
+www.infineon.com/remuneration-report
+The references to the Remuneration Report are not audited as part of the audit of
+the financial statements. The Remuneration Report was subjected to a separate
+substantive audit by the auditor in accordance with IDW PS 490. This audit also
+includes the formal audit required by section 162, paragraph 3 of the German Stock
+Corporation Act (AktG).
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Infineon Technologies Philippines, Inc.
+Further information
+Notes to the Consolidated Financial Statements
+Management Board
+The Management Board members were as follows:
+Name
+Position
+Jochen Hanebeck
+Chief Executive Officer,
+Labor Director
+Constanze Hufenbecher
+(until 31 October 2023)
+162 →
+Elke Reichart
+Fees of €0.2 million were charged by KPMG to the Company in the 2023 fiscal year for
+other services. These mainly included quality assurance during the implementation
+of regulatory requirements.
+In addition to the amounts described above, KPMG charged an aggregate of
+€0.7 million in the 2023 fiscal year for other audit services, which mainly included
+the audit of the disclosures in the Sustainability Report, the audit of compliance
+management systems, the provision of comfort letters, as well as the substantive
+audit of the Remuneration Report.
+15
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+The allocation of revenues from external customers to geographic areas is based on
+the customers' locations. The average number of employees by geographic region is
+provided in note 4. □ p. 109
+No single customer accounted for more than 10 percent of Infineon's revenue during
+the 2023 and 2022 fiscal years.
+1 The presentation of grants receivables, as well as of some of the advance payments made, was corrected in the 2023 fiscal year.
+These are now no longer reported under current or non-current financial assets. The previous year's figures have been adjusted to
+improve comparability.
+176
+2 Greater China comprises Mainland China, Hong Kong and Taiwan.
+Non-current assets do not include financial instruments, deferred tax assets and
+assets from employee benefits.
+Infineon | Annual Report 2023
+Fees for other services
+Management Board and Supervisory Board
+Consolidated Financial Statements
+Notes to the Consolidated Financial Statements
+Further information
+← 161 →
+30 Additional information in accordance with HGB
+Information pursuant to section 161 Stock Corporation Act (AktG)
+The Declaration of Compliance prescribed by section 161 AktG was drawn up by the
+Management Board and the Supervisory Board and made permanently available to
+the public on Infineon's website.
+www.infineon.com/cms/en/about-infineon/investor/corporate-governance/#corporate-governance
+Fees for audit and advisory services pursuant to section 314,
+paragraph 1, no. 9, HGB
+Year-end audit fees
+At the Annual General Meeting held on 16 February 2023, the shareholders elected
+KPMG AG Wirtschaftsprüfungsgesellschaft (KPMG), Munich (Germany), as auditor for
+the 2023 Separate Financial Statements and the Consolidated Financial Statements
+of Infineon Technologies AG. The audit fees charged by KPMG in the 2023 fiscal year
+amounted to €4.3 million for the audit of the Consolidated Financial Statements and
+various annual audits, including an audit review of the Interim Financial Statements.
+Fees for other advisory services
+Combined Management Report
+2,091
+(since 1 November 2023)
+Chief Digital
+Transformation Officer
+People's Republic of China
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+> Infineon Technologies Americas Corp., USA
+> Infineon Technologies Japan K.K., Japan
+Member of the Board of Directors
+> Infineon Technologies Asia Pacific Pte., Ltd., Singapore
+(Chairman)
+> Infineon Technologies Japan K.K., Japan
+> Infineon Technologies China Co., Ltd.,
+People's Republic of China
+> Infineon Technologies China Co., Ltd.,
+> Infineon Technologies Americas Corp., USA
+(Chairman)
+> SMART Photonics B.V., Netherlands
+› Carl Zeiss AG, Germany (since 13 March 2023)
+The Supervisory Board
+The Supervisory Board members, their Supervisory Board position, their occupation,
+and their membership of other supervisory and governing bodies are as follows:
+Name
+Dr. Herbert Diess
+Chairman
+(since 16 February 2023)
+Johann Dechant¹
+Vice Chairman
+Xiaoqun Clever-Steg
+Supervisory Board member
+Chief Digital
+Transformation Officer
+Member of the Board of Directors
+> Covestro AG, Germany (listed)
+Dr. Sven Schneider
+Chief Financial Officer
+Andreas Urschitz
+Chief Marketing Officer
+Dr. Rutger Wijburg
+Chief Operations Officer
+Membership of Supervisory Boards
+and other comparable governing bodies of domestic
+and foreign companies
+Supervisory Board member
+> Infineon Technologies Austria AG, Austria
+> Infineon Technologies Austria AG, Austria
+(Chairman)
+> Voith GmbH & Co. KGaA, Germany
+Member of the Shareholders' Committee
+> Voith Management GmbH, Germany
+Supervisory Board member
+> Trumpf SE + Co. KG, Germany
+> SUSE S.A., Luxembourg
+> BECHTLE AG, Germany
+Member of the Board of Directors
+> esure Group plc, Great Britain
+Supervisory Board member
+Supervisory Board member
+Dr. Ulrich Spiesshofer
+14,218
+Total
+> Cornelsen Group, Germany
+Member of the Administrative Board
+› Amadeus IT Group SA, Spain (listed)
+› Capgemini SE, France (listed)
+(until 16 May 2023)
+Supervisory Board member
+> SBK Siemens-Betriebskrankenkasse, Germany
+Member of the Administrative Board
+and other comparable governing bodies of domestic
+and foreign companies
+Membership of other Supervisory Boards
+Member of the Board of Directors
+Labor union secretary
+IG Metall district
+management, Berlin-
+Brandenburg-Saxony
+Member of various
+supervisory bodies
+Chairman of the
+group works council,
+Vice Chairman of the
+general works council
+and Chairman of the
+works council Regensburg,
+Infineon Technologies AG
+Member of various
+supervisory bodies
+Manager, most recently
+CEO of Volkswagen AG
+Position
+Annette Engelfried¹
+24
+16
+Greater China'
+5,275
+Member of various
+supervisory bodies
+5,204
+> BHP Group Plc., Great Britain (listed)
+Supervisory Board member
+and other comparable governing bodies of domestic
+and foreign companies
+Name
+Membership of other Supervisory Boards
+Position
+Name
+Notes to the Consolidated Financial Statements
+163 →
+Further information
+Consolidated Financial Statements
+und BHP Group Ltd., Australia (listed)
+Combined Management Report
+Infineon | Annual Report 2023
+Deutschland GmbH, Germany
+> Siemens Gamesa Renewable Energy
+> Infineon Technologies Dresden Verwaltungs GmbH,
+Germany
+Supervisory Board member
+> Allianz SE, Germany (listed)
+> Festo Management SE, Germany (Chairman)
+Supervisory Board member
+> voestalpine AG, Austria (listed)
+(Chairman)
+Management Board and Supervisory Board
+16,309
+71
+therein: Mainland China, Hong Kong
+Americas
+2,374
+1,857
+517
+28
+therein: USA
+8,750
+9,978
+(1,228)
+(12)
+(12)
+1,982
+1,564
+418
+27
+Total
+17,255
+16,712
+543
+3
+therein: USA
+1
+(1,226)
+8,767
+162
+137
+25
+18
+therein: Mainland China, Hong Kong
+4,124
+4,063
+61
+2
+9,993
+Japan
+67
+12
+18
+Japan
+1,706
+1,415
+291
+21
+Americas
+79
+7.09
+Lausanne, Switzerland
+11
+Neubiberg, Germany
+6, 16
+25.27
+288.61
+100
+100
+Dresden, Germany
+6
+(5.95)
+100
+(1.03)
+100
+Herlev, Denmark
+11
+0.07
+0.07
+0
+100
+Belgrade, Serbia
+11
+0
+36.64
+0
+0.00
+Singapore, Singapore
+6
+0.68
+9.14
+0
+100
+St. Denis, France
+6
+(0.02)
+0.09
+1.91
+100
+Rotterdam, The Netherlands
+6,24
+7.17
+21.07
+0
+100
+Wilmington, Delaware, USA
+6, 13, 15
+100
+217.53
+0
+100
+6
+0.05
+1.46
+0
+100
+Blackburn, Australia
+6
+275.97
+802.02
+Villach, Austria
+0
+Singapore, Singapore
+6, 24
+200.18
+1,818.33
+0
+100
+Wilmington, Delaware, USA
+12
+n.a.
+100
+100
+0.004
+1,965.89
+Shanghai, People's Republic of China
+11
+1.19
+4.09
+0
+100
+Shanghai, People's Republic of China
+6
+(12.95)
+42.37
+0
+100
+Cegléd, Hungary
+12
+n.a.
+n.a.
+0
+100
+Toronto, Ontario, Canada
+6
+518.96
+100
+0
+3.81
+3.04
+100
+Neubiberg, Germany
+6, 24
+52.39
+832.53
+0
+100
+Wilmington, Delaware, USA
+6
+0
+7.01
+0
+100
+Seoul, Republic of Korea
+6
+17.98
+56.88
+0
+100
+Tokyo, Japan
+15.89
+0.11
+0.09
+3
+Infineon Technologies Nijmegen B.V.
+Infineon Technologies Memory Solutions Israel Ltd.
+Infineon Technologies Memory Solutions Japan G.K.
+Infineon Technologies Memory Solutions Malaysia Sdn. Bhd.
+Infineon Technologies Memory Solutions Taiwan Ltd.
+Name of company
+Notes to the Consolidated Financial Statements
+167 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+5
+0.14
+0.15
+0
+100
+Bangalore, India
+6,24
+0.00
+74.84
+0
+100
+Wilmington, Delaware, USA
+6
+n.a.
+6.53
+0
+Tokyo, Japan
+5
+5.39
+22.35
+0
+100
+Bangalore, India
+6
+0.90
+100
+2.63
+100
+Hong Kong, People's Republic of China
+6
+276.10
+11,677.51
+100
+100
+Rotterdam, The Netherlands
+6
+0
+0
+24.90
+5.78
+100
+Klagenfurt, Austria
+6
+1.69
+6.77
+0
+100
+Milan, Italy
+6
+0.26
+0.54
+100
+100
+Dublin, Ireland
+6
+(0.02)
+0.09
+0
+100
+Rotterdam, The Netherlands
+6
+11.15
+100
+100
+Rotterdam, The Netherlands
+3, 13, 14
+0.00
+2.16
+100
+100
+Karlsruhe, Germany
+6,24
+0.00
+6.64
+0
+100
+Camana Bay (George Town), Cayman Islands
+11
+0.09
+2.36
+0
+100
+Lviv, Ukraine
+6,24
+Beijing, People's Republic of China
+100
+0
+15.16
+6
+1.46
+429.36
+0
+100
+Kulim, Malaysia
+11
+2.92
+47.64
+(0.82)
+0
+Wuxi, People's Republic of China
+11
+1.88
+3.39
+0
+100
+Shenzhen, People's Republic of China
+11
+1.29
+100
+Melaka, Malaysia
+274.43
+100
+Guadalajara, Mexico
+4
+2.34
+8.89
+0
+100
+Cork, Ireland
+6,24
+4.78
+316.41
+0
+100
+Wilmington, Delaware, USA
+6,24
+(197.26)
+6,495.61
+0
+100
+Wilmington, Delaware, USA
+100
+0
+(0.03)
+0.02
+Camana Bay (George Town), Cayman Islands
+11
+(6.92)
+4.29
+0
+100
+Shanghai, People's Republic of China
+11
+2.24
+0
+2.80
+100
+Singapore, Singapore
+6, 24
+(0.03)
+6.29
+0
+100
+Camana Bay (George Town), Cayman Islands
+11
+0
+100
+76.96
+353.34
+Infineon Technologies Italia s.r.l.
+Infineon Technologies Ireland Limited
+Infineon Technologies Investment B.V.
+Infineon Technologies Innovates G.K.
+Infineon Technologies India Private Limited
+Infineon Technologies Hong Kong Ltd.
+Infineon Technologies Holding B.V.
+Infineon Technologies Holding Asia Pacific Pte. Ltd.
+Infineon Technologies France S.A.S.
+Infineon Technologies Finance B.V.
+Infineon Technologies Epi Services, Inc.
+Infineon Technologies Dresden Verwaltungs GmbH
+Infineon Technologies Dresden GmbH & Co. KG
+Infineon Technologies Denmark ApS
+Infineon Technologies d.o.o. Beograd
+Infineon Technologies China Co., Ltd.
+Infineon Technologies Center of Competence (Shanghai) Co., Ltd.
+Infineon Technologies Cegléd Kft.
+Infineon Technologies Canada Acquisition Inc.
+Infineon Technologies Austria AG
+Infineon Technologies Australia Pty Limited
+Infineon Technologies IT-Services GmbH
+Infineon Technologies Japan K.K.
+Infineon Technologies Korea Co., LLC
+Infineon Technologies LLC
+12
+n.a.
+n.a.
+0
+100
+Dresden, Germany
+6
+(€ in millions)
+(0.02)
+0.03
+0
+Neubiberg, Germany
+100
+Footnote
+Net result
+(€ in millions)
+Equity
+Thereof Infineon
+Technologies AG
+in %
+Shareholdings
+Infineon | Annual Report 2023
+Infineon Technologies Memory Solutions Holdings Inc.
+Infineon Technologies Memory Solutions India LLP
+Infineon Technologies Memory Solutions Germany GmbH
+(€ in millions)
+0
+Registered office
+Infineon Technologies Americas Corp.
+Wuxi, People's Republic of China
+8
+3.80
+91.88
+0
+100
+Nonthaburi, Thailand
+12
+n.a.
+n.a.
+0
+100
+Shanghai, People's Republic of China
+8
+1.36
+9.10
+0
+100
+Kuala Lumpur, Malaysia
+6
+47.08
+100
+0
+141.33
+14.74
+Infineon Technologies 2. Vermögensverwaltungsgesellschaft mbH
+Infineon Technologies 3. Vermögensverwaltungsgesellschaft mbH
+Infineon Technologies Acquisition B.V.
+Name of company
+Notes to the Consolidated Financial Statements
+Infineon Technologies Asia Pacific Pte Ltd
+Further information
+Consolidated Financial Statements
+Combined Management Report
+166 →
+11
+0.37
+8.13
+0
+100
+Xi'an, People's Republic of China
+11
+Management Board and Supervisory Board
+(until 16 February 2023)
+Dr. Friedrich Eichiner
+Munich, 23 November 2023
+KPMG AG
+Wirtschaftsprüfungsgesellschaft
+[Original German version signed by:]
+Huber-Straßer
+Wirtschaftsprüferin
+[German Public Auditor]
+Schmitt
+Wirtschaftsprüfer
+[German Public Auditor]
+Infineon | Annual Report 2023
+Combined Management Report
+Independent Auditor's Report
+Jochen Hanebeck
+Infineon Technologies AG
+Management Board
+Neubiberg, 23 November 2023
+To the best of our knowledge, and in accordance with the applicable reporting
+principles, the Consolidated Financial Statements give a true and fair view of the
+assets, liabilities, financial position and profit or loss of the Group, and the Combined
+Management Report, which is combined with the Management Report of Infineon
+Technologies AG, includes a fair review of the development and performance of the
+business and the position of the Group, together with a description of the principal
+opportunities and risks associated with the expected development of the Group.
+Responsibility Statement
+by the Management Board
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Elke Reichart
+Dr. Rutger Wijburg
+Dr. Sven Schneider
+Elke Reichart
+Jochen Hanebeck
+Infineon Technologies AG
+Management Board
+Neubiberg, 21 November 2023
+Notes to the Consolidated Financial Statements
+← 171 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Andreas Urschitz
+Dr. Sven Schneider
+Andreas Urschitz
+Dr. Rutger Wijburg
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Pursuant to Section 322 (3) sentence 1 HGB, we declare that our audit has not led
+to any reservations relating to the legal compliance of the consolidated financial
+statements and of the group management report.
+> the accompanying consolidated financial statements comply, in all material respects,
+with the IFRSS as adopted by the EU, and the additional requirements of German
+commercial law pursuant to Section 315e (1) HGB [Handelsgesetzbuch: German
+Commercial Code] and, in compliance with these requirements, give a true and fair
+view of the assets, liabilities, and financial position of the Group as at 30 Septem-
+ber 2023, and of its financial performance for the financial year from 1 October 2022
+to 30 September 2023, and
+In our opinion, on the basis of the knowledge obtained in the audit,
+The group management report contains cross-references that are not required by
+law and which are marked as unaudited. In accordance with German legal require-
+ments, we have not audited the cross-references and the information to which the
+cross-references refer.
+In accordance with German legal requirements, we have not audited the content
+of those components of the group management report specified in the “Other Infor-
+mation" section of our auditor's report.
+We have audited the consolidated financial statements of Infineon Technologies AG,
+Neubiberg, and its subsidiaries (the Group), which comprise the consolidated state-
+ment of financial position as at 30 September 2023, and the consolidated statement
+of profit or loss, consolidated statement of comprehensive income, consolidated state-
+ment of changes in equity and consolidated statement of cash flows for the financial
+year from 1 October 2022 to 30 September 2023, and notes to the consolidated financial
+statements, including a summary of significant accounting policies. In addition, we
+have audited the combined management report of Infineon Technologies AG and of
+the Group (hereinafter: the "group management report") for the financial year from
+1 October 2022 to 30 September 2023.
+Report on the Audit of the Consolidated Financial
+Statements and of the Group Management Report
+Opinions
+To Infineon Technologies AG, Neubiberg
+Independent Auditor's Report
+For the Consolidated Financial Statements and Group Management Report we have issued an unqualified auditor's report.
+The English language text below is a translation of the auditor's report. The original German text shall prevail in the event of any discrepancies
+between the English translation and the German original. We do not accept any liability for the use of, or reliance on, the English translation
+or for any errors or misunderstandings that may derive from the translation.
+← 173 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+← 172 →
+by the Management Board
+Further information
+Responsibility Statement
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+← 174 →
+2
+2
+77
+77
+77
+in %
+Shareholdings
+High Blantyre, Scotland
+Wilmington, Delaware, USA
+Taipei, Taiwan
+Registered office
+1 Certain subsidiaries were not consolidated due to immateriality.
+Qimonda UK Ltd. (in liquidation)
+Qimonda Taiwan Co. Ltd. (in liquidation)
+Thereof Infineon
+Technologies AG
+0
+Qimonda Richmond LLC (in insolvency)
+Footnote
+Net result
+(€ in millions)
+Equity
+Notes to the Consolidated Financial Statements
+← 170 →
+=
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Name of company
+(€ in millions)
+0
+0
+2 On 23 January 2009, Qimonda AG applied to the Munich District Court for insolvency proceedings to be opened. Insolvency proceedings were formally opened on 1 April 2009. The equity and earnings of Qimonda AG and its subsidiaries
+are not disclosed due to the substantial and ongoing restriction of Infineon's rights as a result of Qimonda AG's insolvency. The list of subsidiaries held by Qimonda AG is based on information from 30 September 2010, since Infineon
+had not received any further information from the insolvency administrator of Qimonda AG with respect to the insolvency or liquidation of Qimonda companies, and further reflects information from the German commercial register.
+Since all Qimonda-related investments were written down in full in previous years, this has no effect on Infineon's net assets, financial position and results of operations.
+Infineon | Annual Report 2023
+24 IFRS figures.
+23 Consolidated financial statements.
+22 Infineon accounts for its interest using the equity method as Infineon lacks controlling influence due to certain contractual participation rights of the co-shareholder.
+21 Infineon accounts for its interest using the equity method because Infineon has significant influence due to the right to hold a supervisory board position in combination with comprehensive minority rights and certain contractual rights
+in the context of development cooperation.
+20 The entity owns land of which Infineon is the sole tenant.
+19 Non-stock entity. Disclosure of ownership in percent does not apply.
+18 Because criteria pursuant to section 285, No. 11, German Commercial Code are not met, investments in the affiliate are not disclosed.
+17 Exemption pursuant to section 264b German Commercial Code from the obligations to prepare a management report, from the audit obligation, and from the obligation to disclose the annual financial statements.
+16 Exemption pursuant to section 264b German Commercial Code from the obligations to prepare a management report as well as notes and from the obligations to disclose the annual financial statements.
+15 Exemption pursuant to section 264, paragraph 3, German Commercial Code from the obligations to disclose the annual financial statements pursuant to section 325 German Commercial Code.
+14 Exemption pursuant to section 264, paragraph 3, German Commercial Code from the preparation of a management report and from the audit obligation pursuant to section 264 et seq. German Commercial Code and from the obligations
+to disclose the annual financial statements pursuant to section 325 German Commercial Code.
+13 Control and profit transfer agreement.
+12 The entity was founded in the 2023 fiscal year.
+11 Equity and net result as of 31 December 2022.
+10 Equity and net result as of 2 October 2022 (period from 4 October 2021 until 2 October 2022).
+9 Equity and net result as of 30 September 2022 (period from 8 September 2022 until 30 September 2022).
+8 Equity and net result as of 30 September 2022 (period from 1 January 2022 until 30 September 2022).
+7 Equity and net result as of 30 September 2022 (period from 12 November 2021 until 30 September 2022).
+6 Equity and net result as of 30 September 2022.
+5 Equity and net result as of 31 March 2022.
+4 Equity and net result as of 31 December 2021.
+3 Equity and net result as of 30 September 2021.
+2
+Basis for the Opinions
+> the accompanying group management report as a whole provides an appropriate
+view of the Group's position. In all material respects, this group management report
+is consistent with the consolidated financial statements, complies with German
+legal requirements and appropriately presents the opportunities and risks of future
+development. Our opinion on the group management report does not cover the
+content of those components of the group management report specified in the
+"Other Information" section of the auditor's report. The group management report
+contains cross-references that are not required by law and which are marked as
+unaudited. Our audit opinion does not extend to the cross-references and the
+information to which the cross-references refer.
+Key Audit Matters in the Audit of the Consolidated
+Financial Statements
+From the matters communicated with those charged with governance, we determine
+those matters that were of most significance in the audit of the consolidated financial
+statements of the current period and are therefore the key audit matters. We describe
+these matters in our auditor's report unless law or regulation precludes public disclo-
+sure about the matter.
+← 178 →
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+We also provide those charged with governance with a statement that we have
+complied with the relevant independence requirements, and communicate with
+them all relationships and other matters that may reasonably be thought to bear on
+our independence, and where applicable, the actions taken or safeguards applied
+to eliminate independence threats.
+We communicate with those charged with governance regarding, among other matters,
+the planned scope and timing of the audit and significant audit findings, including
+any significant deficiencies in internal control that we identify during our audit.
+> Perform audit procedures on the prospective information presented by the
+Management Board in the group management report. On the basis of sufficient
+appropriate audit evidence we evaluate, in particular, the significant assumptions
+used by the Management Board as a basis for the prospective information, and
+evaluate the proper derivation of the prospective information from these assump-
+tions. We do not express a separate opinion on the prospective information and
+on the assumptions used as a basis. There is a substantial unavoidable risk that
+future events will differ materially from the prospective information.
+> Evaluate the consistency of the group management report with the consolidated
+financial statements, its conformity with [German] law, and the view of the Group's
+position it provides.
+> Obtain sufficient appropriate audit evidence regarding the financial information
+of the entities or business activities within the Group to express opinions on the
+consolidated financial statements and on the group management report. We are
+responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our opinions.
+> Evaluate the overall presentation, structure and content of the consolidated
+financial statements, including the disclosures, and whether the consolidated
+financial statements present the underlying transactions and events in a manner
+that the consolidated financial statements give a true and fair view of the assets,
+liabilities, financial position and financial performance of the Group in compliance
+with IFRSS as adopted by the EU and the additional requirements of German
+commercial law pursuant to Section 315e (1) HGB.
+> Conclude on the appropriateness of the Management Board's use of the going
+concern basis of accounting and, based on the audit evidence obtained, whether
+a material uncertainty exists related to events or conditions that may cast significant
+doubt on the Group's ability to continue as a going concern. If we conclude that a
+material uncertainty exists, we are required to draw attention in the auditor's report
+to the related disclosures in the consolidated financial statements and in the group
+management report or, if such disclosures are inadequate, to modify our respec-
+tive opinions. Our conclusions are based on the audit evidence obtained up to the
+date of our auditor's report. However, future events or conditions may cause the
+Group to cease to be able to continue as a going concern.
+> Evaluate the appropriateness of accounting policies used by the Management
+Board and the reasonableness of estimates made by the Management Board and
+related disclosures.
+> Obtain an understanding of internal control relevant to the audit of the consolidated
+financial statements and of arrangements and measures (systems) relevant to the
+audit of the group management report in order to design audit procedures that are
+appropriate in the circumstances, but not for the purpose of expressing an opinion
+on the effectiveness of these systems.
+We conducted our audit of the consolidated financial statements and of the group
+management report in accordance with Section 317 HGB and the EU Audit Regulation
+No 537/2014 (referred to subsequently as "EU Audit Regulation") and in compliance
+with German Generally Accepted Standards for Financial Statement Audits promulgated
+by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).
+Our responsibilities under those requirements and principles are further described in
+the "Auditor's Responsibilities for the Audit of the Consolidated Financial Statements
+and of the Group Management Report" section of our auditor's report. We are inde-
+pendent of the group entities in accordance with the requirements of European law
+and German commercial and professional law, and we have fulfilled our other German
+professional responsibilities in accordance with these requirements. In addition, in
+accordance with Article 10 (2)(f) of the EU Audit Regulation, we declare that we have
+not provided non-audit services prohibited under Article 5 (1) of the EU Audit Regula-
+tion. We believe that the evidence we have obtained is sufficient and appropriate to
+provide a basis for our opinions on the consolidated financial statements and on the
+group management report.
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+> Identify and assess the risks of material misstatement of the consolidated financial
+statements and of the group management report, whether due to fraud or error,
+design and perform audit procedures responsive to those risks, and obtain audit
+evidence that is sufficient and appropriate to provide a basis for our opinions. The
+risk of not detecting a material misstatement resulting from fraud is higher than
+the risk of not detecting a material misstatement resulting from error, as fraud
+may involve collusion, forgery, intentional omissions, misrepresentations, or the
+override of internal controls.
+Other Legal and Regulatory Requirements
+We exercise professional judgement and maintain professional scepticism throughout
+the audit. We also:
+Report on the Assurance on the Electronic Rendering of the
+Consolidated Financial Statements and the Group Management
+Report Prepared for Publication Purposes in Accordance with
+Section 317 (3a) HGB
+In our opinion, the rendering of the consolidated financial statements and the group
+management report contained in the electronic file made available, identified above
+and prepared for publication purposes complies in all material respects with the
+requirements of Section 328 (1) HGB for the electronic reporting format. Beyond this
+assurance opinion and our audit opinion on the accompanying consolidated financial
+statements and the accompanying group management report for the financial year
+from 1 October 2022 to 30 September 2023 contained in the "Report on the Audit of
+the Consolidated Financial Statements and the Group Management Report" above,
+The German Public Auditor responsible for the engagement is Martin Schmitt.
+Responsible for the Engagement
+German Public Auditor
+Our auditor's report must always be read together with the audited consolidated
+financial statements and the audited group management report as well as the exam-
+ined ESEF documents. The consolidated financial statements and group management
+report converted to the ESEF format – including the versions to be entered in the
+company register - are merely electronic renderings of the audited consolidated
+financial statements and the audited group management report and do not take their
+place. In particular, the ESEF report and our assurance opinion contained therein
+are to be used solely together with the examined ESEF documents made available in
+electronic form.
+Other matter - Use of the Auditor's Report
+We declare that the opinions expressed in this auditor's report are consistent with
+the additional report to the Audit Committee pursuant to Article 11 of the EU Audit
+Regulation (long-form audit report).
+> Evaluate whether the tagging of the ESEF documents with Inline XBRL technology
+(iXBRL) in accordance with the requirements of Articles 4 and 6 of Commission
+Delegated Regulation (EU) 2019/815, as amended as at the reporting date, enables
+an appropriate and complete machine-readable XBRL copy of the XHTML rendering.
+Further information pursuant to Article 10 of the EU Audit Regulation
+We were elected as group auditor at the Annual General Meeting on 16 February 2023.
+We were engaged by the Supervisory Board on 3 May 2023. In compliance with the
+transitional provision of Article 41 (2) of the EU Audit Regulation, we have been, with-
+out interruption since short financial year 1999 (1 April to 30 September 1999), the
+group auditor of Infineon Technologies AG, which without interruption since its IPO
+in 2000 has fulfilled the definition of a public interest entity within the meaning of
+Section 316a sentence 2 HGB.
+> Evaluate whether the ESEF documents provide an XHTML rendering with content
+equivalent to the audited consolidated financial statements and the audited group
+management report.
+> Evaluate the technical validity of the ESEF documents, i.e. whether the file made
+available containing the ESEF documents meets the requirements of Commission
+Delegated Regulation (EU) 2019/815, as amended as at the reporting date, on the
+technical specification for this electronic file.
+> Obtain an understanding of internal control relevant to the assurance on the ESEF
+documents in order to design assurance procedures that are appropriate in the
+circumstances, but not for the purpose of expressing an assurance opinion on the
+effectiveness of these controls.
+← 179 →
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+> Identify and assess the risks of material intentional or unintentional non-compliance
+with the requirements of Section 328 (1) HGB, design and perform assurance pro-
+cedures responsive to those risks, and obtain assurance evidence that is sufficient
+and appropriate to provide a basis for our assurance opinion.
+Our objective is to obtain reasonable assurance about whether the ESEF documents
+are free from material intentional or unintentional non-compliance with the require-
+ments of Section 328 (1) HGB. We exercise professional judgement and maintain
+professional scepticism throughout the assurance work. We also:
+The Supervisory Board is responsible for overseeing the process of preparing the
+ESEF documents as part of the financial reporting process.
+In addition, the Company's Management Board is responsible for such internal control
+that it has considered necessary to enable the preparation of ESEF documents that
+are free from material intentional or unintentional non-compliance with the require-
+ments of Section 328 (1) HGB for the electronic reporting format.
+The Company's Management Board is responsible for the preparation of the ESEF
+documents including the electronic rendering of the consolidated financial statements
+and the group management report in accordance with Section 328 (1) sentence 4
+item 1 HGB and for the tagging of the consolidated financial statements in accordance
+with Section 328 (1) sentence 4 item 2 HGB.
+We conducted our assurance work on the rendering of the consolidated financial
+statements and the group management report contained in the file made available
+and identified above in accordance with Section 317 (3a) HGB and the IDW Assurance
+Standard: Assurance Work on the Electronic Rendering of Financial Statements and
+Management Reports Prepared for Publication Purposes in Accordance with Section
+317 (3a) HGB (IDW ASS 410 (06.2022)). Our responsibility in accordance therewith is
+further described below. Our audit firm applies the IDW Standard on Quality Manage-
+ment 1: Requirements for Quality Management in Audit Firms (IDW QS 1).
+we do not express any assurance opinion on the information contained within these
+renderings or on the other information contained in the file identified above.
+We have performed assurance work in accordance with Section 317 (3a) HGB to obtain
+reasonable assurance about whether the rendering of the consolidated financial
+statements and the group management report (hereinafter the "ESEF documents")
+contained in the electronic file „Infineon_Technologies_AG_KA+KLB_ESEF_2023-
+09-30.zip" (SHA256-Hashwert: 2e23e589e5a7223309fd39b953f18c24f0f95c79648
+b6d38651487c0207649db) made available and prepared for publication purposes
+complies in all material respects with the requirements of Section 328 (1) HGB for
+the electronic reporting format (“ESEF format”). In accordance with German legal
+requirements, this assurance work extends only to the conversion of the information
+contained in the consolidated financial statements and the group management report
+into the ESEF format and therefore relates neither to the information contained in
+these renderings nor to any other information contained in the file identified above.
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
+conducted in accordance with Section 317 HGB and the EU Audit Regulation and in
+compliance with German Generally Accepted Standards for Financial Statement Audits
+promulgated by the Institut der Wirtschaftsprüfer (IDW) will always detect a material
+misstatement. Misstatements can arise from fraud or error and are considered material
+if, individually or in the aggregate, they could reasonably be expected to influence
+the economic decisions of users taken on the basis of these consolidated financial
+statements and this group management report.
+← 177 →
+The Supervisory Board is responsible for overseeing the Group's financial reporting
+process for the preparation of the consolidated financial statements and of the group
+management report.
+Finally, we assessed whether the disclosures in the notes regarding impairment
+testing of goodwill are appropriate.
+In order to take account of the existing forecast uncertainty and the earlier cut-off
+date selected for impairment testing, the Company examined the effects of possible
+changes in the discount rates, revenue and margin performance and the long-term
+growth rate in perpetuity on the value in use by calculating alternative scenarios
+and comparing these with its own reported figures (sensitivity analysis). We have
+assessed this analysis. In order to take into account the earlier cut-off date for impair-
+ment testing, we also assessed the impact of events until 30 September 2023 on
+impairment testing.
+To ensure the computational accuracy of the valuation method used, we verified the
+Company's calculations on the basis of selected risk-based elements.
+We checked how the discount rates used were derived and their amounts. For this
+purpose, we compared the assumptions and data underlying the discount rates,
+in particular the risk-free rate, the market risk premium and the beta factor, with our
+own assumptions and publicly available data.
+performance used for measurement is within a reasonable range. We also confirmed
+the accuracy of the Company's previous forecasts by comparing the budgets of
+previous financial years with actual results and by analysing deviations.
+← 175 →
+Auditor's Responsibilities for the Audit of the Consolidated
+Financial Statements and of the Group Management Report
+Our objectives are to obtain reasonable assurance about whether the consolidated
+financial statements as a whole are free from material misstatement, whether due
+to fraud or error, and whether the group management report as a whole provides an
+appropriate view of the Group's position and, in all material respects, is consistent
+with the consolidated financial statements and the knowledge obtained in the audit,
+complies with the German legal requirements and appropriately presents the oppor-
+tunities and risks of future development, as well as to issue an auditor's report that
+includes our opinions on the consolidated financial statements and on the group
+management report.
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+When assessing the impairment test, we also assessed the appropriateness of key
+assumptions. We assessed the Company's calculation method and selected assump-
+tions in terms of their appropriateness with the help of our valuation specialists.
+For this purpose, we checked that corporate planning was updated for the next five
+years and adopted by the Management Board. Using elements selected on the basis
+of risk, we had the staff responsible for preparing corporate planning explain to us in
+particular revenue and margin performance, as well as the long-term growth rates
+assumed in perpetuity, which consider a steady state taking into account the synergy
+effects of the acquisition of Cypress Semiconductor Corporation. In this context,
+revenue performance in particular was critically reviewed and assessed based on
+publicly available market estimates and information to determine whether the revenue
+Our audit approach
+As a result of the impairment test performed, the Company did not identify any
+need to recognise impairment losses. In light of the discretionary judgement of the
+assumptions underlying impairment testing, there is the risk for the consolidated
+financial statements that a required impairment was not recognised. There is also the
+risk that the related disclosures in the notes are not appropriate.
+Impairment testing of goodwill is complex and based on a range of assumptions that
+require judgement. Such judgement includes, among other elements, the assumptions
+found in the adopted corporate planning for a period of five years, such as revenue
+growth and margins, assumed long-term growth rates in perpetuity, which consider
+a steady state taking into account the synergy effects of the acquisition of Cypress
+Semiconductor Corporation, and the underlying discount rates.
+Infineon tests goodwill for impairment in accordance with IAS 36 at the operating
+segment level annually in the fourth quarter of the financial year ending 30 Septem-
+ber, as well as in cases where events or changes to the prevailing conditions provide
+indications that the recoverable amount may have fallen below the carrying amount.
+The recoverable amount is the higher of fair value less costs of disposal and value
+in use. Goodwill is impaired if the carrying amount of the operating segment to which
+the goodwill is allocated exceeds the recoverable amount of this unit. Infineon
+determines the recoverable amount of the respective cash-generating unit to which
+goodwill was allocated according to value in use.
+The consolidated financial statements of Infineon Technologies AG reported goodwill
+in the amount of EUR 6,547 million as at 30 September 2023. At 23% of the balance
+sheet total, goodwill accounts for a considerable share of total assets.
+The financial statement risk
+Please refer to note 2 in the notes to the consolidated financial statements for infor-
+mation on the accounting policies applied and the assumptions used. Information on
+the value of goodwill can be found under note 14.
+Impairment testing of goodwill
+Key audit matters are those matters that, in our professional judgement, were of most
+significance in our audit of the consolidated financial statements for the financial
+year from 1 October 2022 to 30 September 2023. These matters were addressed in
+the context of our audit of the consolidated financial statements as a whole, and in
+forming our opinion thereon, we do not provide a separate opinion on these matters.
+Our observations
+The calculation method used for impairment testing of goodwill is appropriate and
+in line with the accounting policies to be applied.
+Further information
+Independent Auditor's Report
+The related disclosures in the notes are appropriate.
+Furthermore, the Management Board is responsible for the preparation of the group
+management report that, as a whole, provides an appropriate view of the Group's
+position and is, in all material respects, consistent with the consolidated financial
+statements, complies with German legal requirements, and appropriately presents
+the opportunities and risks of future development. In addition, the Management Board
+is responsible for such arrangements and measures (systems) as they have consid-
+ered necessary to enable the preparation of a group management report that is in
+accordance with the applicable German legal requirements, and to be able to provide
+sufficient appropriate evidence for the assertions in the group management report.
+In preparing the consolidated financial statements, the Management Board is respon-
+sible for assessing the Group's ability to continue as a going concern. They also have
+the responsibility for disclosing, as applicable, matters related to going concern. In
+addition, it is responsible for financial reporting based on the going concern basis of
+accounting unless there is an intention to liquidate the Group or to cease operations,
+or there is no realistic alternative but to do so.
+The Management Board is responsible for the preparation of consolidated financial
+statements that comply, in all material respects, with IFRSS as adopted by the EU and
+the additional requirements of German commercial law pursuant to Section 315e (1)
+HGB and that the consolidated financial statements, in compliance with these require-
+ments, give a true and fair view of the assets, liabilities, financial position, and financial
+performance of the Group. In addition, the Management Board is responsible for such
+internal control as they have determined necessary to enable the preparation of con-
+solidated financial statements that are free from material misstatement, whether due
+to fraud (i.e., fraudulent financial reporting and misappropriation of assets) or error.
+The Company's assumptions used for measurement are appropriate.
+Responsibilities of the Management Board and the
+176 →
+Further information
+Independent Auditor's Report
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Supervisory Board for the Consolidated Financial Statements
+and the Group Management Report
+> otherwise appears to be materially misstated.
+> is materially inconsistent with the consolidated financial statements, with the
+group management report information audited for content or our knowledge
+obtained in the audit, or
+In connection with our audit, our responsibility is to read the other information and,
+in so doing, to consider whether the other information
+Our opinions on the consolidated financial statements and on the group management
+report do not cover the other information, and consequently we do not express an
+opinion or any other form of assurance conclusion thereon.
+The other information also includes the remaining parts of the annual report. The
+other information does not include the consolidated financial statements, the group
+management report information audited for content and our auditor's report thereon.
+> information extraneous to management reports and marked as unaudited.
+> the combined corporate governance statement for the Company and the Group
+referred to in the group management report, and
+If, based on the work we have performed, we conclude that there is a material
+misstatement of this other information, we are required to report that fact. We have
+nothing to report in this regard.
+> the separate combined non-financial report of the Company and Group, which is
+referred to in the group management report
+The Management Board and the Supervisory Board, respectively, are responsible for
+the other information. The other information comprises the following components of
+the group management report, whose content was not audited:
+Other information
+Publication of
+third quarter 2024¹
+results
+Publication of
+fourth quarter and
+fiscal year 2024¹
+results
+Infineon | Annual Report 2023
+Combined Management Report
+Publication of
+second quarter 2024¹
+results
+Consolidated Financial Statements
+Further information
+Imprint
+Management Board and Supervisory Board
+Annual General
+Meeting 2024
+virtual
+7
+12
+Tuesday
+5
+Tuesday
+Monday
+6
+186 →
+23
+Publication of
+first quarter 2024¹
+results
+Imprint
+Public
+Copy deadline:
+Forward-looking statements
+This report contains forward-looking statements about the business, financial condition, earnings performance
+and strategy of the Infineon Group. These statements and assessments are based on assumptions and projections
+resting upon currently available information and present estimates. They are subject to a multitude of uncertain-
+ties and risks, many of which are wholly or partially beyond Infineon's control. Infineon's actual business devel-
+opment, financial position, performance and strategy may therefore differ materially from the statements made
+in this report.
+Friday
+Infineon, the Infineon logo, AURIX™, FlexRay™, Modus Toolbox™, PROFET™,
+PSoCT, TRAVEO M
+Specific disclaimer for Omdia reports, data and information referenced in this document:
+in the 2023 fiscal year:
+The following were brand names of Infineon Technologies AG
+Page 12: Tobias Eble, Munich (Germany)
+Published by:
+Editors:
+Page 4: Werner Bartsch, Hamburg (Germany)
+Page 10: Bernhard Schmidt, Munich (Germany)
+KPMG AG Wirtschaftsprüfungsgesellschaft,
+Munich (Germany)
+1 October to 30 September
+Infineon Technologies AG, Neubiberg (Germany)
+Investor Relations, Accounting, Consolidation & Reporting
+23 November 2023
+Note
+Photography:
+Designed by:
+Independent auditors:
+Fiscal year:
+HGB Hamburger Geschäftsberichte GmbH & Co. KG,
+Hamburg (Germany)
+Tuesday
+> Wind power turbines
+August
+> Agricultural vehicles
+› Construction vehicles
+> Electric delivery vehicles
+> Forklifts
+> Hybrid buses
+Traction
+> High-speed trains
+› Locomotives
+> Metro trains
+› Trams
+1 Including motors, compressors, pumps and fans.
+Product range
+› Bare die business
+> Discrete IGBTs
+› Driver ICs
+> IGBT modules (low-power, medium-power,
+high-power)
+> IGBT module solutions, including IGBT stacks
+> Intelligent IGBT modules with integrated
+control unit, driver and switch
+Industrial vehicles
+Industrial robotics
+> Uninterruptable power supplies
+> Home energy storage
+> Dishwashers
+> Induction cooktops
+> Microwave ovens
+> Refrigerators
+> Vacuum cleaners
+> Washing machines
+Industrial drives¹
+> Air conditioning technology
+> Automation technology
+> SiC diodes, SiC MOSFETs, SiC modules
+> Drives technologies
+> Escalators
+> Materials handling
+> Oil derricks
+› Pipelines
+> Rolling mills
+Industrial power supplies
+> Auxiliary power supplies
+> Battery chargers
+› Charging stations for electric vehicles
+> Elevator systems
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Cellular communications infrastructure
+› Base stations
+Charging stations for electric vehicles
+Human-machine interaction
+IoT
+› Communications
+› Sensors
+> Smart speakers
+> Voice control
+> Multi-copters
+LED and conventional lighting systems
+Mobile devices
+› Activity trackers
+> Health care trackers
+› Navigation devices
+› Smartphones
+> Tablets
+Power management (chargers, adapters, power
+supplies, DC-DC conversion, wireless charging)
+› Consumer electronics
+Microinverter for roof-top systems
+> Air conditioners
+> eScooters
+- Power saws
+Consolidated Financial Statements
+PSS Power & Sensor Systems
+Further information
+Applications and product range
+Power & Sensor Systems
+Applications
+Audio amplifiers
+> Battery-powered loudspeakers
+> Smart speakers
+Automotive electronics
+> Blind spot detection
+> eBikes
+> In-cabin USB PD charging
+> Power train for low-speed electric vehicles
+BLDC motor
+> Battery-powered gardening equipment, e.g.,
+- Hedge trimmers
+- Lawn mowers
+› Battery-powered home appliances, e.g.,
+- Vacuum cleaners
+> Battery-powered power tools, e.g.,
+- Cordless screwdrivers
+- Drills
+> Onboard charger
+› Data centers
+Home appliances
+> Offshore wind farm HVDC transmission lines
+> Lane departure warning system
+> Tire pressure monitoring system
+Comfort electronics
+> Air conditioning
+› Body control units
+> Door electronics
+> Electronic seat adjustment
+> Hatch door
+> Lighting
+> Power window
+> Steering
+> Sunroof
+> Suspension
+> Windshield wipers
+Infotainment
+› Connectivity for in-cabin infotainment
+› Digital instrument cluster
+Powertrain
+› Battery charging control
+> ESP (Electronic Stability Program)
+› Emergency braking assistant
+> Electronic power steering
+> Electronic chassis control
+The provision of the information used by Infineon does not imply any judgment on Infineon and no liability is
+assumed for the information.
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Applications and product range
+ATV Automotive
+Further information
+Applications and product range
+Automotive
+← 180 →
+Applications
+› Battery management
+Assistance systems and safety systems
+› Airbag
+> Automatic parking
+> E/E architecture
+-
+Power distribution
+- On-board network
+> Blind spot detection
+> Cruise control
+› Distance control
+> ABS (Anti-blocking system)
+› Combustion engine control
+› DC-DC converter
+> Electric motor control
+> Transceivers (CAN, CAN FD, LIN, Ethernet, FlexRay™)
+> Voltage regulators
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+GIP
+Green Industrial Power
+Further information
+Applications and product range
+Green Industrial Power
+> SiC (diodes, MOSFETs, modules)
+← 181 →
+Energy generation
+> Photovoltaic systems
+Energy storage
+> Grid stability
+> Home usage
+> Urban district
+> Wall box
+Energy transmission
+> FACTS (Flexible AC Transmission Systems)
+Applications
+> Overland HVDC transmission lines
+77 GHz radar, current)
+> Power ICs
+› Generator control
+> Start-stop system
+› Thermal management
+› Transmission control
+Security
+› Communication
+-Car-to-car
+-Car-to-infrastructure
+› Original spare parts authentication
+> Sensors (3D-ToF, pressure, magnetic,
+> Protection against manipulation (e.g., odometer)
+> Remote keyless entry
+> Tachograph
+Product range
+> 32-bit automotive microcontrollers for powertrain,
+safety, driver assistance systems, infotainment and
+digital display systems
+› Discrete power semiconductors
+> IGBT modules
+> Industrial microcontrollers
+> Memory ICs (NOR flash, SRAM, nvSRAM, F-RAM)
+> Protection against software manipulation
+> Home appliances
+> Mobile devices
+> PCs and notebooks
+C06
+Revenue and Segment Result of the
+Power & Sensor Systems segment
+DRAM
+dynamic random access memory
+47
+GaN
+gallium nitride
+C07
+IC
+integrated circuit
+Connected Secure Systems segment
+49
+IGBT
+insulated gate bipolar transistor
+C08 Revenue by segment
+50
+IoT
+C09 Financial debt by currency
+53
+direct current to direct current conversion
+corporate social responsibility
+bluetooth low energy
+DC-DC
+C02
+Core competencies in the segments
+24
+ΑΙ
+artificial intelligence
+ASIC
+C03
+R&D expenses
+35
+LED
+application-specific integrated circuit
+brushless direct current
+C04 Revenue and Segment Result of the
+Automotive segment
+C05 Revenue and Segment Result of the
+Green Industrial Power segment
+445
+46
+BLE
+CSR
+46
+BLDC
+C10 Development of the Infineon Technologies AG share
+compared to Germany's DAX Index, the Philadelphia
+Semiconductor Index (SOX) and the Dow Jones
+MEMS
+US Semiconductor Index for the 2023 fiscal year
+(daily closing prices)
+Sic
+silicon carbide
+ToF
+time-of-flight
+USB
+universal serial bus
+Wi-Fi
+wireless fidelity
+Infineon | Annual Report 2023
+silicon
+← 184 →
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Financial calendar 2024
+← 185 →
+Financial calendar 2024
+1 Preliminary
+February
+February
+May
+Management Board and Supervisory Board
+advanced driver assistance system
+Si
+programmable system-on-chip
+59
+NAND
+C11 Shareholder structure as of the end of the 2023 fiscal year
+59
+NFC
+C12 Dividend per share for the 2014 to 2023 fiscal years
+60
+PSOC
+C13
+radio frequency
+Risk assessment matrix
+RF
+ML
+Internet of Things
+light-emitting diode
+micro-electromechanical system
+machine learning
+MOSFET metal-oxide-semiconductor field-effect transistor
+not AND
+near-field communication
+66
+ADAS
+Page
+22
+C01 The main stages of the semiconductor value chain
+Infineon | Annual Report 2023
+> Oil and gas exploration
+> Submarine telecommunications
+182 →
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Applications and product range
+Connected Secure Systems
+183 →
+> USB controllers
+CSS
+Applications
+Authentication
+› Accessories
+> Brand protection
+› Game consoles
+> Industrial control systems
+> Printer cartridges
+Automotive
+› Connected vehicles
+Connected Secure Systems
+- eCall
+> TVS (transient voltage suppressor) diodes
+> RF power transistors
+> Servers
+› Telecommunication technology
+Special applications in harsh environments
+› Aerospace systems
+> Aviation technologies
+> Defense technologies
+Product range
+> 3D ToF sensors
+> Chips for gas sensors
+> SiC diodes, SiC MOSFETS
+> Chips for MEMS microphones
+> Control ICs for power switches
+> Customized chips (ASICS)
+> Discrete low-voltage, mid-voltage and
+high-voltage power MOSFETs (Si-based)
+> GaN power switches
+> GPS low-noise amplifiers
+> Low-voltage and high-voltage driver ICS
+> Radar sensor ICs (24 GHz, 60 GHz)
+> RF antenna switches
+› Chips for pressure sensors
+November
+-Car-to-car communications
+> Electronic toll collection (toll collect)
+› Credit/debit cards
+> Mobile payment
+> NFC-based contactless payment
+Ticketing, access control
+Trusted computing
+Infineon | Annual Report 2023
+Product range
+› Connectivity solutions (Wi-Fi, Bluetooth, BLE, UWB)
+> Embedded security controllers (Embedded SIM,
+Payment systems
+Authentication, Trusted Computing)
+and industrial applications
+> Security controllers (contact-based, contactless,
+dual-interface)
+Management Board and Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Chart overview
+Further information
+Chart overview | List of abbreviations
+List of abbreviations
+> Microcontroller for consumer electronics
+-Car-to-infrastructure communications
+> SIM cards
+- Consumer applications
+> In-cabin infotainment
+> Protection against manipulation (e.g., tachographs)
+Consumer electronics
+› Game consoles
+> Remote control
+› Smart watches and activity trackers
+Government identification documents
+> Driver's licenses
+> Healthcare cards
+- IoT applications
+> National identity cards
+> Social insurance cards
+IoT
+> Industry 4.0
+> IT equipment
+> Smart city
+> Smart home
+Mobile communications
+> Embedded SIM
+(machine-to-machine communication)
+> Passports
+Specific disclaimer for S&P Global - reports, data and information referenced in this document:
+The S&P Global Mobility and S&P Global Commodity Insights reports, data and information referenced herein
+(the "S&P Global Materials") are the copyrighted property of S&P Global Inc. and its subsidiaries ("S&P Global")
+and represent data, research, opinions or viewpoints published by the relevant divisions within S&P Global, and
+are not representations of fact. The S&P Global Materials speak as of the original publication date thereof and not
+as of the date of this document. The information and opinions expressed in the S&P Global Materials are subject
+to change without notice and neither S&P Global nor, as a consequence, Infineon have any duty or responsibility
+to update the S&P Global Materials or this publication. Moreover, while the S&P Global Materials reproduced
+herein are from sources considered reliable, the accuracy and completeness thereof are not warranted, nor are
+the opinions and analyses which are based upon it. S&P Global and the trademarks used in the Data, if any, are
+trademarks of S&P Global. Other trademarks appearing in the S&P Global Materials are the property of S&P Global
+or their respective owners.
+Revenue and Segment Result of the
+Infineon | Annual Report 2023
+www.infineon.com
+Am Campeon 1-15, D-85579 Neubiberg near Munich (Germany), Phone +49 89 234-0
+investor.relations@infineon.com, Phone +49 89 234-26655, Fax +49 89 234-955 2987
+media.relations@infineon.com, Phone +49 89 234-28480, Fax +49 89 234-955 4521
+Visit us on the web:
+Visit us on the web: www.infineon.com f in X
+Headquarters:
+Contact for Investors and Analysts:
+Media Contact:
+Infineon Technologies AG
+www.infineon.com/declaration-on-corporate-governance
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = < 17 →
+Rules of procedure for the Supervisory Board and
+the Management Board
+All the rules of procedure for the Supervisory Board and the Management Board are
+available on the Infineon website.
+www.infineon.com/cms/en/about-infineon/investor/corporate-governance/articles-of-association/
+Related party transactions
+Publicly listed companies such as Infineon require the approval of the Supervisory
+Board or one of its committees before entering into certain transactions with related
+parties. In order to identify related party transactions that require approval and to
+treat them in accordance with the law, Infineon has implemented a procedure based
+on guidelines that apply worldwide across the Group. The Supervisory Board has
+delegated responsibility in this area to the Investment, Finance and Audit Committee,
+particularly for resolutions requiring approval. There were no related party trans-
+actions requiring approval in the 2023 fiscal year.
+Separate and Consolidated Financial Statements
+KPMG audited the Separate Financial Statements of Infineon Technologies AG and
+the Consolidated Financial Statements as of 30 September 2023, as well as the
+Combined Management Report of Infineon Technologies AG and the Infineon Group,
+and issued unqualified opinions thereon.
+The Half-Year Financial Report was also reviewed by KPMG. No issues were identified
+that might indicate that the condensed Interim Consolidated Financial Statements
+or the Interim Group Management Report were not prepared in accordance with the
+applicable provisions in all material respects.
+KPMG has audited the Separate Financial Statements of Infineon Technologies AG
+and the Consolidated Financial Statements of the Infineon Group and reviewed the
+Interim Consolidated Financial Statements since the 1999 fiscal year (short fiscal year
+from 1 April 1999 to 30 September 1999). Martin Schmitt, the auditor responsible for
+the engagement, signed the auditor's report for the first time for the 2021 fiscal year
+(1 October 2020 to 30 September 2021) and Angelika Huber-Straßer, as co-signatory,
+for the first time for the 2023 fiscal year (1 October 2022 to 30 September 2023).
+At the meeting of the Investment, Finance and Audit Committee held on 14 November
+2023 and continued in a conference call on 21 November 2023, thorough discussions
+were held with the auditor regarding the Separate Financial Statements, the Consoli-
+dated Financial Statements, the Combined Management Report, the appropriation
+of profit and the auditor's findings. The Committee deliberated at length on the key
+audit matters disclosed in the auditor's report as well as on the related audit proce-
+dures. Based on the insights gained in the course of these deliberations, the Investment,
+Finance and Audit Committee resolved to suggest to the Supervisory Board that the
+financial statements drawn up and presented by the Management Board be approved
+and the proposed appropriation of profit agreed to.
+The Separate Financial Statements, the Consolidated Financial Statements, the Com-
+bined Management Report, the Management Board's proposal for the appropriation
+of unappropriated profit (all prepared by the Management Board), and KPMG's long-
+form audit reports were all made available to the Supervisory Board at its meeting on
+23 November 2023. At this meeting, the Chairman of the Investment, Finance and
+Audit Committee reported in depth on the corresponding recommendations of the
+Committee. In addition, all material issues relevant to the financial statements and
+the audit, including the key audit matters, were exhaustively discussed with the audi-
+tor and closely examined by the Supervisory Board. The examination also covered
+the proposal to pay a dividend of €0.35 per share entitled to dividend.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Combined Management Report
+Further information on the topic of corporate governance is available in the Statement
+of Corporate Governance.
+Consolidated Financial Statements
+The Combined Management Report contains forward-looking statements
+about the business, financial condition and earnings performance of
+Infineon. These statements are based on assumptions and projections on
+the basis of currently available information and present estimates. They
+are subject to a multitude of uncertainties and risks. Actual business devel-
+opment may therefore differ materially from what has been expected.
+Beyond disclosure requirements stipulated by law, Infineon does not
+undertake any obligation to update forward-looking statements.
+With effect from 1 April 2023, the "Industrial Power Control" segment
+was renamed "Green Industrial Power". Decarbonization, electrification
+and energy efficiency are important drivers of the business in this seg-
+ment. This focus and the significant contribution made by this segment
+to CO2 reduction are reflected in its new name. The change of name has
+no impact on the organizational structure, strategy or scope of business.
+Examination of potential conflicts of interest
+The Committee's recommendation to the full Supervisory Board to propose to share-
+holders at the 2023 Annual General Meeting that KPMG AG Wirtschaftsprüfungs-
+gesellschaft, Munich (KPMG) be elected for the last time as Company and Group audi-
+tor was based on a Declaration of Independence obtained from KPMG as well as an
+analysis of the non-audit services provided by KPMG. There were no indications of
+conflicts of interest, grounds for exclusion or other lack of independence on the part
+of the auditor. The Committee also considered the fee arrangements, issued con-
+tracts for the relevant audit engagements and defined supplementary areas for audit
+emphasis.
+Representatives of the auditor attended all the meetings of the Investment, Finance
+and Audit Committee and reported in detail on the audit procedures performed. At
+each of the meetings, there was also a closed session involving the auditor and the
+members of the Investment, Finance and Audit Committee without the Management
+Board being present. This also applied to the full Supervisory Board meeting that
+considered the financial statements.
+The Committee also devoted time to the Remuneration Report and the separate
+combined Non-Financial Report and, in this context, considered other sustainability
+issues, including the German Supply Chain Act (LkSG).
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = < 16 →
+Strategy and Technology Committee
+The Supervisory Board's Strategy and Technology Committee convened three times
+during the reporting year. The Management Board provided it with reports on a num-
+ber of topics, including key aspects of the macroeconomic market and competitive
+environment and the progress of the Group's digital agenda. Other areas discussed
+at committee meetings were strategic considerations with regard to the expansion of
+manufacturing capacity and the value contribution of software at Infineon.
+Corporate Governance
+Declaration of Compliance 2023
+In the Declaration of Compliance dated November 2023, the Management Board and
+Supervisory Board jointly declared that, since the submission of the last Declaration
+of Compliance in November 2022, all the recommendations of the German Corporate
+Governance Code contained in the version dated 28 April 2022 have been complied
+with and will continue to be complied with in the future.
+The actual wording of the Declaration of Compliance 2023 and all previous Declara-
+tions of Compliance are available on Infineon's website.
+www.infineon.com/declaration-of-compliance
+Self-assessment by the Supervisory Board
+The Supervisory Board regularly assesses how effectively it performs its duties. It
+conducted such a self-assessment in the 2023 fiscal year. Given that in the 2022 fiscal
+year, the self-assessment was carried out with the support of an external consultant
+(including personal interviews with all the members of the Management Board and
+the Supervisory Board), Infineon reverted in the 2023 fiscal year to the use of an inter-
+nal questionnaire. The results of the questionnaire were discussed in the course of
+a Supervisory Board meeting in August 2023 and a full-day Supervisory Board work-
+shop in November 2023. Issues discussed included reinforcing the expertise of
+the Supervisory Board in the area of semiconductors, which led to Prof. Hermann Eul
+being nominated to the Supervisory Board, cooperation between the committees
+and the full Supervisory Board, the framework for the Supervisory Board's engage-
+ment with strategic topics, and the parameters of the Supervisory Board's continuous
+succession planning for Management Board positions.
+Skills and expertise profile and list of objectives for
+the Supervisory Board/qualifications matrix
+The Supervisory Board decided to make a modification to the skills and expertise
+profile and list of objectives. One of the reasons for this was to make explicit refer-
+ence in the skills and expertise profile to sustainability expertise. It was also decided
+to modify the age limit of 70 previously set for Supervisory Board members to the
+extent that, in the future, it will no longer be simply a rule but a strict limit. Moreover,
+the Supervisory Board looked in detail at the qualifications matrix published in the
+Statement on Corporate Governance.
+The members of the Management Board and of the Supervisory Board are required
+to disclose any conflicts of interest to the Supervisory Board without delay. One
+Supervisory Board member disclosed a potential conflict of interest in respect of an
+M&A project. Thereafter, this Supervisory Board member was not given access to
+the relevant documents and also did not participate in the meetings and decision-
+making process of the Supervisory Board in this respect.
+Prior to Management Board members assuming sideline activities, particularly super-
+visory board mandates outside the Company, the German Corporate Governance
+Code requires that permission be granted by the Supervisory Board. No conflicts of
+interest were discernible in any of the sideline activities performed. In fact, they were
+all in Infineon's best interests and were therefore approved by the Supervisory Board
+and/or Executive Committee.
+Further information
+After detailed discussions, the Supervisory Board concluded that it had no objections
+to the financial statements and the audits performed by the auditor. In its opinion, the
+Combined Management Report complied with all legal requirements. The Supervisory
+Board also concurred with the assertions regarding Infineon's future development
+contained therein, as well as with the results of the audit of the financial statements.
+It therefore approved the Separate Financial Statements of Infineon Technologies AG
+and the Consolidated Financial Statements of the Infineon Group for the 2023 fiscal
+year. The Separate Financial Statements were adopted accordingly. The Supervisory
+Board also approved the Management Board's proposal for the appropriation of
+unappropriated profit.
+27 Long-term growth trends
+27 Strategic targets
+29 Strategic guidelines
+33 Human resources strategy
+34 Research and development
+37 Internal management system
+40 Review of the semiconductor industry
+Infineon | Annual Report 2023
+55 Review of liquidity
+58 Infineon on the capital market
+61 Overall statement on Infineon's financial condition
+62 Report on outlook, risk and opportunity
+62 Outlook
+65 Risk and opportunity report
+79 Infineon Technologies AG
+82 Corporate Governance
+82 Information pursuant to section 289a, paragraph 1
+and section 315a, paragraph 1 of the German
+Commercial Code (HGB)
+86 Statement on Corporate Governance pursuant to sections
+289f and 315d of the German Commercial Code (HGB)
+86 Remuneration Report
+87 List of references
+This report combines the Group Management Report of Infineon ("Infineon"
+or "the Group") - comprising Infineon Technologies AG (hereafter also
+referred to as "the Company") and its consolidated subsidiaries - and the
+Management Report of Infineon Technologies AG.
+27 Group strategy
+Its activities centered on monitoring the financial reporting process, reviewing the
+half-year and quarterly financial statements, conducting the preliminary audit of the
+Separate Financial Statements, Consolidated Financial Statements and Combined
+Management Report for Infineon Technologies AG and the Infineon Group, and dis-
+cussing the audit reports with the auditor. The Committee also conducted an assess-
+ment of the quality of the audit. In addition, the Committee examined Infineon's
+financial and investment budget. It also received regular reports on the internal con-
+trol, internal audit, risk management and compliance management systems and
+deliberated on their appropriateness and effectiveness. The Committee was also
+provided with continuous updates on additional risks and significant legal disputes.
+24 The segments
+53
+Moreover, the Investment, Finance and Audit Committee and the full Supervisory
+Board deliberated on the combined separate Non-Financial Report for the year ended
+30 September 2023 drawn up by the Management Board and the Remuneration
+Report prepared together with the Management Board. KPMG performed a reason-
+able assurance engagement for the Remuneration Report and a limited assurance
+engagement for some parts of the combined separate Non-Financial Report and a
+reasonable assurance engagement for other parts of that report. In both cases, KPMG
+issued an unqualified opinion thereon. The documents were carefully examined by
+the Investment, Finance and Audit Committee at its meeting on 14 November 2023,
+which was continued in a conference call on 21 November 2023, and by the Super-
+visory Board at its meeting on 23 November 2023. The Supervisory Board approved
+the Remuneration Report and positively acknowledged the combined separate
+Non-Financial Report prepared by the Management Board.
+The Supervisory Board wishes to thank all Infineon employees and the Management
+Board for their great commitment and their excellent performance in the 2023 fiscal
+year, which has again been a challenging year.
+Neubiberg, November 2023
+On behalf of the Supervisory Board
+H. DIESS
+Dr. Herbert Diess
+Chairman of the Supervisory Board
+Infineon | Annual Report 2023
+50 = ( 19 )
+Combined Management Report
+42 2023 fiscal year
+20 Business model
+21
+Overview
+42 Group performance
+22 Value chain and manufacturing
+44
+Segment performance
+49
+Review of results of operations
+Review of financial condition
+5 Q = < 18 →
+The Investment, Finance and Audit Committee held five ordinary meetings in the
+2023 fiscal year.
+At its ordinary meetings, the Executive Committee focused primarily on preparing the
+Supervisory Board's resolutions to determine the level of variable remuneration to be
+paid to Management Board members. These included, firstly, determining the Short-
+Term Incentive (STI) target achievement levels for the 2022 fiscal year and setting new
+target values for the 2023 fiscal year and, secondly, determining the STI modifier cri-
+teria, confirming the ESG targets for limiting carbon emissions and increasing diversity
+that are relevant for the Long-Term Incentive (LTI) and confirming the composition
+of the TSR (Total Shareholder Return) peer group. The topics discussed at the extra-
+ordinary meetings were the personnel and remuneration issues referred to above.
+Andreas Urschitz has been a
+member of the Management Board
+and Chief Marketing Officer of
+Infineon Technologies AG since
+2022 (appointed until 31 May 2025).
+He is responsible for Group Sales,
+Marketing & Distribution; Customer
+Engagement Strategy; Application
+Framework & Services; Organization
+and Strategy enablement/imple-
+mentation of Regions Greater China,
+Asia Pacific and Japan; Marketing
+Communications.
+Andreas Urschitz was born in
+1972 in Klagenfurt, Austria. He
+obtained his master's degree in
+commercial science at the Vienna
+University of Economics and Busi-
+ness, Austria. He has been with
+Infineon (Siemens AG until 1999)
+since 1995.
+Sven Schneider has been Chief
+Financial Officer at Infineon
+Technologies AG since 2019
+(appointed until 30 April 2027).
+He is responsible for Group
+Finance; Group Financial Con-
+trolling & Planning; Treasury;
+Taxes; Accounting, Consolidation
+& Reporting; Investor Relations;
+Compliance; Audit; Risk Manage-
+ment; Internal Controls.
+Sven Schneider was born in 1966 in
+Berlin, Germany. After completing
+his studies in business administration
+(Diplom-Kaufmann), he received
+his doctorate in business adminis-
+tration from the University of Trier,
+Germany. From 1995 to 2019, he
+held several positions at Linde AG,
+most recently as Spokesman of
+the Executive Board, Chief Finan-
+cial Officer and Labor Director.
+Jochen Hanebeck has been a
+member of the Management
+Board of Infineon Technologies AG
+since 2016. He has been CEO
+since 1 April 2022 (appointed until
+31 March 2027). He is responsible
+for Divisions; Group Strategy;
+Mergers & Acquisitions; Organization
+and Strategy enablement/imple-
+mentation of region Americas;
+Communications & Public Policy;
+Human Resources (Labor Director);
+Legal & Patents; Research & Devel-
+opment (CTO).
+Jochen Hanebeck was born in
+1968 in Dortmund, Germany.
+He received a degree in electrical
+engineering from RWTH Aachen
+University, Germany. He has been
+with Infineon since 1994 (Siemens
+AG until 1999).
+Elke Reichart has been a member of
+the Management Board of Infineon
+Technologies AG and Chief Digital
+Transformation Officer since 2023
+(appointed until 31 October 2026).
+She is responsible for Groupwide
+Digitalization Strategy, Information
+Technology, Digital Sales & Market-
+ing Platforms and Services, Business
+Continuity, Business Excellence,
+Group Processes.
+Elke Reichart was born in 1965 in
+Stuttgart, Germany. She received
+her diploma in Romance Languages
+and Economics as well as a post-
+graduate degree in Applied Com-
+puter Science from the University
+of Gießen, Germany. She began
+her career at Hewlett-Packard Inc.
+in 1991.
+Rutger Wijburg has been a mem-
+ber of the Management Board of
+Infineon Technologies AG and Chief
+Operations Officer since 1 April 2022
+(appointed until 31 March 2025).
+He is responsible for Group Manufac-
+turing, Supply Chain, Procurement,
+Customs, Quality Management, Real
+Estate and Facility Management
+(Manufacturing Sites).
+Rutger Wijburg was born in
+Nijmegen, Netherlands, in 1962.
+He studied Electrical and Electronics
+Engineering at the University of
+Twente, Netherlands, and received
+his PhD in 1990. He started his
+career in 1990 at the University
+of Twente. Before joining Infineon
+in 2018, he held various leading
+positions at Philips, NXP and
+Globalfoundries.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = < 12 →
+Report of the Supervisory Board
+to the Annual General Meeting
+Dr. Herbert Diess
+Chairman of the Supervisory Board
+Ludies and Grunthermen,
+The times we live in are being affected by so much change. What sets us apart at
+Infineon is that we see this as an opportunity and are actively working to shape that
+change. Our forward-looking technologies and products are making an important
+contribution towards halting (or at least slowing down) climate change and towards
+using digitalization with human beings in mind. I can see how Infineon employees
+around the world are playing their part with enthusiasm, skill and a positive mindset.
+This is not only making us an innovative high-tech company but also ensures sustain-
+able economic success. The 2023 fiscal year has demonstrated this once again. We
+want you, dear shareholders, to be able to participate in this success in the usual way
+and will therefore submit a proposal jointly with the Management Board to the Annual
+General Meeting for another increase in the dividend to €0.35 per share entitled
+to a dividend. For many years, Infineon's success story has been built on outstanding
+technological and business performance combined with added value for society
+as a whole, and I would be delighted if you continued to accompany us on our way.
+Chief Operations Officer
+Main activities of the Supervisory Board
+Dr. Rutger Wijburg
+Elke Reichart
+Consolidated Financial Statements
+Further information
+10 →
+The Management Board
+Infineon | Annual Report 2023
+ઉમ
+(From left to right)
+Andreas Urschitz
+Chief Marketing Officer
+Dr. Sven Schneider
+Chief Financial Officer
+Jochen Hanebeck
+Chief Executive Officer
+Elke Reichart
+Chief Digital
+Transformation Officer
+Dr. Rutger Wijburg
+Chief Operations Officer
+Management Board and Supervisory Board
+The Management Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = < 11
+The Management Board
+Andreas Urschitz
+Chief Marketing Officer
+Dr. Sven Schneider
+Chief Financial Officer
+Jochen Hanebeck
+Chief Executive Officer
+Chief Digital Transformation Officer
+Investment, Finance and Audit Committee
+During the 2023 fiscal year, the Supervisory Board again performed its duties with
+utmost diligence in accordance with the law, Infineon's Articles of Association and
+the Supervisory Board's own rules of procedure. Its work was based in particular on
+reports presented by the Management Board at Supervisory Board and committee
+meetings regarding all issues relevant to Infineon. For the most part, the focus was
+again on corporate strategy, current business performance and the economic situa-
+tion, financial and investment planning, and the risk profile, as well as issues relating
+to risk management and compliance. In addition, the Supervisory Board addressed
+the replacement of the Chairman of the Supervisory Board and other personnel
+changes on the Supervisory Board, as well as preparing for the appointment of a new
+Management Board member responsible for digital transformation. The Supervisory
+Board was provided with written quarterly reports on the economic environment,
+Infineon's business performance, including investment and acquisition activities, key
+financial data, risks and opportunities, and major areas of litigation, as well as other
+specific topics of relevance. Between quarterly reports, the Management Board also
+provided the Supervisory Board with additional information in the form of monthly
+reports on current business performance and developments.
+In the 2023 fiscal year, the full Supervisory Board convened nine times, holding
+six ordinary meetings and three extraordinary meetings. Additionally, two resolutions
+were passed on the basis of written communication. The attendance rate at Super-
+visory Board meetings was just under 98 percent; Diana Vitale was excused from attend-
+ing one meeting and Dr. Manfred Puffer from two meetings. The attendance rate at the
+Supervisory Board's committee meetings was 100 percent. Details of the individual
+attendance record of Supervisory Board members at full Supervisory Board and com-
+mittee meetings are provided in a table in the Statement on Corporate Governance.
+www.infineon.com/declaration-on-corporate-governance
+Litigation
+The Supervisory Board was regularly provided during the 2023 fiscal year with in-depth
+information regarding major legal disputes, which it then discussed at length with
+the Management Board. These included, in particular, the legal dispute with the insol-
+vency administrator of Qimonda AG pertaining to alleged residual liability claims,
+which has been ongoing for years.
+Supervisory Board topics
+Personnel matters relating to the Supervisory Board
+Dr. Wolfgang Eder and Hans-Ulrich Holdenried resigned from the Supervisory Board
+with effect from the end of the Annual General Meeting on 16 February 2023. Based
+on a proposal by the Supervisory Board, Klaus Helmrich and I were newly elected to
+the Supervisory Board. At its meeting immediately after the Annual General Meeting,
+the Supervisory Board elected me as the new Chairman of the Supervisory Board,
+as a member and the Chairman of the Strategy and Technology Committee, and as
+the Chairman of the Nomination Committee. I am grateful for this vote of confidence
+from Infineon's Supervisory Board and would like to take the opportunity here to
+thank once again Dr. Wolfgang Eder and also Hans-Ulrich Holdenried for their success-
+ful work over the past years.
+Following the resignation of Géraldine Picaud from the Supervisory Board at the
+beginning of 2023, Ute Wolf was appointed as a member of the Supervisory Board by
+court order in April 2023 and elected by the Supervisory Board as a member of the
+Investment, Finance and Audit Committee. Until shortly before her appointment by
+Infineon, Ute Wolf was the Chief Financial Officer of a public limited company listed
+in Germany. In addition, she has already spent several years as the Chair of audit
+committees of listed companies. She therefore increases the level of financial expertise
+on the Supervisory Board. At the Annual General Meeting to be held in February 2024,
+the Supervisory Board will propose that Ute Wolf be elected to the Supervisory Board
+for a regular four-year term of office.
+Basic and ongoing training
+Supervisory Board members are responsible for undertaking any basic or ongoing
+training considered necessary to perform their duties, and they receive appropriate
+support from Infineon to do so. In-house information events are held to provide targe-
+ted training. In the 2023 fiscal year, for example, events took place that covered the
+EU Taxonomy and governance topics as well as current regulatory developments affec-
+ting the Supervisory Board. As part of the onboarding process for new Supervisory
+Board members, Infineon also conducts comprehensive briefings covering a broad
+range of topics, including its individual operating segments, the principles and key
+elements of its corporate strategy, investment planning and its manufacturing strategy.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = 15 →
+Committee work
+The Supervisory Board's various committees are responsible for drawing up resolutions
+and preparing other major topics that need to be dealt with by the full Supervisory
+Board. Moreover, the Supervisory Board has delegated certain decision-making powers
+to its committees. The chairpersons of each committee are required to report on
+committee meetings at the next full Supervisory Board meeting.
+Mediation Committee
+The Mediation Committee did not need to convene during the reporting year.
+Nomination Committee
+The Nomination Committee held six meetings in total during the 2023 fiscal year.
+The topics discussed at the meetings included the replacements for Supervisory
+Board positions referred to above following the resignations of Dr. Wolfgang Eder,
+Hans-Ulrich Holdenried and Géraldine Picaud. Klaus Helmrich and I were elected at
+the 2023 Annual General Meeting and Ute Wolf was appointed by the court. The
+committee also prepared the nomination for election at the 2024 Annual General
+Meeting of Ute Wolf, as well as of Prof. Hermann Eul, an acknowledged expert in
+semiconductors.
+The content of these sections is voluntary content that has not been
+checked by the auditor but only read critically. In the case of cross-
+references, the information to which the cross-references refer has not
+been checked either.
+Further information on Management Board remuneration is available in the detailed
+Remuneration Report. As in the previous year, the Management Board and the Super-
+visory Board decided to ask the auditors to perform an additional review of the
+content of the Remuneration Report in addition to their formal audit of the report.
+KPMG issued an unqualified audit opinion on the Remuneration Report.
+As Chairman of the Supervisory Board, I was also in regular contact with both the Chief
+Executive Officer and other members of the Management Board between meetings.
+The CEO kept me well-informed at all times of other key events for Infineon. My work-
+ing relationship with the CEO was respectful, constructive and based on trust.
+In November 2022, the Supervisory Board established a new remuneration system
+for the Management Board. This created a remuneration structure with higher variable
+remuneration components, whereby the Management Board remuneration will in
+the future be even more closely linked with the success of the business. Moreover,
+the maximum remuneration for longer-serving Management Board members will
+be increased, giving the Supervisory Board more scope to offer experienced Manage-
+ment Board members competitive remuneration. The restriction of the STI modifier
+to extraordinary developments brought the system more in line with the provisions
+set out in the German Stock Corporation Act (AktG) and the German Corporate Gover-
+nance Code. Finally, the opportunity was provided to weight ESG targets in the long-
+term variable remuneration even more heavily in the future. At the Annual General
+Meeting in February 2023, this new remuneration system for the Management Board
+was approved by a large majority. It was thereupon implemented in all Management
+Board employment contracts as of 1 April 2023.
+5 Q = < 14 →
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+5 Q = 13
+The three extraordinary meetings of the full Supervisory Board were conducted virtu-
+ally, and all the ordinary meetings were face-to-face meetings. Of the six meetings of
+the Executive Committee, two were virtual. One of the five meetings of the Investment,
+Finance and Audit Committee and four of the six meetings of the Nomination Com-
+mittee were in a virtual format. All the meetings of the Strategy and Technology Com-
+mittee, without exception, were face-to-face meetings.
+In preparation for ordinary Supervisory Board meetings, separate preliminary meet-
+ings were held for both the shareholder representatives and the employee representa-
+tives. The Supervisory Board and the Investment, Finance and Audit Committee also
+convened regularly without the presence of the Management Board.
+Corporate strategy
+The 2023 fiscal year was characterized by a variety of strategic projects that were
+closely monitored and then all approved by the Supervisory Board:
+> First, the Supervisory Board approved a more ambitious target operating model
+and thereby an upward revision of Infineon's long-term financial targets. Like the
+Management Board, the Supervisory Board is convinced that decarbonization and
+digitalization will ensure structurally increasing demand for semiconductors and
+that, thanks to its strategic focus, Infineon will benefit disproportionately from this
+development.
+> In addition, the past fiscal year has involved major investment – the construction
+of a new factory in Dresden (Germany), significant expansion of manufacturing
+in Kulim (Malaysia) and, finally, the participation of Infineon in a joint venture
+with TSMC, Bosch and NXP to build a modern semiconductor fab, also in Dresden.
+Infineon is therefore creating the production capacity required to reliably meet
+growing demand from its customers over the long term. Moreover, the investment
+in Dresden is an important milestone that will reinforce the European semicon-
+ductor ecosystem and strengthen supply chain resilience in Europe. Accordingly,
+the Supervisory Board was satisfied that these investments were necessary for
+the business and made economic sense and approved the plans.
+> Finally, the Supervisory Board examined measures relating to the Group's inorganic
+growth in promising new fields and granted its approval for the acquisition of
+the Canadian company GaN Systems, the technological leader in the development
+of GaN-based solutions for power conversion. The acquisition will significantly
+strengthen Infineon's leading position in power systems. The Supervisory Board
+also agreed on strategic portfolio management measures with the Management
+Board and endorsed the sale of its HiRel (High Reliability) DC-DC converter business to
+Micross Components, a transaction that enables Infineon to focus in the future on
+those HiRel business areas that benefit from its leading semiconductor technologies.
+In the 2023 fiscal year, separately from the examination of specific strategic projects,
+the Supervisory Board also considered various aspects of Infineon's corporate strategy
+at a daylong strategy meeting that took place on the Dresden site. Topics discussed
+included strategic fundamentals, portfolio management, parameters for organic and
+inorganic growth, geopolitical issues, financial targets and, last but not least, Infineon's
+sustainability strategy.
+Personnel matters relating to the Management Board
+In the course of the fiscal year, Constanze Hufenbecher, Management Board member
+and Chief Digital Transformation Officer (CDTO), informed the Supervisory Board
+of her intention not to renew her contract which was due to expire in April 2024. The
+Supervisory Board accepted her decision with regret. Immediately thereafter, the
+Supervisory Board initiated the process of finding a replacement for the CDTO position
+on the Management Board. Based on the Supervisory Board's continuous succes-
+sion planning and with the support of a human resources consultant, an extensive
+search process was launched. Infineon was eventually able to recruit Elke Reichart,
+an experienced digitalization expert. Elke Reichart was appointed as a member of the
+Management Board for three years with effect from 1 November 2023. Constanze
+Hufenbecher resigned from the Management Board with effect from 31 October 2023.
+The Supervisory Board thanks Constanze Hufenbecher for her achievements and
+personal commitment and wishes Elke Reichart a successful start in her new role.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Report of the Supervisory Board
+Combined Management Report
+Consolidated Financial Statements
+Further information
+Management Board remuneration
+Executive Committee
+Combined Management Report
+Management Board and Supervisory Board
+The Management Board
+Management Board and Supervisory Board
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business model
+The segments
+Management Board and Supervisory Board
+■ 10 Tokyo
+Japan
+■ 9 Wuxi
+■ 8 Shanghai
+Mainland China
+Greater China
+■ 7 Bangkok
+Thailand
+6 Singapore
+Singapore
+■ 5 Cavite
+Philippines
+■ 4 Melaka
+■ 3 Kulim
+Malaysia
+- 2 Cheonan
+Korea
+■ 1 Batam
+Indonesia
+Asia-Pacific
+6 Cegléd
+Infineon | Annual Report 2023
+5 Q = < 24 →
+The segments
+In addition to general areas within the Group, such as manufacturing and various cor-
+porate functions, Infineon comprises four segments (also known as divisions). Each
+segment focuses on the needs of its own target markets and customers and also has
+individual responsibility for specific areas that reflect its core competencies. The
+Automotive segment is responsible for the semiconductor business for automotive
+electronics. The Green Industrial Power segment concentrates on power semicon-
+ductors primarily used in industrial applications and renewable energy, while the
+Power & Sensor Systems segment addresses not only sensor technologies but also
+power supplies in general, including those for data centers, telecommunications
+networks and more consumer-oriented applications. Activities relating to loT and
+traditional and new security applications are bundled within the Connected Secure
+Systems segment. The segments often cooperate with one another to ensure com-
+prehensive coverage of the requirements of the various target markets. As a result,
+the sales activities of one segment are generally, but not always, focused on its
+own target market.
+Chart Co2 provides an overview of the core competencies of the individual segments.
+CSS
+Infineon | Annual Report 2023
+✓
+✓
+✓
+Software
+Security
+Memories for
+specific applications
+Connectivity
+Power semiconductors
+power semiconductors
+✓
+✓
+✓
+Control of
+✓
+Embedded control
+Radio frequency
+✓
+Sensor technologies
+Power & Sensor
+Systems
+Green
+Industrial Power
+Automotive
+PSS
+GIP
+ATV
+Core competencies
+C02 Core competencies in the segments
+For the definition of frontend/backend manufacturing, see chapter "Value chain and manufacturing". p. 22
+Regional headquarters ■Frontend manufacturing ■ Backend manufacturing
+"
+■ Corporate headquarters
+Services
+By
+sub-contractors
+By foundry
+partners
+Customer
+Distribution
+center
+In-house
+manufacturing
+In-house
+manufacturing
+Backend
+manufacturing
+Frontend
+manufacturing
+Design
+C01 The main stages of the semiconductor value chain
+In frontend manufacturing, the wafers are processed. Optical, physical and chemical
+methods are used to create transistors and their interconnections, thus determining
+the function of the chip. The wafers are transferred from the frontend site to a back-
+end site, where the remaining processing steps take place in backend manufacturing.
+Infineon | Annual Report 2023
+Infineon covers the main stages of the semiconductor value chain: from development
+and design, via frontend and backend manufacturing and marketing, to delivery
+to customers (see C01). Increasingly, it also provides software and other services,
+such as application-specific support for the implementation of its solutions.
+Value chain and manufacturing
+5 Q = < 22 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business model
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+In addition to our established core business, we also service new and adjacent busi-
+ness areas. Links may arise between the different areas, not only in terms of products
+or technology but also in terms of markets or applications.
+In the area of digitalization, we have a broad portfolio of microcontrollers with hard-
+ware-based security, sensors and connectivity products, such as Wi-Fi and Bluetooth,
+supplemented by software. These are used in the automotive, industrial and consumer
+sectors, as well as in end applications such as mobile payment and governmental
+identity documents.
+Our core business includes power semiconductors based on silicon (Si), silicon carbide
+(SiC) and gallium nitride (GaN) in the form of individual components, modules and
+system solutions. Over the years, Infineon has acquired in-depth knowledge about
+the use of power semiconductors in all applications and the specific challenges
+associated with them, developing a very broad portfolio. By adopting our strategic
+approach "Product to System", we combine these power semiconductors with
+microcontrollers (including software and driver components), so that we can provide
+perfect solutions for energy conversion systems and enable decarbonization.
+Semiconductors are essential to mastering the challenges of decarbonization and
+digital transformation. They make our everyday lives easier, safer and greener. With
+around 58,600 employees worldwide, Infineon is a leading global provider of semi-
+conductor solutions that pave the way for green and efficient energy, clean and safe
+mobility, and intelligent and secure IoT. Infineon develops, manufactures and markets
+a large number of semiconductors and semiconductor-based solutions, focusing
+on the key markets in the automotive, industrial and consumer sectors. Its products
+range from standard components to special components for digital, analog and
+mixed-signal applications, all the way to customer-specific solutions and the appro-
+priate software.
+Overview
+Value chain and manufacturing
+Software
+Application
+support
+Digital
+services
+5 Warstein
+Hungary
+■■ 4 Regensburg
+■ 3 Dresden
+near Munich
+2 Neubiberg
+Germany
+■ 1 Villach
+Austria
+Europe, Middle East, Africa
+■ 6 San José, CA
+■ 5 Mesa, AZ
+■ 4 Leominster, MA
+■ 3 Austin, TX
+■ 2 El Segundo, CA
+Mexico
+■ 1 Tijuana
+USA
+Americas
+Headquarters and manufacturing sites
+Value chain and manufacturing
+5 Q = < 23 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business model
+Management Board and Supervisory Board
+In order to optimize the use of capital and increase flexibility, we use external manufac-
+turing partners in addition to our in-house manufacturing. In frontend manufacturing,
+this applies primarily to manufacturing processes with little potential for differen-
+tiation and, in backend manufacturing, to standardized package types. More informa-
+tion about our manufacturing strategy is given in the chapter "Group strategy”. p. 27 ff.
+These steps include sawing the wafer into individual chips as well as assembly and
+testing. Following the backend manufacturing, the chips are sold to customers via
+regional distribution centers.
+Connected
+Secure Systems
+A detailed presentation of the applications and product range of the individual
+segments is given in the chapter "Applications and product range”. □ p. 180 ff.
+✓
+✓
+Further information
+Target 2: Average Segment Result Margin of
+25 percent over the cycle
+We hold leading positions in our core markets and have expanded systematically
+over the years into new and adjacent markets. Our four segments focus on the
+long-term growth trends of decarbonization and digitalization. With our strategic
+approach "Product to System", we use our extensive technological and product
+expertise to provide more comprehensive solutions and thus create more value for
+our customers. In the areas of electromobility, advanced driver assistance systems
+(ADAS), renewable energy, data center/Al and IoT in particular, we expect to achieve
+above-average growth, resulting in total average annual revenue growth for the
+Group over the cycle of more than 10 percent (">10%”).
+Target 1: Average annual revenue growth of
+more than 10 percent over the cycle
+Strategic targets
+5 Q = < 28
+Management Board and Supervisory Board
+Consolidated Financial Statements
+Combined Management Report
+Group strategy
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+We want to continue to grow in the markets in which we operate and to increase our
+profitability. Our long-term financial targets reflect this aspiration and apply over the
+semiconductor cycle. At the beginning of the 2023 fiscal year, we revised our target
+operating model and significantly raised our long-term financial targets. This reflects
+Infineon's success over the past few years and, at the same time, is an expression
+of our greater ambitions, especially with regard to profitability and value generation.
+We want to create even more value by focusing consistently on the long-term growth
+trends of decarbonization and digitalization and implementing our strategic guidelines
+(see the chapter “Strategic guidelines”, □ p. 29 ff.).
+Profitable growth
+To generate value from decarbonization and digitalization for our customers, the
+company, our shareholders and society with our semiconductor solutions, we pursue
+clear and measurable strategic targets.
+Strategic targets
+Digitalization is another key trend. This involves connectivity between ever-smarter
+devices with an ability to perceive their environment; devices that make life easier,
+safer and more pleasant. The possibilities are huge: greater convenience and security
+in the smart home, more efficiency in manufacturing, higher productivity together
+with better environmental sustainability in farming, and new services to support older
+people. Infineon's products in these areas include microcontrollers with software
+and sensors that make it possible to produce connected and smart loT devices with
+increasing performance in both the industrial sector and the end user sector.
+Digitalization
+Decarbonization is a necessity to contain global warming and therefore the key respon-
+sibility of humanity over the next decades. We will need to make drastic changes to
+the ways in which we generate, transport, store and use energy. To halt global warm-
+ing, it is imperative that we waive the use of fossil fuels to a great extent and that we
+make a consistent transition to renewables and widely adopt electrification. Effecting
+this transition requires not only the use of wind and solar power but also of systems
+for the storage and efficient transportation of energy. We believe that one of the key
+tasks for Infineon is to provide semiconductor solutions for more efficient generation,
+conversion and use of electric energy. Our business operations are thereby making a
+significant contribution to the quality of life of generations to come.
+Decarbonization
+As a leading global provider of semiconductor solutions, Infineon focuses its business
+activities on two issues that are fundamental to society and where it sees major long-
+term growth trends: decarbonization and digitalization.
+A key criterion for our success is sustainable profitability. Infineon can consistently pur-
+sue its targets even in weaker market phases by engaging in economic activity that
+is sustainably profitable. We have set ourselves the target of achieving an average
+Segment Result Margin of 25 percent over the cycle. Key elements that will enable
+us to achieve our profitability target are our system solutions, which are based on our
+strategic approach "Product to System", and generate higher value and greater cus-
+tomer benefit. In the future, software will play a larger role. We enjoy economies of scale
+and cost advantages while continuing to develop our leading market position and
+innovative manufacturing technologies (such as those used to produce 300-millimeter
+thin wafers) and accelerating the expansion of silicon carbide manufacturing facili-
+ties. At the same time, we make sure that, if we consider our overall portfolio, all our
+businesses are making an adequate contribution to Infineon's success. We also aim
+to ensure that our research and development expenses as well as our selling, general
+and administrative expenses increase at a slower rate than the rate of growth in our
+revenue. This is supported by our digitalization strategy.
+Long-term growth trends
+Target 3: Adjusted Free Cash Flow within a range of
+Looking at value generation, we include a Free Cash Flow target in our target operating
+model. Free Cash Flow, adjusted for large investments in frontend buildings as well
+as large M&A transactions (acquisitions and disposals), should fall within a range of
+10 to 15 percent of revenue over the cycle. This will be achieved by ensuring our oper-
+ating cash flow grows at a faster rate in the long term than our investment expenditure.
+Infineon | Annual Report 2023
+For this to succeed, we have to understand the environment in which our customers'
+products are used, how these products are embedded in larger systems, with which
+other devices the products interact, what requirements they have to fulfill and what
+function they are intended to perform. We also have to consider which other active
+and passive components and control concepts they use and what capabilities our custo-
+mers themselves contribute to the value creation process. Equipped with this know-
+ledge, we can make the most of our competencies. We want to translate the technolo-
+gically possible into marketable products that provide the greatest possible benefit
+to our customers. This helps us to continue to develop leading positions in our markets.
+With our approach “Product to System” (P2S), we are fostering our leading positions
+in the area of power systems and IoT. P2S helps us to better adapt our solutions and
+products to customer requirements. We understand new trends early on and can
+develop innovative approaches together with our customers. As a result, our custom-
+ers can realize sustainable benefits, among others, in terms of systems performance,
+system costs and development time.
+"Product to System" (P2S) and software
+To achieve our strategic targets, we rely on a number of strategic guidelines to ensure
+sustainable corporate governance and profitable growth.
+Strategic guidelines
+Our other sustainability activities are described in the separate report "Sustainability
+at Infineon". This report, including the summarized separate Non-Financial Report,
+which is based on the requirements set out in the German CSR Directive Implementa-
+tion Act, can be downloaded from the internet at www.infineon.com/csr_reporting.
+We are convinced that economic success must go hand in hand with environmental
+and social commitment. This includes contributing towards more sustainable devel-
+opment in society. With our products, solutions and systems, we are enabling greater
+efficiency and making an active contribution towards climate protection. Sustain-
+ability is of crucial importance both within the Group and in relation to our supply
+chains. We manage Infineon sustainably and are committed to acting sustainably
+for the benefit of society. Making a contribution towards containing global warming
+forms part of our mission. We have therefore set ourselves the target of becoming
+carbon-neutral by the end of the 2030 fiscal year; by 2025, our emissions are to be
+reduced by 70 percent compared with 2019. This target relates to Infineon's own
+greenhouse gas footprint and includes not only all direct emissions but also indirect
+emissions from electricity and heat. Already by the end of the 2023 fiscal year, our
+scope 1 and scope 2 emissions were 56.8 percent below the emissions for the base
+year 2019. The development of intelligent exhaust air abatement systems, the
+purchase of electricity from renewable sources and the implementation of energy
+efficiency schemes have all contributed to this reduction.
+Sustainable corporate governance
+Strategic targets | Strategic guidelines
+5 Q = < 29 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Group strategy
+Infineon | Annual Report 2023
+Our leverage target is expressed as an upper limit on gross financial debt of two times
+EBITDA. Infineon defines EBITDA as earnings from continuing operations before inter-
+est, taxes, depreciation and amortization.
+Our liquidity target is €1 billion, plus at least 10 percent of revenue. The fixed base
+amount of €1 billion provides a solid liquidity reserve for contingent liabilities and
+pension liabilities, which are unrelated to revenue. The additional amount of at least
+10 percent of revenue means that we always have access to sufficient cash to be
+able to finance our operating business and investment throughout all phases of the
+semiconductor cycle.
+Our capital structure targets link together the concepts of environmental and economic
+sustainability and ensure that Infineon remains a trusted partner in the long term.
+An investment grade rating is the key element of Infineon's conservative financial
+policy. From this cornerstone, we derive our long-term capital structure targets, which
+consist of a liquidity target and a leverage target.
+Capital structure targets
+10 to 15 percent of revenue over the cycle
+Group strategy
+Infineon sees itself as a trailblazer for a carbon-neutral and digital future: "Driving
+decarbonization and digitalization. Together." This applies to large parts of our
+portfolio. Sensors record mostly analog information from the world around us and
+transform it into digital data; microcontrollers process these data and generate
+control signals; memory ICs enable the microcontrollers to store data and program
+codes; actuators such as power semiconductors convert the control signals into actions
+and make the efficient generation and conversion of energy possible; security solu-
+tions protect the integrity of devices and data, while connectivity chips transfer these
+data within the digital world. Software enhances the benefit to customers of our semi-
+conductor solutions, allowing for more flexible adjustment. We thereby establish a link
+between the real world and the digital world and enable a carbon-neutral future.
+5 Q = < 27 →
+=
+III
+The segments
+Business model
+Long-term growth trends | Strategic targets
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+The Green Industrial Power segment specializes in semiconductor solutions for the
+intelligent management and efficient conversion of electric energy along the entire
+conversion chain, comprising the generation, transmission, storage and use of electri-
+city. The product portfolio comprises mainly IGBT power transistors and the driver
+ICs to control them, as well as power semiconductors based on SiC. We offer products
+in the Green Industrial Power segment, whether Si-based or SiC-based, in various
+form factors and with different levels of functionality. The segment's broad application
+spectrum includes motor control units for industrial manufacturing and building
+technology, inverters for photovoltaic and wind power systems, major home appliances,
+traction, electric utility vehicles (such as buses and construction and agricultural
+vehicles), systems for high-voltage direct current transmission and energy storage,
+industrial power supplies and the charging infrastructure for electric vehicles.
+GIP Green Industrial Power
+The Automotive segment shapes the future of mobility with products and solutions
+to make cars clean, safe and smart. We cover all application areas in the vehicle: pow-
+ertrain and energy management, connectivity and infotainment, body and comfort
+electronics, safety and data security. Infineon is the world market leader in semicon-
+ductor solutions for cars. Our range of products and solutions helps to navigate the
+transition from internal combustion engines to hybrid and electric drives, enabling
+an ever-increasing degree of automated driving, electric-electronic (E/E) vehicle
+architecture, greater connectivity and digitization, and a higher level of data security
+in vehicles. We also offer our customers innovative solutions in the areas of safety,
+digital cockpit, infotainment, comfort and lighting technology. In addition to sensors,
+microcontrollers, software solutions, a reliable power supply, memories for specific
+applications and power semiconductors based on Si and SiC, our product portfolio
+also comprises components for human-machine interaction and vehicle connectivity.
+ATV Automotive
+The segments
+Business model
+25 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+26-
+PSS Power & Sensor Systems
+Further information
+css Connected Secure Systems
+Further information
+Consolidated Financial Statements
+The Power & Sensor Systems segment encompasses a wide selection of technologies
+relating to power semiconductors, radio frequency and sensors. We use these tech-
+nologies to make electronic devices like power supplies, power tools, lighting systems,
+mobile devices and industrial and consumer applications smaller, lighter and more
+energy-efficient, as well as to develop new functionalities. We are drawing on the
+next generation of new, innovative solutions based on Si, SiC and GaN for applications
+in the areas of 5G, data centers, power supplies and adapters, battery-powered devices,
+and renewable energy. Our portfolio of products for power supplies, comprising con-
+trol ICs, drivers and MOSFET power transistors, addresses the two key requirements
+of the market: efficiency and power density. Infineon is the clear market leader in
+the global Si MOSFET market. Our high-precision sensor solutions give IoT devices
+"human senses", enabling them to react intuitively to their surroundings. The port-
+folio is rounded off with USB controllers and radio frequency products such as RF
+antenna switches, RF power transistors and low-noise amplifiers.
+Combined Management Report
+Business model
+Consolidated Financial Statements
+Further information
+20-
+Business model
+Infineon
+Management Board and Supervisory Board
+Management Board and Supervisory Board
+Infineon Annual Report 2023
+The Connected Secure Systems segment supplies comprehensive systems for a
+secure, connected world based on reliable, game-changing microcontrollers and
+wireless connectivity and security solutions. In particular, we offer microcontroller
+solutions, Wi-Fi and Bluetooth solutions and combined connectivity solutions
+(known as combo chips), along with hardware-based security technologies and an
+efficient software environment for the programming and configuration of the micro-
+controllers and connectivity components that cover many application areas. These
+include devices for loT applications, connected home appliances and smart home
+appliances, IT equipment, consumer electronics, cloud security and connected vehicles,
+as well as credit and debit cards, electronic passports and national identity cards.
+With our technologies in the areas of computing, connectivity and security, we are
+contributing significantly towards ensuring that current and future connected systems
+are reliably protected.
+Management Board and Supervisory Board
+Combined Management Report
+Group strategy
+Infineon | Annual Report 2023
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Business model
+Overview
+21 →
+Ukraine
+15 San Diego, CA
+17 Warwick, RI
+16 San José, CA
+21 Netanya
+8 Dresden
+14 Shenzhen
+30 Redhill
+13 Shanghai
+14 Portland, OR
+7 Melaka
+20 Dublin
+13 Murrieta, CA
+31 Lviv
+8 Penang
+9 Duisburg
+Greater China
+Mainland China
+12 Chengdu
+16 Xi'an
+Management Board and Supervisory Board
+(20
+Infineon Annual Report 2023
+Sites >10 employees.
+21 Tokyo
+20 Sendai
+15 Wuxi
+19 Nagoya
+Taiwan
+23 Pavia
+11 Ilmenau
+22 Padua
+Italy
+10 Erlangen
+17 Hsinchu
+18 Taipeh
+Japan
+11 Nonthaburi
+12 Morrisville, NC
+Singapore
+10 Singapore
+In the context of P2S, software is playing an increasingly significant role. We have
+intensified our activities in this area in recent years through our own organic growth
+and strategic partnerships, as well as through the acquisitions of Cypress, Industrial
+Analytics and Imagimob. This means that we have at our disposal an entire ecosystem
+comprising software components and a development environment, as well as refer-
+ence designs, product support, blogs, a developer community and online tutorials.
+An important element of this ecosystem is the ModusToolbox TM development environ-
+ment. This includes reusable firmware that makes it easier for customers' developers
+to program microcontrollers and Wi-Fi and Bluetooth components. With software,
+we enable smaller customers in particular to make even better use of our products
+and thus increase our profitability.
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Group strategy
+Strategic guidelines
+Management Board and Supervisory Board
+Combined Management Report
+Internal management system
+Consolidated Financial Statements
+Further information
+5 Q = < 37 →
+Internal management system
+The internal management system at Infineon is designed to help implement Group
+strategy and the related long-term financial targets. Accordingly, performance indica-
+tors are used that enable profitable growth and efficient employment of capital to
+be measured.
+Overall, the achievement of our long-term financial targets will lead to a sustainable
+increase in the value of Infineon by generating a permanent premium on the cost
+of capital.
+In this context, growth, profitability, liquidity and investments are all interdependent.
+Profitability is the prerequisite for being able to finance operations internally, which,
+in other words, means opening up potential opportunities for growth. Growth, in turn,
+requires continual investment in research and development as well as manufactur-
+ing capacities. Growing at a commensurate rate enables Infineon to achieve leading
+market positions and generate economies of scale that contribute to greater profit-
+ability. Employing financial resources efficiently is a critical factor in achieving these
+goals.
+Infineon deploys a comprehensive controlling system to manage its business with
+respect to the strategic targets it has set itself. The system involves the use of financial
+and operating performance indicators. Information for controlling purposes is derived
+from annual long-term planning, quarterly outlooks, actual monthly data and infor-
+mation available with even greater frequency, such as the volume of orders received.
+This knowledge enables management to base its decisions in a timely manner on
+sound information about the current situation and future expected financial and
+operational developments.
+Sustainable business practices and the consideration of forward-thinking qualitative
+factors are important for Infineon's long-term success. As an enterprise very much aware
+of its responsibilities towards society, Infineon also takes account of non-financial
+factors, mainly in relation to the environment and employee diversity. See the report
+"Sustainability at Infineon" on our website www.infineon.com/csr_reporting |
+As part of the process of managing business performance, management also attaches
+great importance to ensuring that Infineon acts in strict compliance with legal require-
+ments and that it also complies with its internal corporate governance standards (see
+the chapter "Corporate Governance”, p. 82 ff.).
+Performance indicators
+Principal performance indicators
+In order to measure its success in implementing its strategy, Infineon uses the follow-
+ing three principal performance indicators:
+> Segment Result Margin/Segment Result,
+> Free Cash Flow from continuing operations, and
+> Return on Capital Employed (ROCE).
+These financial performance indicators are also the cornerstones of the system for vari-
+able remuneration. Most of the variable salary components pertaining to employees
+and management are directly linked to these performance indicators.
+Segment Result Margin/Segment Result
+Segment Result Margin/Segment Result is the key figure used by the Group to measure
+operating performance (for an analysis of the development of the Segment Result
+Margin/Segment Result of Infineon and of the individual segments in the 2023 fiscal
+year, see the chapter "2023 fiscal year” p. 42 ff.). The Segment Result Margin is the
+Segment Result expressed as a percentage of revenue and is a measure of the profit-
+ability of revenue and the success of Infineon's operating business. The activities
+of the segments are managed on the basis of the Segment Result Margin/Segment
+Result. Responsibility for optimizing the Segment Result Margin/Segment Result
+within the framework of the Group strategy (as approved by the Management Board)
+rests with the management teams of the relevant segments, acting, however, in
+close coordination with the Management Board.
+Technology leadership and customer-focused
+innovation
+Infineon | Annual Report 2023
+In accordance with our strategic approach of thinking in application trends, our
+developers identify challenges early, together with our customers. This enables us to
+fulfill the promise of technological leadership. Through close cooperation, we learn
+to understand applications better, allowing us to identify future trends at an early
+stage and develop products that are tailored accordingly. In this way, we can offer
+our customers either individual components or complete solutions, including the
+necessary software, depending on their requirements.
+From a technological perspective, compound semiconductors are of particular impor-
+tance. Whereas most semiconductor components to date have been based on pure
+silicon, silicon carbide and gallium nitride are two chemical compounds with physical
+properties, in particular a wide band gap, that make it possible to produce semi-
+conductors with even greater performance. These compounds allow for particularly
+efficient electric switches in the smallest space; for example, they make efficient charg-
+ing stations for electric vehicles much more compact, allowing them to be installed
+in more places. We consider a strong position in compound semiconductors essential
+to reinforcing our leading position in power semiconductors and, thereby, in power
+systems. The acquisition of GaN Systems Inc., which was successfully completed after
+the end of the past financial year on 24 October 2023, will make a significant contri-
+bution to this. The Ottawa (Canada)-based company contributes a broad portfolio of
+GaN-based energy conversion solutions and first-class application expertise.
+A pioneer of digitalization
+We will continue to supplement our organic growth in the future with selective acquisi-
+tions. These acquisitions will need to fulfill three criteria: a) be strategically beneficial
+based on the portfolio process, b) be financially advantageous and c) be a good cultural
+fit. A purchase must strengthen Infineon's market position in accordance with our
+strategic focus, usefully complementing our range of competencies. The corporate
+culture of any potential acquisition must be a good fit with Infineon's culture or must
+add valuable elements.
+We conduct regular reviews to ascertain whether our operations, both individually and
+as part of our overall portfolio, make an appropriate contribution to the success of
+Infineon. This enables us to target the use of our financial resources and, as a result,
+to continue to improve our profitable growth. We consider individual operations
+from various points of view, such as value creation, current and expected market posi-
+tion, significance to the customer and risk assessment. On this basis, we decide the
+extent to which we will invest in or divest an operation. Growth prospects and prof-
+itability are mutually dependent here, with profitability enabling investment and
+ensuring sustainable innovation and growth as a result.
+Portfolio management and inorganic growth
+5 Q = 32
+Further information
+Thailand
+Combined Management Report
+Group strategy
+Strategic guidelines
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Tried-and-tested processes, methods and tools, together with continuous improve-
+ment programs, form the basis for the high priority Infineon attaches to quality.
+Our quality departments are embedded in the global organization. Regular events
+such as Quality Days at our global sites promote a greater awareness of quality,
+with the result that all Infineon employees are responsible for honoring our quality
+pledge within their own sphere of responsibility.
+In addition, clearly defined quality principles provide guidance for our employees.
+These principles have the overriding aim of honoring the pledges we have made
+to our customers relating, among other things, to product functionality and reliabil-
+ity. To achieve this, we attach great importance to understanding our customers'
+concerns and clearly defining their product requirements. Honoring our pledges is
+an essential guiding principle that is also reflected in the in-house cooperation we
+see at Infineon.
+High quality and reliability are key values for us, differentiating us from our competitors.
+Therefore, quality plays a key role in the lifecycle of an Infineon product – from its
+development and production to its supply and product-related services. Infineon is
+certified worldwide in accordance with the leading quality standards and has an
+efficient management system.
+Our supply chains and our production are both particularly resilient. Our manufacturing
+facilities are spread across all major regions of the world, and our contract manufac-
+turer and supplier base is broadly diversified. The investment in a production company
+in Germany (European Semiconductor Manufacturing Company, ESMC), which will
+be founded under the leadership of TSMC (Taiwan Semiconductor Manufacturing
+Company) and in which Infineon will hold a 10 percent stake, will play an important
+role in the geographical diversification of the supply chains.
+Expanding our capacity in line with expected market trends over the cycle has proved
+very effective and forward-thinking. For this reason, we have now decided to extend
+the third module significantly beyond its original specifications, creating the world's
+largest and most competitive manufacturing facility for silicon carbide semiconductors,
+reflected in a particularly efficient production landscape and substantial economies
+of scale. We are also expanding our site in Dresden as planned to include an additional
+300-millimeter module for analog mixed-signal products as well as power semicon-
+ductors. These can be used in a wide variety of applications, such as data centers,
+automotive and loT. The new factory combines the two growth areas, decarbonization
+and digitalization, and is designed to meet demand from our customers in the second
+half of the decade.
+Our 300-millimeter thin wafer manufacturing technology for power semiconductors
+is a clear indication of the value of differentiating manufacturing in our own fabs:
+As pioneers of this technology, the scale of manufacturing we have now reached
+allows us to achieve significant economies of scale. Compared with manufacturing
+on 200-millimeter wafers, we benefit from significantly lower costs and lower
+capital investment. This has enabled us to maintain our lead: With the factory at
+the Villach site (Austria), together with our 300-millimeter manufacturing facility
+in Dresden (Germany), we have established a closely coordinated manufacturing
+network across the two sites. In line with our “One Virtual Fab” concept, we are
+using the same processes, equipment, and automation and digitalization concepts
+in Villach and in Dresden. This generates economies of scale, but it also benefits
+the customer, as we have the flexibility to shift production volumes between the
+sites. We are applying a similar concept in the area of compound semiconductors
+between our sites in Villach and Kulim (Malaysia). The third module under construc-
+tion in Kulim is also able to generate synergies with the existing 200-millimeter pro-
+duction infrastructure.
+from the design and the software. To ensure and improve our delivery capability, even
+in times of scarce production capacity in standard technologies, we have signed sup-
+ply agreements with our contract manufacturers, sometimes covering a period of
+several years.
+5 Q = 31
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Group strategy
+Strategic guidelines
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+We are continuing to expand our in-house manufacturing in areas in which we create
+added value for the customer and differentiation for Infineon. Thus, we manufacture
+products in our own fabs when doing so means that our customers benefit from lower
+cost, higher performance or improved availability. This has been the case until now,
+for example, for power semiconductors and sensors. Customers are increasingly recog-
+nizing the competitive advantage offered by our in-house manufacturing by entering
+into long-term supply contracts and capacity reservation arrangements. Some cus-
+tomers make multi-year advance payments that support the cashflow during times of
+investments to expand production capacity. However, where manufacturing in our
+own fabs offers no additional customer benefit or opportunity to differentiate our-
+selves from the competition, we work together with contract manufacturers. This is
+predominantly the case for highly integrated digital products such as microcontrollers,
+connectivity components and security ICs, where the differentiation arises mainly
+Value creation through differentiating in-house
+manufacturing and high quality
+We are continuing to enhance our leading technological position and expertise in our
+core markets through radical and customer-focused innovation. As a result, we are
+strengthening our core business and identifying long-term growth opportunities in
+adjacent business areas. As one of the market leaders in the field of power electronics,
+we began researching new materials such as silicon carbide and gallium nitride at an
+early stage, building up our expertise, and we are constantly broadening our product
+portfolio in order to generate added value for our customers.
+Management Board and Supervisory Board
+Combined Management Report
+Internal management system
+Consolidated Financial Statements
+Management Board and Supervisory Board
+Combined Management Report
+Internal management system
+Consolidated Financial Statements
+Further information
+5 Q = < 39 →
+Selected supplementary performance indicators
+The principal performance indicators are supplemented by the following additional
+performance indicators.
+Growth and profitability indicators
+Since the three principal performance indicators, especially Segment Result/Segment
+Result Margin, positively correlate with revenue growth, the latter is not used as a
+principal performance indicator in its own right but is covered by the three performance
+indicators indirectly.
+In order to analyze operating profitability in detail, the result and cost block compo-
+nents of the Segment Result are considered. These are gross profit, research and
+development expenses, and selling, general and administrative expenses, as well as
+their relation to revenue.
+These indicators are analyzed both at Group level and at segment level (for changes
+in these indicators for the Group in the 2023 fiscal year, see the chapter "Review of
+results of operations", p. 49 ff.).
+Liquidity performance indicators
+A rolling cash flow forecast helps ensure that Infineon has appropriate levels of liquidity
+at its disposal and an optimal capital structure. Liquidity is managed only at Group
+level, and not at segment level, using the following performance indicators:
+> Gross cash position: Cash and cash equivalents plus financial investments
+› Net cash position: Gross cash position less short-term and long-term financial debt
+› Investments: The total amount invested in property, plant and equipment and in
+other intangible assets, including capitalized development costs
+For an analysis of changes in these performance indicators during the 2023 fiscal
+year, see the chapter "Review of liquidity”. p. 55 ff.
+Non-financial performance indicators
+Non-financial performance indicators at Infineon include CO2 emissions and indicators
+relating to diversity.
+Already at the 2020 Annual General Meeting, Infineon announced that it wanted to
+become carbon-neutral by 2030. By 2025, Infineon would like to reduce its CO2 emis-
+sions by 70 percent compared to the 2019 calendar year.
+The degree of target achievement for these non-financial performance indicators
+is also reflected in the remuneration of the Management Board (see the chapter
+"Remuneration Report", p. 86).
+Actual and target values for performance indicators
+The chapter "Outlook”, p. 62, contains a table comparing the actual values achieved
+in the 2023 fiscal year for principal and selected supplementary performance indicators
+with the values forecasted and the expectations for the 2024 fiscal year.
+Infineon | Annual Report 2023
+Infineon | Annual Report 2023
+ROCE 1/②
+= Capital employed ②
++ Liabilities classified as held for sale
+Further information
+Segment Result is defined as follows:
+Operating profit, adjusted for:
+Certain reversal of impairments (impairments) (in particular on goodwill)
+Gains (losses) on earnings of restructuring and closures
+Share-based payment
+Acquisition-related depreciation/amortization and other expenses
+Gains (losses) on sales of businesses, or interests in subsidiaries
+Other income and expenses
+= Segment Result
+Free Cash Flow
+Free Cash Flow measures the ability to generate sufficient cash flows to finance day-to-
+day operations and to fund required investments out of the ongoing business. It is
+Infineon's stated target to sustainably generate positive Free Cash Flow (for an expla-
+nation of changes in Free Cash Flow during the 2023 fiscal year, see the chapter
+"Review of liquidity", p. 55 f.). Free Cash Flow is managed by Infineon at Group level
+only and not at segment level.
+The main factors influencing Free Cash Flow are a positive earnings trend combined
+with effective management of inventories, trade accounts receivable and payable,
+and capital expenditures.
+Free Cash Flow at Infineon is defined as follows:
+Cash flows from operating activities from continuing operations
++ Cash flows from investing activities from continuing operations
+An important topic for us is Infineon's digital transformation, which we are driving
+forward using a strategic roadmap. As a global semiconductor manufacturer, we
+benefit from the digital transformation in two ways: on the one hand, as a provider
+and, on the other, as a user of digital solutions. As a provider, we use digitization
+and efficient platforms to support our customers in the best possible way throughout
+the customer relationship and the development process. We are constantly optimiz-
+ing and expanding our website and web content, and it is important for us that all
+product-related information and support services are easily accessible.
++ Purchases of (proceeds from sales of) financial investments, net
+= Free Cash Flow
+The performance indicator RoCE measures the return on capital and shows the corre-
+lation between profitability and the capital resources required to run the business
+(for the mathematical derivation and development of ROCE in the 2023 fiscal year, see
+the chapter "Review of financial condition”, p. 54). ROCE describes how efficiently
+a company uses its resources and, through the comparison with cost of capital, serves
+as an instrument for value-based corporate management. It is also analyzed by Infineon
+at Group level only and not at segment level.
+ROCE is defined as follows:
+Operating profit, plus/minus:
+Financial result excluding interest result
+Share of profit (loss) of associates and joint ventures accounted for using the equity method
+Income taxes
+= Operating profit from continuing operations after tax :D:D:D:D:D
+Assets, plus/minus:
+Cash and cash equivalents
+Financial investments
+Assets classified as held for sale
+Total current liabilities
++ Short-term financial debt and current maturities of long-term financial debt
+Return on Capital Employed (ROCE)
+The accompanying software products and digital services are increasingly being pro-
+vided using appropriate licensing models via our digital customer interfaces, such
+as the Infineon Developer Center. A major focus is on scaling up technical support, so
+that, even in fragmented markets, we can provide support to customers during their
+product choice and design-in. The Infineon Developer Community offers round-the-clock
+technical support to all customers and continues to expand and improve by learning
+from customer queries and customer experience. With the specific usage of Al-based
+methods, we enable even better support for our customers through the use of power-
+ful generative language models. This makes access to our resources faster and easier.
+We will therefore continue to expand the Al-based portion in the next few years. This
+is a particularly efficient way for us to ensure that customers use our products and,
+indeed, use them in a more effective and targeted way.
+Consolidated Financial Statements
+As part of our digital roadmap, we are focusing on the rapid implementation of
+projects. When selecting projects, we are guided by the direct value contribution to
+improving the customer experience through efficiency or productivity gains and
+by their function as the necessary basis for future digitization initiatives.
+5 Herlev
+Denmark
+4 Villach
+3 Linz
+16 Warstein
+15 Soest
+2 Klagenfurt
+14 Regensburg
+12 Langen
+13 Neubiberg
+1 Graz
+Austria
+Europe, Middle East, Africa
+11 Lynnwood, WA
+10 Lexington, KY
+9 Leominster, MA
+8 Irvine, CA
+7 El Segundo, CA
+6 Colorado Springs, CO
+As a user, we also use digitization to optimize our internal processes and make them
+as efficient and future-proof as possible. So, for example, we connect our sites and
+contract manufacturers in accordance with Industry 4.0 in a virtual manufacturing net-
+work. In sales and marketing, we use applications based on methods for analyzing
+big data that enable us to provide our customers with targeted personal and increas-
+ingly customized support via our digital platforms. In addition, we evaluate customer
+behavior and customer requirements in a structured way and incorporate these results
+into the development of our solutions and products. In manufacturing, we are focus-
+ing to a greater extent on a high level of automation and the increasing use of artificial
+intelligence methods in order to continue to improve our productivity and quality. In
+all of these areas, we systematically analyze which processes can be further improved
+and optimized through the use of generative Al language models.
+4 Austin, TX
+3 Andover, MA
+USA
+2 Tijuana
+1 Guadalajara
+Americas
+Mexico
+France
+11
+6 Le Puy-Sainte-
+Germany
+Philippines
+9 Muntinlupa
+6 Kulim
+Malaysia
+5 Ipoh
+4 Seoul
+3 Cheonan
+2 Batam
+Korea
+Indonesia
+1 Bangalore
+India
+Asia-Pacific
+29 Bristol
+UK
+28 Belgrad
+Serbia
+27 laşi
+26 Bucharest
+25 Braşov
+Romania
+Netherlands
+24 Nijmegen
+Israel
+19 Cork
+Ireland
+17 Budapest
+18 Cegléd
+Hungary
+7 Augsburg
+Réparade
+29 30
+5 Chandler, AZ
+Further information
+← 34 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+R&D sites and application centers
+Further information, including detailed statistics, is available in the HR Report 2023
+and the 2023 Sustainability Report.
+People are the main focus of our activities, as dedicated, healthy, successful employees
+are key to maintaining and improving our market-leading position, thereby creating a
+successful future for us all.
+Frank
+5) strengthening the area of organizational development in order to be prepared
+for further growth and to promote the desired internal cultural change (SPIRIT).
+4) pushing ahead with leadership development programs as well as employee
+training and skill enhancement, and
+3) strengthening hybrid working where possible and practical,
+2) continuing to drive digitalization and standardization forward in HR and
+positioning ourselves in a scalable way to support Infineon's growth,
+1) attracting the best talent in the market, optimizing the onboarding process,
+developing internal talent and keeping it loyal to Infineon,
+We consider it our responsibility to contribute to addressing the key societal challenges.
+Decarbonization and digitalization are having an impact not only on our world but
+also on the future of work. From this, we derive the key action areas of our HR strategy.
+Our main focus is on
+Our human resources (HR) strategy is a key component of Infineon's success. It sup-
+ports us in our efforts to achieve our growth and profitability targets and enables us to
+successfully navigate our way through varying economic phases and challenges. Our
+HR understanding is "People create value. Engagement drives people”. Our overriding
+objective is to foster our employees' engagement and to take targeted measures to
+achieve this. When employees are enthusiastic about their job, have the relevant skill
+sets, and can take advantage of suitable opportunities for continuing professional
+development, the outcome is a higher level of creativity, productivity and innovation,
+as well as better results. We use regular pulse checks of our employees worldwide
+to measure their level of engagement and thus keep our finger on the pulse of their
+needs, enabling Infineon to make continuous progress.
+Human resources strategy
+Human resources strategy
+5 Q = <33 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Group strategy
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Research and
+development
+Infineon ❘ Annual Report 2023
+www.infineon.com/hrreport
+www.infineon.com/csr_reporting
+Combined Management Report
+Research and development
+Consolidated Financial Statements
+Combined Management Report
+Research and development
+Management Board and Supervisory Board
+Management Board and Supervisory Board
+Another indication of Infineon's innovative power and long-term competitiveness is
+the number of our patents. In the 2023 fiscal year, we applied for around 1,850 patents
+worldwide (previous year: around 1,700). In addition to patent applications and
+expirations, there were changes in the portfolio due to regular strategic patent port-
+folio adjustments. Maintenance of the patent portfolio is carried out on a regular
+basis. This has resulted, along with new patent applications for inventions, in a signif-
+icant increase in the relevance of the patents, as highlighted again by LexisNexis®
+and ClarivateⓇ in their innovation reports. At the end of the 2023 fiscal year, the world-
+wide patent portfolio comprised around 29,700 patents and patent applications
+(previous year: around 29,600).
+Patents
+We are also addressing longer-term future-related topics in areas such as quantum
+computing and post-quantum cryptography.
+Artificial intelligence (AI) methods are being used in a wide variety of applications
+to improve products and processes. In the field of edge computing, for example,
+Al is used in combination with our smart sensors and microcontrollers to classify
+tone, key words or gestures to enable the adoption of new and innovative approaches
+in human-machine communication. In addition, Al supports many processes such
+as chip design, marketing and production.
+Percentage of revenue
+R&D expenses
+12.2%
+2023
+2022
+Infineon | Annual Report 2023
+12.6%
+H
+Consolidated Financial Statements
+5 Q = < 35 →
+Research and development expenses were €1,985 million in the 2023 fiscal year,
+compared with €1,798 million in the previous year. This increase of €187 million, or
+10 percent, was less than the increase in revenue. Accordingly we invested 12.2 percent
+of revenue in research and development in the 2023 fiscal year, compared with
+12.6 percent in the previous year. Capitalized development costs in the 2023 fiscal year
+were €214 million (previous year: €209 million). The amortization of capitalized devel-
+opment costs in the 2023 fiscal year was €93 million (previous year: €94 million). Sub-
+sidies and grants received for research and development increased from €113 million
+in the 2022 fiscal year to €130 million in the 2023 fiscal year.
+At the end of the 2023 fiscal year, Infineon employed 12,830 people (22 percent of the
+total workforce) in research and development worldwide. Of these, 1,645 worked on
+software. At the end of the 2022 fiscal year, 12,005 people were employed by Infineon
+in research and development worldwide (21 percent of the workforce). The number of
+research and development sites in the 2023 fiscal year was 69 (2022: 64) in 25 countries.
+Further information
+Research and development activities are also focused on the digitization of products
+and solutions as an essential prerequisite for the implementation of our P2S strate-
+gic approach. The opportunity to offer customers all-in-one solutions is particularly
+important and provides them with benefits in terms of system performance, system
+costs and development time. The main development fields here are microcontrollers,
+connectivity and security solutions, and software.
+C03 R&D expenses
+€ in millions
+1,985
+1,798
+Infineon's research and development activities are in accord with its strategy of con-
+tinuing to strengthen its leading technological position through customer-focused
+innovation. Research and development activities therefore concentrate on continuing
+to improve our power semiconductors, with a particular focus on the use of new
+materials such as silicon carbide and gallium nitride. Important development goals
+are to improve efficiency and increase power density while at the same time main-
+taining a high level of reliability.
+Further information
+Review of the semiconductor market
+in the 2023 fiscal year
+The growth figures relate to market size, translated into US dollars at market
+exchange rates.
+For the 2023 calendar year, experts at the International Monetary Fund (IMF) expect a
+global economic growth of 2.5 percent (☐ R01). This would mean growth in the 2023
+calendar year would be slightly below the long-term growth trend. The reasons for this
+include the impact of the energy crisis, high rates of inflation, sharp increases in inter-
+est rates, a drop in consumer and business confidence, and the unexpectedly slow
+recovery of the Chinese economy after the removal of pandemic-related restrictions.
+Following exceptionally strong growth in the global economy in the 2021 calendar
+year in the wake of the post-Covid recovery, growth returned to a more normal level
+in the 2022 calendar year of 3.0 percent (☐ R01).
+Review of the global economy in the
+2022 and 2023 calendar year
+5 Q = 41
+Consolidated Financial Statements
+Consolidated Financial Statements
+Management Board and Supervisory Board
+Infineon ❘ Annual Report 2023
+Review of the
+semiconductor
+industry
+40 ->
+Further information
+Combined Management Report
+Review of the semiconductor industry
+Management Board and Supervisory Board
+Worldwide semiconductor revenue totaled €480 billion in the 2023 fiscal year. This was
+13 percent lower than the figure for the 2022 fiscal year of €550 billion. Expressed in
+US dollars, the decrease was 14 percent (☐ R02). This was mainly due to the significant
+fall in demand in the computing, smartphone and consumer market segments, with
+a double-digit contraction in revenue in some areas ( R03).
+Combined Management Report
+Review of the semiconductor industry
+Revenue in Infineon's reference market (i.e., the market for semiconductors exclud-
+ing DRAM and NAND flash memory chips and microprocessors) was €364 billion in
+the 2023 fiscal year, 1 percent less compared with €367 billion in the 2022 fiscal year.
+Expressed in US dollars, the decrease was 2 percent (☐ R02). The relatively steady
+performance in the Infineon reference market was primarily due to the automotive
+and industrial market segments, in which growth was driven by the decarbonization
+and digitalization trends. Semiconductor content in vehicles increased, partly as a
+result of growing demand for electric vehicles, comfort features and efficient driver
+assistance systems. Growing demand for semiconductors was also evident again in
+the renewable energy sector (☐ R03).
+ATV
+In the 2022 calendar year, Infineon was ranked in 13th place in the global semiconduc-
+tor market, with a market share of 2.6 percent. In the Infineon reference market,
+Infineon ranked in seventh place worldwide in the 2022 calendar year, with a market
+share of 4.0 percent. This puts Infineon in second place among European semicon-
+ductor manufacturers in both markets (R04).
+2023
+2022
+absolute
+in %
+16,309
+14,218
+2,091
+15
+7,413
+6,131
+1,282
+21
+Research and development expenses
+Selling, general and administrative expenses
+Other operating income and expenses, net
+Operating profit
+(1,985)
+(1,798)
+(187)
+(10)
+(1,599)
+(1,565)
+(34)
+(2)
+119
+77
+42
+55
+3,948
+2,845
+€ in millions, except earnings per share
+Revenue
+1,103
+Change
+Gross profit
+Management Board and Supervisory Board
+Combined Management Report
+2023 fiscal year
+Consolidated Financial Statements
+Further information
+5 Q = 4 48
+Segment performance
+As a result of the decline in demand for smartphones and other mobile devices,
+there was a decrease in revenue from MEMS microphones, TVS (transient voltage
+suppressor) diodes, as well as antenna tuners and RF antenna switches in the
+2023 fiscal year.
+Our software business becomes more important year to year. For a variety of products,
+software offers an additional benefit and helps us to differentiate via the enhance-
+ment of our product portfolio. We provide software either directly to complement the
+firmware already integrated into the end product or as an additional service. In both
+cases, software enables us to augment our revenue, either by selling a greater number
+of higher-quality products at correspondingly higher prices or by producing additional
+revenue with our software services. In the 2023 fiscal year, we generated increasing
+revenue from software, primarily related to USB-C chargers. Turnkey products that can
+still subsequently be configured and programmed by the customer were particularly
+in demand in this product area.
+In the 2023 fiscal year, we generated our first revenue from ion traps for quantum
+computing. Together with the German firm eleQtron GmbH, a pioneer in quantum
+computers, Infineon is now manufacturing quantum processors based on ion-trap
+technology and supplies continuously improved generations of ion traps for eleQtron
+to incorporate into its quantum computers. Several other partnerships have already
+been established with regard to the manufacture of quantum computers. One example
+of these is the English company Oxford Ionics. These collaborations with partners in
+the quantum industry will continue to be expanded in the future.
+As a result of the decrease in revenue described above, there was also a decline in
+the Segment Result and the Segment Result Margin. The Segment Result in the 2023
+fiscal year was €861 million, compared with €1,137 million in the 2022 fiscal year, a
+decrease of 24 percent. The Segment Result Margin was 22.7 percent, compared with
+27.9 percent in the 2022 fiscal year, see Il C06.
+CSS
+Review of the Connected Secure Systems segment
+in the 2023 fiscal year
+In the Connected Secure Systems segment, Infineon generated revenue in the 2023
+fiscal year of €2,046 million, an increase of 12 percent compared with the figure
+for the previous fiscal year of €1,822 million. The segment contributed 13 percent of
+Infineon's Group revenue.
+The growth in revenue was driven by higher prices, an improved product mix and
+volume growth in dedicated applications. The security solutions business in particular
+benefited from the stabilization of the supply situation in the past fiscal year, which
+meant it was possible to meet the outstanding demand, especially for payment and
+ID solutions. Moreover, demand for eSIM solutions for automotive and industrial
+applications remained high.
+Demand for connectivity solutions and microcontrollers was adversely impacted by
+a worsening macroeconomic climate, which had a dampening effect on consumer
+spending. Despite macroeconomic obstacles, the digitalization of applications in the
+context of IoT remains one of our principal long-term growth areas. This growth is
+driven primarily by an increase in the penetration rate of end devices, especially in
+the area of industrial and consumer applications.
+The trend towards cashless and contactless payment is continuing. There was strong
+demand for our solutions across all regions.
+Around the world, there was a significant increase in travel in the past fiscal year.
+In addition to this trend, other major ID projects contributed significantly to strong
+revenue growth in this business area.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+2023 fiscal year
+Segment performance | Review of results of operations
+Consolidated Financial Statements
+Further information
+5 Q = < 49 →
+There was an increase in revenue from embedded SIMS (eSIMS), which are used in
+vehicles with an automatic emergency call function as well as in the industrial sector.
+Progress with Industry 4.0 applications is also leading to growing demand for eSIMs.
+Manufacturing machinery, tools and other technical devices are becoming more and
+more connected and can therefore be monitored, serviced and maintained remotely.
+Given the growth in revenue, both the Segment Result and Segment Result Margin
+were higher than in the 2022 fiscal year. Higher prices, a better product mix and
+volume growth in dedicated applications led to this improvement. The Segment
+Result in the 2023 fiscal year was €488 million, an increase of 29 percent compared
+with the prior-year figure of €378 million. Based on revenue, the Segment Result
+Margin was 23.9 percent (previous year: 20.7 percent), see c07.
+Review of results of operations
+Net financial result
+39
+(financial income and expenses, net)
+(54)
+1.65
+0.73
+44
+Segment Result
+-
+- Segment Result Margin
+Diluted earnings per share (in euro)
+2.38
+1.65
+0.73
+44
+Adjusted earnings per share (in euro) - diluted
+2.65
+1.97
+0.68
+35
+C07 Revenue and Segment Result of the Connected Secure Systems segment
+€ in millions
+20.7%
+2,046
+1,822
+23.9%
+488
+378
+Infineon | Annual Report 2023
+2022
+2023
+2.38
+Basic earnings per share (in euro)
+Revenue
+Market position
+(161)
+107
+66
+Share of profit (loss) of associates and joint
+ventures accounted for using the equity method
+27
+39
+(12)
+(31)
+Income tax
+(782)
+(537)
+(245)
+(46)
+Segment Result Margin
+Profit (loss) from continuing operations
+2,186
+953
+44
+Profit (loss) from discontinued operations,
+net of income taxes
+(2)
+(7)
+5
+71
+Profit (loss) for the period
+3,137
+2,179
+958
+3,139
+2023
+44
+Segment Result
+PSS
+CSS
+Segment
+performance
+GLOBAL
+INNOVATORS
+CAL
+INNOVATORS
+CONFERENCE
+niven
+Management Board and Supervisory Board
+Combined Management Report
+2023 fiscal year
+Consolidated Financial Statements
+Further information
+5 Q = 45 →
+Segment performance
+ATV
+Review of the Automotive segment
+in the 2023 fiscal year
+In the Automotive segment, Infineon generated revenue in the 2023 fiscal year of
+€8,242 million, an increase of 26 percent compared with the figure for the previous
+fiscal year of €6,516 million. The segment contributed 51 percent of Infineon's Group
+revenue.
+Electromobility, driver assistance systems, software-defined vehicle architecture and
+the trend towards higher levels of electronic features in vehicles continued to be the
+main drivers of our growth in the 2023 fiscal year. Electromobility benefited not only
+from purchase incentive schemes but also from the increasing availability of charging
+stations, the wider range of models being produced by almost all vehicle manufacturers
+and a change in attitude in society towards sustainable mobility.
+Our business with microcontrollers developed particularly well. These include the
+AURIX™, TRAVEOTM and PSOC™ families. The transition to new vehicle architectures by
+many manufacturers, expanded driver assistance systems and the electrification of
+vehicles ensured above-average demand. Our AURIX™ family was developed specifi-
+cally for embedded control systems with the highest safety requirements and is there-
+fore used in addition to driver assistance systems for engine control, security and in
+high-speed onboard networks. Real-time capability, high computing power and low
+power consumption are the decisive characteristics. The TRAVEOTM family benefited
+from the trend towards digital instrument and display systems. In addition, the delivery
+situation at our manufacturing partners continued to improve in the past financial
+year, which also had a positive impact on sales development.
+Infineon was also able to benefit from the fact that electromobility, automated driving
+and mobility services are increasingly requiring more powerful software. This software
+needs to be updatable throughout the lifecycle of the vehicle. This flexibility, as well
+as higher safety requirements for automated driving, require a new architecture for
+onboard networks used for data transmission and power distribution. For the latter, in
+particular, special safety-certified semiconductor solutions are used, replacing existing
+fuses and relays. With PROFET™, Infineon offers an extensive portfolio of smart semi-
+conductor switches. They enable decentralized configurable power distribution that
+at the same time complies with the highest safety standard.
+Moreover, during the reporting period, there was a further increase in comfort fea-
+tures across all vehicle segments. Examples of these include retractable door handles,
+electrically controlled seat adjustment, sun visors and tailgates. All these functions
+require power switches, sometimes several per function, around a hundred on average
+per vehicle. As Infineon has an extensive portfolio of semiconductor switches, it
+achieved above-average growth in this area in the past fiscal year.
+Higher prices also contributed to the increase in revenue.
+We were able to win additional contracts worldwide for our microcontrollers and
+power semiconductors, particularly for silicon carbide both in the power train and
+onboard chargers as well as in DC-DC converters. We therefore anticipate achieving
+significant increases in revenue in this area over the next few years.
+The Segment Result in the 2023 fiscal year was €2,380 million, an increase of 60 percent
+compared with the Segment Result for the previous fiscal year of €1,490 million. Based
+on revenue, the Segment Result Margin was 28.9 percent (previous year: 22.9 percent),
+see C04. The increase in the Segment Result Margin was mainly due to positive price
+effects, the higher level of revenue and improvements in the product mix.
+C04 Revenue and Segment Result of the Automotive segment
+€ in millions
+8,242
+GIP
+6,516
+Segment performance
+Management Board and Supervisory Board
+2022
+In the first nine months of the 2023 fiscal year, Infineon achieved a market share of
+3.4 percent in the global semiconductor market and was ranked in 11th place. In the
+Infineon reference market, Infineon achieved a market share of 4.7 percent in the
+first nine months of the 2023 fiscal year and was ranked in sixth place. In the first nine
+months of the fiscal year, Infineon was ranked in second place among European
+semiconductor manufacturers in both markets (☐ R04). Data for the full 2023 fiscal
+year was not yet available at the time this report was prepared.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+2023 fiscal year
+Group performance
+2023 fiscal year
+Group
+performance
+Infineon Annual Report 2023
+Consolidated Financial Statements
+Further information
+Management Board and Supervisory Board
+Combined Management Report
+2023 fiscal year
+Consolidated Financial Statements
+Further information
+5 α = 443
+Group performance
+Group revenue up by 15 percent
+Infineon generated Group revenue of €16,309 million in the 2023 fiscal year, a 15 percent
+increase on the previous year's figure of €14,218 million. Around half the growth in
+revenue was due to price increases and around half to higher volumes and product mix
+adjustments. Continuing high levels of demand for semiconductors in the automotive
+and renewable energy sectors, in particular, had a positive impact here. At the same
+time, manufacturing capacity is continually being expanded. This was also the case
+in the 2023 fiscal year at our sites in Villach (Austria), Dresden (Germany) and Kulim
+(Malaysia). Production corridors of contract manufacturers also contributed to the
+increase in revenue. In addition, there were positive exchange rate effects during
+the reporting period.
+Segment Result Margin of 27.0 percent achieved
+Infineon improved its Segment Result by 30 percent from €3,378 million in the 2022
+fiscal year to €4,399 million in the 2023 fiscal year. The main reasons for this were
+price increases, higher volumes and improvements in the product mix. Moreover,
+operating expenses rose at a lower rate than revenue. This was offset by higher idle
+costs and write-downs on increased inventories.
+Taking all this into account, the Segment Result Margin of 27.0 percent was signifi-
+cantly higher than the figure for the previous fiscal year of 23.8 percent.
+Details about Infineon's two other principal performance indicators, Free Cash Flow
+and ROCE, and about its other performance indicators can be found in the chapters
+"Review of results of operations”, p. 49 ff., “Review of financial condition”, p. 53 f.,
+and "Review of liquidity", p. 55 ff..
+Infineon | Annual Report 2023
+Combined Management Report
+Consolidated Financial Statements
+Further information
+44 →
+2023 fiscal year
+⚫28.9%
+In the 2023 fiscal year, Infineon has set new records for revenue and profitability. The
+results are an initial confirmation of our more ambitious course we embarked on as a
+company a year ago. Nevertheless, we find ourselves in an environment that continues
+to present challenges. We are seeing different trends in our target markets. Structural
+semiconductor growth in the areas of renewable energy, electromobility (especially
+in China) and microcontrollers for the automotive industry remains unabated. In con-
+trast, consumer, communication, computing and IoT applications are experiencing
+a temporary period of low demand. Details about the performance of the segments
+can be found in the chapter "Segment performance". p. 44 ff.
+Demand in our industrial business and for applications in the automotive sector
+continued on an upward trend. The growing number of electric vehicles being sold
+resulted in steadily increasing demand for charging stations and onboard chargers.
+In addition, the number of vehicles with in-cabin USB-C ports for charging mobile
+devices is continuing to rise. Good revenue growth was also to be seen in the compo-
+nents business for light electric vehicles such as eBikes, eScooters and forklift trucks.
+Demand for microinverters for roof-top solar systems remained steady, although it
+began to weaken towards the end of the fiscal year.
+662
+384
+Segment Result
+Segment Result Margin
+Infineon | Annual Report 2023
+2022
+2023
+Combined Management Report
+2023 fiscal year
+Consolidated Financial Statements
+Further information
+5 α = 47
+Segment performance
+PSS
+Review of the Power & Sensor Systems segment
+in the 2023 fiscal year
+In the Power & Sensor Systems segment, Infineon generated revenue in the 2023 fiscal
+year of €3,798 million, a decrease of 7 percent compared with the figure for the pre-
+vious fiscal year of €4,070 million, see C06. In the first quarter of the fiscal year, weak
+demand in the consumer business was still partially offset by increasing demand for
+semiconductors used in servers and industrial applications. In the following quarters,
+demand for semiconductors used in servers also declined significantly, following high
+growth rates in previous years. Combined with continuing weak demand for semicon-
+ductors for computers, consumer electronics and telecommunications infrastructure,
+this led to a decrease in revenue in the 2023 fiscal year. The segment contributed
+23 percent of Infineon's Group revenue.
+In past years, there was significant growth in demand in the server market, mainly
+driven by high levels of investment from cloud computing service providers. However,
+this growth slowed considerably in the course of the 2023 fiscal year. Furthermore,
+investment in cloud servers was deferred, and more Al accelerators were ordered
+instead. Al accelerators are special parts of servers that significantly accelerate artificial
+intelligence (AI) learning. In principle, this deferral should be seen as a positive devel-
+opment for semiconductor demand, as the power supply of an Al accelerator processor
+has a significantly higher semiconductor content than that required for the power
+supply of a processor for standard servers. The increase in demand for semiconductors
+for Al was not yet sufficient in the 2023 fiscal year to offset the decline in revenue in
+the area of traditional servers. Demand for power semiconductors in the area of tele-
+communications infrastructure also slowed in the 2023 fiscal year.
+Demand for products in the consumer market also remained weak in the 2023 fiscal
+year. Sales figures for consumer electronic devices of all types (e.g., smartphones, PCs,
+laptops and notebooks, games consoles, as well as television) rose sharply during
+the Covid pandemic before returning to more normal levels, which led to a decrease
+in revenue in this area. Bucking the generally weak trend, interest in chargers, adapters
+and power supplies based on the new material GaN is continuing to grow. This led to
+an increase in revenue in this market segment, even if this was from a relatively low
+base. As a result of the acquisition of GaN Systems, the number of GaN specialists in
+our Group has virtually doubled. We are therefore now in a position to gain even faster
+access to the market of various GaN applications.
+C06 Revenue and Segment Result of the Power & Sensor Systems segment
+€ in millions
+4,070
+3,798
+Infineon | Annual Report 2023
+27.9%
+⚫22.7%
+Revenue
+1,137
+861
+22.9%
+Revenue
+21.5%
+Management Board and Supervisory Board
+30.0%
+2,380
+1,490
+Revenue
+-
+Segment Result
+Segment Result Margin
+Infineon | Annual Report 2023
+2022
+Management Board and Supervisory Board
+Combined Management Report
+2023 fiscal year
+Consolidated Financial Statements
+Further information
+5 Q = < 46 →
+Segment performance
+GIP
+2023
+In home appliances, the revenue declined due to the weak construction activity in
+China. The trend towards inverterized motor control systems continued but could not
+compensate for the weak demand.
+Review of the Green Industrial Power segment
+in the 2023 fiscal year
+€ in millions
+C05 Revenue and Segment Result of the Green Industrial Power segment
+In the 2023 fiscal year, the Segment Result was €662 million, an increase of 72 percent
+compared with the figure for the previous fiscal year of €384 million. As a result of the
+growth in volumes and positive price effects, the Segment Result Margin improved from
+21.5 percent in the 2022 fiscal year to 30.0 percent in the 2023 fiscal year, see C05.
+Revenue in transportation grew strongly from a weak basis. Besides the recovery
+in trains, new business areas such as the electrification of buses, trucks and farm
+machinery contributed to the improved result.
+1,790
+2,205
+As the proportion of renewable energy in the energy mix continues to grow, so too
+does the importance of storage solutions to stabilize the grids. The energy infrastruc-
+ture business comprises the transmission, distribution and storage of energy, as
+well as the charging infrastructure for electromobility and enjoyed strong demand.
+There was an increase in revenue from products for wind power as well as from PV
+inverter products. In many regions of the world, solar and wind power are now the
+cheapest way of generating electricity. Capacity is therefore being expanded accord-
+ingly, especially in the form of utility-scale installations.
+Demand in the area of renewable energy remained high. The generation of clean energy
+is an essential prerequisite for the achievement of global carbon emission targets.
+Thanks to its strong market position in the area of renewable energy, Infineon was
+able to benefit directly from this megatrend.
+In the Green Industrial Power segment, Infineon generated revenue in the 2023 fiscal
+year of €2,205 million, an increase of 23 percent compared with the figure for the
+previous fiscal year of €1,790 million. The revenue growth was the result of higher
+volumes as well as positive price effects. The segment contributed 13 percent to
+Infineon's Group revenue.
+Revenue in the fields of automation and electric drives benefited from demand in the
+area of factory equipment and automation.
+Combined Management Report
+2023 fiscal year
+Consolidated Financial Statements
+(120 bp)
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+The financial result in the 2023 fiscal year was a net loss of €54 million (previous year:
+net loss of €161 million). The improvement in the financial result arose mainly from
+higher interest income due to increased interest rates and from positive valuation
+effects. In contrast, interest expenses relating to financial liabilities were subject to
+almost no fluctuations due to contractually agreed fixed interest rates. In addition,
+in June 2023, a bond with a nominal volume of €750 million was repaid on schedule.
+Further information is provided in note 4 to the Consolidated Financial Statements.
+p. 110
+Improvement in financial result
+Despite the 15 percent increase in its revenue, Infineon was able to keep its selling,
+general and administrative expenses at a stable level of €1,599 million. Expressed as
+a percentage of revenue, selling, general and administrative expenses comprised
+9.8 percent of revenue in the 2023 fiscal year, which was lower than the prior-year
+figure of 11.0 percent. The impact on earnings of the purchase price allocations and
+acquisition-related expenses included in Infineon's selling, general and administrative
+expenses in the 2023 fiscal year was €168 million (previous year: €177 million).
+Increase in net amount of other operating income and expenses
+The net amount of other operating income and expenses improved in the course of
+the 2023 fiscal year to €119 million (previous year: €77 million). This includes income
+from the sale of Infineon's HiRel DC-DC converter business to Micross Components,
+Inc. and from the sale of the Temecula site (USA).
+Change
+in %
+34
+1,565
+11.0%
+1,599
+9.8%
+Selling, general and administrative expenses
+As percentage of revenue
+absolute
+2022
+€ in millions, except percentages
+Further information
+2023
+2
+5 Q = < 52 →
+43.1%
+Effective tax rate of 19.9 percent
+44
+953
+Selling, general and administrative expenses
+2,186
+3,139
+Profit (loss) from continuing operations - diluted
+Compensation of hybrid capital investors'
+Profit (loss) from continuing operations
+attributable to shareholders
+in %
+absolute
+2022
+2023
+€ in millions (unless otherwise stated)
+Change
+Adjusted earnings per share (diluted) increased from €1.97 in the 2022 fiscal year to
+€2.65 per share in the 2023 fiscal year and is calculated as follows:
+Earnings per share in accordance with IFRS is influenced by amounts relating to pur-
+chase price allocations for acquisitions (in particular Cypress) and other exceptional
+items. To enable better comparability of operating performance over time, Infineon
+calculates adjusted earnings per share (diluted). Adjusted profit (loss) for the period
+and adjusted earnings per share (diluted) should not be seen as a replacement or as
+superior performance indicators, but rather as additional information to the profit (loss)
+for the period and earnings per share (diluted) determined in accordance with IFRS.
+Increase in adjusted earnings per share
+The calculation of earnings per share in accordance with IFRS is presented in detail
+in note 8 to the Consolidated Financial Statements. □ p. 115
+Both basic and diluted earnings per share stood at €2.38 for the 2023 fiscal year
+(previous year: €1.65).
+The higher profit for the period resulted in a corresponding increase in earnings
+per share.
+Profit for the period and earnings per share up on previous year
+After deducting income taxes and adjusting for the profit/loss from discontinued
+operations, Infineon recorded a profit for the period of €3,137 million in the 2023
+fiscal year (previous year: €2,179 million).
+Further details regarding the income tax expense are provided in note 6 to the
+Consolidated Financial Statements. p. 111 ff.
+The income tax expense in the 2023 fiscal year increased to €782 million (previous
+year: €537 million). Based on the profit from continuing operations before income
+taxes of €3,921 million (previous year: €2,723 million), the tax rate for the reporting
+year was 19.9 percent (previous year: 19.7 percent).
+Review of results of operations
+Expressed as a percentage of revenue, research and development expenses comprised
+12.2 percent of revenue in the 2023 fiscal year, which was lower than the prior-year
+figure of 12.6 percent.
+2022
+(40 bp)
+in %
+absolute
+2023
+€ in millions, except percentages
+Change
+Research and development expenses
+Operating expenses have fallen as a percentage of revenue
+Operating expenses (research and development expenses, and selling, general and
+administrative expenses) rose at a lower rate than revenue by €221 million in the
+2023 fiscal year to €3,584 million (previous year: €3,363 million), corresponding to
+22.0 percent of revenue (previous year: 23.7 percent).
+Gross profit (revenue less cost of goods sold) in the 2023 fiscal year was €7,413 million,
+21 percent higher than the prior-year figure of €6,131 million. The gross margin
+improved accordingly, from 43.1 percent in the 2022 fiscal year to 45.5 percent in the
+2023 fiscal year.
+Cost of goods sold also includes expenses of €276 million incurred mainly in connec-
+tion with the acquisition of Cypress (previous year: €288 million). These expenses
+include the amortization of fair value adjustments of €250 million (previous year:
+€278 million) identified in the course of purchase price allocations and other acquisi-
+tion-related expenses.
+51 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+2023 fiscal year
+Review of results of operations
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+At €8,896 million, cost of goods sold during the reporting year was €809 million or
+10 percent higher than the previous year's figure of €8,087 million. The increase in the
+cost of goods sold was therefore less than the increase in revenue. This was primarily
+due to positive price effects and improvements in the product mix. The increase in idle
+costs and inventory write-downs had an opposite effect.
+Details on the performance of the segments can be found in the chapter "Segment
+performance". p. 44 ff.
+(29)
+240bp
+Research and development expenses, gross
+2,329
+2,120
+209
+12.6%
+12.2%
+10
+187
+1,798
+1,985
+(2)
+(5)
+(209)
+Research and development expenses increased by €187 million or 10 percent, from
+€1,798 million in the 2022 fiscal year to €1,985 million in the 2023 fiscal year. The
+increase reflects the higher volume of business and results mainly from the intensi-
+fication of research and development activities and the higher headcount in this
+area. A total of 12,830 employees were engaged in research and development as of
+30 September 2023, an increase of 7 percent over the figure for 30 September 2022
+of 12,005.
+(214)
+(17)
+(113)
+(130)
+As percentage of revenue
+Research and development expenses
+Capitalized development costs
+Grants received
+Minus:
+10
+(15)
+(29)
+21
+Property, plant and equipment
+(4)
+Losses (gains) on sales of businesses,
+(30)
+(71)
+(7)
+(64)
+4
+(4)
+(95)
+(20)
+(116)
+Revaluation of deferred tax assets resulting
+from the annually updated earnings forecast
+Adjusted profit (loss) for the period from
+continuing operations attributable to shareholders
+of Infineon Technologies AG - diluted
+(15)
+15
++++
+3,466
+2,563
+903
+35
+18
+Weighted-average number of shares outstanding
+484
+Acquisition-related depreciation/amortization
+and other expenses
+or interests in subsidiaries
+45.5%
+Other income and expenses
+3,110
+2,157
+953
+44
+Certain impairments (reversal of impairments)
+(in particular on goodwill)
+464
+(6)
++++
+Losses (gains) on earnings of restructuring
+and closures
+(4)
+(4)
+Share-based payment
+92
+62
+30
+48
+6
+of Infineon Technologies AG - diluted
+Plus/minus:
+(in millions) diluted
+1,304
+Trade receivables
+Change
+30 Septem-
+ber 2023
+30 Septem-
+ber 2022
+absolute
+in %
+3,590
+3,717
+financial investments
+(127)
+1,991
+1,887
+104
+6
+Inventories
+3,974
+3,081
+893
+29
+(3)
+1,306
+Cash and cash equivalents and
+€ in millions
+2
+Adjusted earnings per share (in euro) - diluted²
+2.65
+1.97
+0.68
+35
+Acquisition-related expenses within
+financial result
+Tax effect on adjustments
+1 Including the cumulative tax effect.
+ASSETS
+2 The calculation of the adjusted earnings per share is based on unrounded figures.
+Management Board and Supervisory Board
+Combined Management Report
+2023 fiscal year
+Consolidated Financial Statements
+Further information
+5 Q = < 53 →
+Review of financial condition
+Review of financial condition
+Increase in property, plant and equipment due to expansion
+in frontend manufacturing facilities
+Property, plant and equipment increased by €1,500 million to €7,045 million as of
+30 September 2023. Additions of €2,729 million significantly exceeded depreciation
+of €1,143 million. The main focus of Infineon's investing activities in the 2023 fiscal
+year was on the expansion of its frontend manufacturing facilities in Villach (Austria)
+and Dresden (Germany), as well as the development of the frontend manufacturing
+site in Kulim (Malaysia).
+Infineon | Annual Report 2023
+21
+(30)
+6,131
+€750 million
+due on 24 June 2029,
+2.000% Bond from 24 June 2020
+€650 million
+ISIN: XS2194192527
+2.875% Hybrid Bond from 1 October 2019
+€600 million
+first call date 1 January 2025,
+ISIN: XS2056730323
+3.625% Hybrid Bond from 1 October 2019
+€600 million
+first call date 1 January 2028,
+US Private Placement from 5 April 2016
+US Private Placement from 5 April 2016
+US Private Placement from 5 April 2016
+US Private Placement from 16 June 2021
+US Private Placement from 16 June 2021
+US Private Placement from 16 June 2021
+US Private Placement from 16 June 2021
+Rating of S&P Global Ratings
+US$350 million
+US$350 million
+US$235 million
+US$350 million
+US$350 million
+US$350 million
+US$250 million
+due on 5 April 2024
+due on 5 April 2026
+due on 5 April 2028
+due on 16 June 2027
+due on 16 June 2029
+ISIN: XS2056730679
+due on 16 June 2031
+due on 16 June 2033
+since 15 February 2023:
+"BBB", Outlook: "positive"
+1 The number of shares issued includes own shares.
+2 Calculation of market capitalization: ("shares issued" - "own shares") x share price. The calculation is based on unrounded figures.
+1.625% Bond from 24 June 2020
+€750 million
+1.125% Bond from 24 June 2020
+€500 million
+€40,879 million
+(based on closing price of €31.36 as of 30 September 2023)
+3,829,653 (in the 2023 fiscal year)
+ADS, over-the-counter trading on the OTC market
+(OTCQX International)
+US$43,245 million
+(based on closing price of US$33.17 as of 30 September 2023)
+199,504 (in the 2023 fiscal year)
+DAX 40
+TecDAX
+EURO STOXX 50
+A full overview of other major indices in which the Infineon share is represented can be found on Infineon's website at
+www.infineon.com/cms/en/about-infineon/investor/infineon-share/#5|
+Dow Jones STOXX Europe 600
+Dow Jones Germany Titans 30
+MSCI Germany
+S&P Europe 350
+Dow Jones Sustainability World Index
+Basic information on bonds and other
+financing instruments
+due on 17 February 2025,
+ISIN: XS2443921056
+due on 24 June 2026,
+ISIN: XS2194283672
+ISIN: XS2194283839
+due on 24 June 2032,
+0.625% Bond from 17 February 2022
+Dow Jones Euro STOXX TMI Technology Hardware & Equipment
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Infineon on the capital market
+170
+160
+150
+140
+130
+120
+On 3 October 2022, right at the beginning of the fiscal year, Infineon shares fell to their
+lowest price for the year of €23.09. Subsequently, the share price climbed relatively
+steadily, reaching its year high for the 2023 fiscal year of €40.00 on 31 July 2023. With
+an increase in value of 38 percent during the fiscal year, Infineon shares rose at a
+faster rate than the DAX, which was up 27 percent. The US benchmark indices, the
+Philadelphia Semiconductor Index (SOX) and Dow Jones US Semiconductor Index,
+rose even faster, mainly as a result of a surge in the price of some technology shares
+at the end of May due to a wave of interest in artificial intelligence. The SOX improved
+by 49 percent compared with the previous year and the Dow Jones US Semiconductor
+Index by 79 percent. With a closing price for Infineon shares of €31.36, its market capi-
+talization as of 30 September 2023 was €40,879 million, compared with €29,574 million
+at the end of the 2022 fiscal year when the share price was €22.71.
+Shareholder structure
+As of 30 September 2023, the company BlackRock Inc. held more than 5 percent of
+the Infineon shares issued. The share capital held by retail investors increased slightly
+to 9.50 percent at the end of the 2023 fiscal year, compared with 9.47 percent at the
+end of the 2022 fiscal year.
+180
+110
+C11 Shareholder structure as of the end of the 2023 fiscal year
+90
+10|2022 11|2022 12|2022 01|2023 02|2023 03|2023 04|2023 05|2023 06|2023 07|2023 08|2023 09|2023
+■Infineon
+DAX
+Infineon | Annual Report 2023
+■SOX
+Dow Jones US Semiconductor Index
+7.45% BlackRock Inc.
+9.50% Retail investors
+83.05% other
+100
+Shares: Frankfurt Stock Exchange (FSE)
+190
+30 September 2022 = 100
+Consolidated Financial Statements
+Further information
+5 Q = 59
+Share price performance
+The closing price for Infineon shares at the end of the 2023 fiscal year was €31.36.
+This was up 38 percent on the closing price of €22.71 at the end of the 2022 fiscal year.
+C10 Development of the Infineon share compared to Germany's DAX Index, the Philadelphia
+Semiconductor Index (SOX) and the Dow Jones US Semiconductor Index for the 2023
+fiscal year (daily closing prices)
+Infineon share price in €
+45.42
+43.15
+200
+40.88
+36.34
+34.07
+31.79
+MA
+29.52
+27.25
+24.98
+22.71
+20.44
+38.61
+7,045
+Management Board and Supervisory Board
+Combined Management Report
+2023 fiscal year
+Industrial Power
+Green
+1,790 2,205
+Automotive
+1.
+8,242
+6,516
+Disproportionately low increase in cost of goods sold;
+significant improvement in gross margin
+The decrease in the proportion of revenue generated in the Greater China region is
+primarily due to the decline in revenue from consumer applications such as PCs
+and smartphones.
+€ in millions, except percentages
+1 Greater China comprises Mainland China, Hong Kong and Taiwan.
+therein: USA
+Japan
+Americas
+100%
+14,218
+100%
+16,309
+11%
+1,564
+12%
+Total
+1,982
+Cost of goods sold
+1,822 2,046
+7,413
+(240 bp)
+56.9%
+54.5%
+10
+809
+8,087
+8,896
+in %
+4,070 3,798
+absolute
+2023
+Change
+Other Operating
+Segments
+Power & Sensor Connected
+Systems Secure Systems
+Gross margin
+2018
+Gross profit
+2022
+2023
+As percentage of revenue
+2022
+1,282
+13%
+15%
+therein: Germany
+24%
+3,399
+27%
+4,360
+Europe, Middle East, Africa
+2022
+2023
+€ in millions, except percentages
+2,017
+Slight shifts in the regional distribution of revenue
+C08 Revenue by segment
+Revenue by segment is disclosed below:
+In addition, there were positive exchange rate effects during the reporting period.
+A significant proportion of revenue in the 2023 fiscal year was earned in foreign
+currencies, primarily in US dollars. The average euro/US dollar exchange rate was
+around 1.08 in the 2022 fiscal year and 1.07 in the 2023 fiscal year.
+Revenue grew by €2,091 million or 15 percent in the 2023 fiscal year to €16,309 million
+(previous year: €14,218 million). Around half the growth in revenue was due to price
+increases and around half to higher volumes and product mix adjustments. Conti-
+nuing high levels of demand for semiconductors in the automotive and renewable
+energy sectors, in particular, had a positive impact here. At the same time, manu-
+facturing capacity is continually being expanded. This was also the case in the 2023
+fiscal year at our sites in Villach (Austria), Dresden (Germany) and Kulim (Malaysia).
+Production corridors released by contract manufacturers also contributed to the
+increase in revenue.
+High demand and positive price and exchange rate effects
+have resulted in an increase in revenue
+Review of results of operations
+5 Q = < 50 →
+Further information
+Consolidated Financial Statements
+€ in millions
+1,857
+12%
+11%
+2,374
+10%
+1,415
+10%
+1,706
+29%
+4,063
+25%
+4,124
+1,594
+therein: Mainland China, Hong Kong
+5,204
+32%
+5,275
+Greater China¹
+16%
+2,343
+16%
+2,594
+Asia-Pacific (excluding Japan, Greater China)
+37%
+5,545
+2,765
+27
+(330)
+395
+cash equivalents
+Cash-relevant change in cash and
+67
+4
+(6)
+(2)
+from discontinued operations
+Net change in cash and cash equivalents
+30
+568
+725
+(1,869)
+Cash flows from financing activities
+7
+177
+(2,441)
+(2,264)
+Cash flows from investing activities
+(1)
+(24)
+3,986
+3,962
+from continuing operations
+Cash flows from operating activities
+(1,301)
++++
+Currency effects on cash and cash equivalents
+Change in cash and cash equivalents
+(13)
+30 Septem-
+ber 2023
+Change
+Financial investments
+Gross cash position
+Cash and cash equivalents
+€ in millions
+Both figures should not be seen as a replacement or as superior performance indicators,
+but rather as useful information in addition to the disclosure of the cash flow reported
+in the Consolidated Statement of Cash Flows, and as a supplementary disclosure to
+other liquidity performance indicators and other performance indicators determined
+in accordance with IFRS. Free Cash Flow and adjusted Free Cash Flow are derived as
+follows from the Consolidated Statement of Cash Flows:
+5 Q = < 56 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+2023 fiscal year
+Review of liquidity
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Since the 2023 fiscal year, adjusted Free Cash Flow has become part of Infineon's
+target operating model (see the chapter “Group strategy”, p. 28) and is defined
+as Free Cash Flow adjusted for cash outflows for investments in large frontend build-
+ings, for cash inflows for related investment subsidies and for major M&A transactions
+(acquisitions and disposals) adjusted for cash acquired or disposed of.
+Infineon reports the Free Cash Flow figure, defined as cash flows from operating
+activities and cash flows from investing activities, both from continuing operations,
+after adjusting for cash flows from the purchase and sale of financial investments.
+Free Cash Flow serves as an additional performance indicator since Infineon holds
+part of its liquidity in the form of financial investments. This does not mean that
+the Free Cash Flow calculated in this way is available to cover other disbursements,
+because dividends, debt-servicing obligations and other fixed disbursements have
+not been deducted.
+at 10.0 percent of revenue
+Decrease in Free Cash Flow; adjusted Free Cash Flow
+More information about financial debt is provided in note 16 to the Consolidated
+Financial Statements. p. 123 f.
+Cash outflows from financing activities decreased by €568 million compared with the
+previous fiscal year. The main effects for this decline are the reduction of €640 million
+in net repayment of financial debt which was offset by a €66 million higher divi-
+dend payment. The net cash outflows from financing activities thus amounted to
+€1,301 million in the 2023 fiscal year.
+improvement. This was offset by the €686 million increase in payments for property,
+plant and equipment. Further information about investments made in the 2023 fiscal
+year can be found in the chapter "Review of financial condition". ☐ p. 53 f.
+Cash outflows from investing activities decreased by €177 million compared with
+the previous fiscal year to €2,264 million. The improvement resulted mainly from
+the €643 million increase in net cash inflow from the purchase and sale of financial
+investments. Cash inflows totaling €200 million from the sale of the HiRel DC/DC
+converter business and the sale of the Temecula site (USA) also contributed to the
+Cash flows from operating activities from continuing operations decreased by
+€24 million to €3,962 million. Set against a significant improvement in profit from
+continuing operations before income taxes of €1,198 million were negative effects,
+principally in relation to the change in other assets and other liabilities and the
+change in working capital.
++++
+693
+(311)
+382
+(32)
+19
+absolute
+30 Septem-
+2022
+€ in millions
+22
+509
+(2,279)
+(1,770)
+(27)
+(382)
+(1,438)
+(1,820)
+1,500
+1,527
+26,912
+28,439
+(5,669)
+Assets classified as held for sale
+Total current liabilities
+Plus/minus:
+Assets
+40
+40
+920
+2,317
+3,237
+Operating profit from continuing
+operations after tax ①
+(46)
+(245)
+(537)
+(782)
+Cash and cash equivalents
+Financial investments
+(5,588)
+(81)
+(1)
+Change
+in %
+Cash flow
+Review of liquidity
+Review of liquidity
+5 Q = 55 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+2023 fiscal year
+Management Board and Supervisory Board
+1 The financial result for the 2023 and 2022 fiscal years amounted to negative €54 million and negative €161 million, respectively,
+and included negative €98 million and negative €131 million, respectively, of net interest result.
+Infineon | Annual Report 2023
+400 bp
+12.6%
+16.6%
+ROCE 1/②
+6
+1,151
+18,359
+19,510
+Capital employed ②
+59
+(56)
+(422)
+752
+330
+Short-term financial debt and
+current maturities of long-term financial debt
+Liabilities classified as held for sale
+2023
+ber 2022
+absolute
+in %
+Furthermore, to the extent permitted by law, all financing activities and credit lines
+worldwide are arranged, structured and managed, either directly or indirectly, by the
+Group Finance & Treasury department in accordance with our treasury principles.
+external financing requirements. Liquidity accumulated at Group level is invested
+centrally by the Group Finance & Treasury department based on a conservative
+investment strategy, in which preserving capital is prioritized over maximizing returns.
+Group Finance & Treasury is also responsible for managing currency and interest rate
+risks and hedging against commodity price risks. For hedging purposes, we employ
+the following derivative financial instruments in our current operations: forward foreign
+currency contracts to reduce the impact of exchange rate exposure (to the extent
+foreign currency cash flows are not offset within the Group) and commodity swaps to
+reduce price risks for expected purchases of gold. Derivative financial instruments
+are not used for trading or speculation purposes. To hedge against most of the foreign
+currency risk relating to the purchase price obligation arising from the acquisition
+of GaN Systems, Infineon concluded a contingent (transaction-dependent) euro/US
+dollar forward foreign currency contract (a deal contingent forward) and a transaction-
+dependent euro/US dollar foreign currency option contract (a deal contingent option).
+Further information regarding derivative financial instruments and the management
+of financial risks is provided in notes 27, p. 142 ff., and 28, p. 150 ff., to the Consoli-
+dated Financial Statements.
+In the context of centralized liquidity management and, to the extent that this is per-
+mitted by law and economically justifiable, cash pooling structures are in place to
+ensure the best possible allocation of liquid funds within the Group and reduce its
+In accordance with our treasury principles, we adopt a highly centralized approach.
+Group Finance & Treasury is the department responsible for all major tasks and
+processes worldwide relating to financing and treasury matters.
+The abovementioned treasury principles cover all liquidity and financing topics, such
+as banking policy and strategy, the execution of financing agreements, global liquidity
+and investment management, the management of currency, interest rate and some
+commodity price risks, and the handling of external and intragroup cash flows.
+As a general rule, debt should only constitute a modest proportion of the financing mix
+to ensure that sufficient headroom is available at all times. The key objective is to
+maintain an investment grade rating. In February 2023, S&P Global Ratings confirmed
+Infineon's BBB investment grade rating and changed the outlook from "stable" to
+"positive". For further information on the nature, maturity, currency and interest rate
+structure of Infineon's gross financial debt, see note 16 to the Consolidated Financial
+Statements. p. 123 f.
+Infineon treasury's stated objective is to ensure financial flexibility based on a solid
+capital structure. Its primary goal is to ensure that sufficient funds are available to
+finance operating activities and planned investments throughout all phases of the
+business cycle. We aim to achieve a gross liquidity level of €1 billion, plus at least
+10 percent of revenue.
+Principles and structure of Infineon's treasury
+Review of liquidity
+5 Q = 57 →
+Further information
+Consolidated Financial Statements
+A Treasury Committee is in place to deliberate on current financial market devel-
+opments and their potential impact on Infineon and to agree upon key liquidity,
+hedging and financing topics. The Committee, which meets on a quarterly basis,
+comprises the CFO and representatives from the Finance & Treasury, Accounting,
+Controlling and Tax departments.
+Combined Management Report
+2023 fiscal year
+Infineon | Annual Report 2023
+Infineon is party to two financing agreements that contain a number of standard
+covenants, including a debt coverage ratio that provides for a certain relationship
+between the size of debt (adjusted) and earnings (adjusted) (see note 21 to the
+Consolidated Financial Statements, p. 132).
+Taking into account the financial resources available to Infineon - including internal
+liquidity on hand, net cash that will be generated, and currently available credit facili-
+ties amounting to €69 million (previous year: €80 million, see note 16 to the Consoli-
+dated Financial Statements, ☐ p. 123) - Infineon assumes that it will be able to cover
+those capital requirements for the 2024 fiscal year that are currently expected. These
+include the repayment of financial debt on its due date. Forecast capital requirements
+also include other financial obligations, such as orders already placed for initiated
+or planned investments in property, plant and equipment (see note 23 to the Consoli-
+dated Financial Statements, p. 135 f.). Investments planned for the 2024 fiscal year
+are described in the chapter "Outlook”. p. 62 ff.
+The following table shows the gross cash position and the net cash position. Since
+some liquid funds are held in the form of financial investments, which for IFRS pur-
+poses are not classified as cash and cash equivalents, Infineon reports on its gross
+and net cash positions in order to provide investors with a better understanding of
+its overall liquidity situation. The gross and net cash positions are determined as
+follows from the Consolidated Statement of Financial Position:
+Gross cash position and net cash position
+10.0%
+1,638
+480
+1 From continuing operations.
+Percentage of revenue
+Adjusted Free Cash Flow
+related investment subsidies
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Infineon on the capital market
+IFX GY (Xetra trading system), IFNNY US
+IFX-XE, IFNNY-PK
+IFX (share), IFNNY (ADS)
+623100
+DE0006231004
+2,171,026 (as of 30 September 2023),
+3,689,901 (as of 30 September 2022)
+€2,611,842,274 (as of 30 September 2023),
+€2,611,842,274 (as of 30 September 2022)
+1,305,921,137 (as of 30 September 2023),
+1,305,921,137 (as of 30 September 2022)
+Ordinary registered shares in the form of shares or
+American Depositary Shares (ADS) with a notional value
+of €2 each (ADS: shares = 1:1)
+Index membership (selected)
+Daily average ADS traded
+Market capitalization²
+Trading in the USA
+Daily average shares traded on Xetra
+Market capitalization²
+Listings
+Nasdaq IR Insight
+Bloomberg
+Ticker symbol
+WKN
+ISIN
+Own shares
+Shares issued¹
+Share capital
+Share types
+Basic information on shares
+Infineon on the capital market
+Further information
+Consolidated Financial Statements
+Cash outflows for investments in large front-end
+buildings after deduction of cash inflows for
+Plus:
+(30)
+(490)
+Long-term financial debt
+in %
+absolute
+2022
+2023
+Cash flows from operating activities'
+€ in millions
+(56)
+(422)
+752
+330
+of long-term financial debt
+Change
+Short-term financial debt and current portion
+Minus:
+(3)
+(127)
+3,717
+3,590
+(22)
+(509)
+2,279
+1,770
+27
+382
+1,438
+1,820
+4,403
+(31)
+4,910
+(10)
+1,648
+1,158
+Free Cash Flow
+(643)
+103
+(540)
+financial investments, net
+Purchases of (proceeds from sales of)
+41
+802
+(1,945)
+(1,143)
+Net cash position
+7
+177
+(2,441)
+(2,264)
+Cash flows from investing activities¹
+(16)
+(929)
+5,662
+4,733
+Gross financial debt
+(1)
+(24)
+3,986
+3,962
+(507)
+(12)
+6
+1,103
+Improvement in ROCE due to higher operating profit
+The equity ratio as of 30 September 2023, based on total assets of €28,439 million,
+was 59.9 percent (30 September 2022: 55.5 percent).
+Equity increased by €2,100 million to €17,044 million as of 30 September 2023. The
+main contributory factor was the profit for the period of €3,137 million. Exchange rate
+effects recognized in other comprehensive income of €718 million and the dividend
+of €417 million paid out for the 2022 fiscal year had an opposite effect.
+Equity up mainly due to profit for the period
+The increase in trade payables of €505 million to €2,765 million resulted mainly from
+the increase in investments and in the business volume.
+ROCE for the 2023 and 2022 fiscal years is calculated as follows:
+Increase in trade payables
+Review of financial condition
+5 Q = < 54 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+2023 fiscal year
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Euro
+56%
+44%
+US dollar
+4,733
+2023
+6
+1,527
+26,912
+28,439
+Total liabilities and equity
+In the 2023 fiscal year, operating profit from continuing operations after tax increased
+significantly by €920 million to €3,237 million (previous year: €2,317 million) and
+therefore at a faster rate than capital employed. Adjustments made to volumes, prices
+and the product mix, as well as exchange rate effects, contributed to the increase in
+operating profit (see the chapter "Review of results of operations”, □ p. 49 ff.). Capital
+employed rose by €1,151 million to €19,510 million as of 30 September 2023.
+60%
+Consequently, Return on Capital Employed (ROCE) increased from 12.6 percent to
+16.6 percent.
+Plus/minus:
+39
+27
+Share of profit (loss) of associates and joint
+ventures accounted for using the equity method
+Income tax
++++
+74
+(30)
+44
+(25)
+(33)
+131
+98
+107
+(161)
+(54)
+39
+2,845
+3,948
+in %
+absolute
+2022
+2023
+Change
+Financial result excluding interest result¹
+Less interest result
+Financial result
+€ in millions, except percentage
+Operating profit
+40%
+66
+2,100
+Other intangible assets decreased by €506 million to €2,977 million as of
+30 September 2023. Amortization of €531 million significantly exceeded additions
+of €255 million. Currency effects of €208 million also contributed to the decline.
+Decrease in other intangible assets
+Goodwill decreased by €536 million to €6,547 million as of 30 September 2023.
+The decline was almost exclusively due to currency effects, in particular the weaker
+US dollar compared to the euro as of the reporting date.
+Currency-related decrease in goodwill
+Increase in business volume results in a rise in inventories
+Inventories, and in particular work in progress, rose by €893 million to €3,974 million
+as of 30 September 2023. This increase is mainly attributable to our Automotive
+segment, where delivery reliability is a key factor in winning and retaining orders.
+6
+1,527
+26,912
+28,439
+Total assets
+9
+199
+2,116
+2,315
+Remaining current and non-current assets
+(15)
+(506)
+3,483
+Other intangible assets
+(8)
+(536)
+7,083
+6,547
+Goodwill
+14
+Repayment of financial debt
+Financial debt decreased by €929 million to €4,733 million, mainly as a result of the
+repayment of a €750 million bond. Exchange rate effects of €182 million arising
+from financial debt denominated in US dollars also contributed to the reduction in
+financial debt.
+2,977
+LIABILITIES AND EQUITY
+14,944
+More detailed information on financial debt is provided in note 16 to the Consolidated
+Financial Statements. ☐ p. 123 f.
+17,044
+Equity
+5,662
+2022
+(120)
+3,749
+3,629
+Remaining current and non-current liabilities
+(10)
+(29)
+297
+(3)
+Pensions and similar commitments
+268
+505
+22
+C09 Financial debt by currency
+4,733
+Financial debt
+(929)
+(16)
+€ in millions
+Trade payables
+5,662
+2,260
+5 Q = < 64
+Green Industrial Power segment should remain more or less stable compared with
+the 2023 fiscal year. The Power & Sensor Systems and Connected Secure Systems
+segments are each forecast to see a decline in revenue in the high single-digit per-
+centage range, due to weak demand for semiconductors for computers and consumer
+electronics as well as relatively high inventory levels still held by customers.
+In the following section, we describe risks that could have a significant or material
+adverse impact on Infineon's Segment Result and/or its business objectives, reputation
+or compliance. We divide these risks into four main risk categories: “Strategic risks",
+"Operational risks”, “Financial risks" and "Legal and compliance risks". Within these
+main risk categories are risk sub-categories. The order in which the various risk
+sub-categories are presented reflects their materiality to Infineon. This means that
+the most material risk sub-category is mentioned at the beginning, and the risk
+sub-categories are mentioned thereafter in descending order of materiality. The
+materiality of each risk is determined on the basis of the total risk score for impact in
+years 1 and 2. The risk score of an individual risk for impact in years 1 and 2 is calcu-
+lated in each case by multiplying the likelihood of occurrence (on a scale of 1-5) by
+the degree of impact of the risk (on a scale of 1-5). Unless otherwise stated, the risks
+described within the risk sub-categories apply across the divisions.
+Segment Result Margin of around 24 percent of revenue expected
+If the middle of the range for the revenue forecast is reached, the Segment Result
+Margin is expected to be around 24 percent in the 2024 fiscal year.
+Free Cash Flow from continuing operations
+For the 2024 fiscal year, Infineon is forecasting Free Cash Flow of around €0.4 billion.
+This figure includes net cash outflows for investments in the expansion of frontend
+manufacturing facilities in Dresden (Germany) and Kulim (Malaysia) and net cash
+outflows for the acquisition of GaN Systems.
+Further information
+Infineon | Annual Report 2023
+The additional classification in “A”, “B” or “C” in brackets behind the respective title
+of the risk sub-category results from the described materiality for Infineon and
+enables a ranking of the risk sub-categories across the main risk categories. The risk
+sub-categories with the bracketed addition "A" represent the first quartile of materiality
+(highest risk sub-categories), “B” describes the second and third quartiles and “C”
+the fourth quartile. The classification in the quartiles represents a change compared
+to the classification in the previous year (high, medium, low).
+> Discussion of new risk topics with the managers responsible and with the Risk
+Committee
+Both the general ICS and ERM and the ICS with respect to the financial reporting
+process are continuously being developed and expanded to ensure compliance with
+internal and external requirements. Improvements made to these systems contribute
+to the ongoing monitoring of the relevant risk areas, including the responsible
+organizational units.
+In all material respects, on the basis of the ICS and ERM activities conducted in the
+2023 fiscal year, no factors came to our attention that would give rise to doubt as to
+the appropriateness and effectiveness of the ICS and ERM system.
+On the basis of the findings of reviews by Internal Audit and external reviews and
+audits, we make continual improvements to our ICS and ERM.
+> Timeliness and regular monitoring of ICS and ERM mitigation activities
+> Timeliness of regular risk inventory, risk reporting processes and testing of
+the controls
+> Availability of clear Group-wide guidelines about the ICS and ERM processes
+Consolidated Financial Statements
+> Appropriate organizational coverage of the ICS and ERM processes of Infineon
+In the semi-annual meetings of the Risk Committee, the Group-wide risk and
+opportunity situation is evaluated, and the results of the internal control process are
+discussed. In addition, an overall statement on the appropriateness and effectiveness
+of our general ICS and ERM is produced once a year. This overall statement is based
+on reviews conducted by Internal Audit, voluntary external reviews and audits, and
+self-assessments. The evaluation here was conducted inter alia on the basis of the
+following criteria:
+Further information
+Significant risks
+Combined Management Report
+Report on outlook, risk and opportunity
+Outlook
+Explanatory comments on the outlook
+for the 2024 fiscal year
+Infineon Annual Report 2023
+According to the original forecast in November 2022, Free Cash Flow was expected to
+reach around €0.8 billion. As a result of the ongoing adjustments to the revenue and
+earnings forecasts, adjustments were also made on a regular basis to the expected
+figure for Free Cash Flow. The final forecast for Free Cash Flow of around €1.2 billion
+was made in August 2023. The actual figure for Free Cash Flow in the 2023 fiscal year
+was €1,158 million. This was in line with the most recent forecast and was significantly
+higher than the figure originally forecast of €0.8 billion.
+As a result of Infineon's positive earnings performance, the actual figure for Return
+on Capital Employed (ROCE) in the 2023 fiscal year was 16.6 percent, exceeding the
+forecast made in November 2022 of “around 12 percent” respectively in March 2023
+of "around 15 percent".
+Consolidated Financial Statements
+The actual figure for investments in the 2023 fiscal year of €2,994 million was in line
+with the forecast figure of €3.0 billion.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Report on outlook, risk and opportunity
+Outlook
+Consolidated Financial Statements
+Further information
+Management Board and Supervisory Board
+5 Q = 63
+As a globally operating organization, Infineon generates revenue not only in euros,
+but also in foreign currencies, predominantly in US dollars. It also incurs expenses in
+US dollars and, to some extent, in currencies correlated with the US dollar, such as
+the Singapore dollar, the Malaysian ringgit and the Chinese renminbi. The impact of
+non-euro-denominated revenue and expenses does not always balance out. For this
+reason, fluctuations in exchange rates, particularly between the euro and the US dollar,
+influence the amounts reported for revenue and earnings. A stronger US dollar against
+the euro has a positive effect, whereas a weaker US dollar against the euro has an
+adverse effect on revenue and earnings. Excluding the effect of currency hedging
+instruments, the impact of a deviation of 1 US cent in the actual exchange rate of the
+US dollar against the euro compared to the forecast rate would amount to a change
+in Segment Result of around €10 million per quarter or around €40 million per fiscal
+year compared to the forecast value. These figures are calculated on the assumption
+that the exchange rates of currencies – in which costs arise for Infineon - change in
+line with the euro/US dollar exchange rate. In terms of revenue, the impact of exchange
+rates is limited primarily to the euro/US dollar rate, where a deviation of 1 US cent
+in the actual exchange rate compared to the forecast rate would have an impact on
+revenue of around €25 million per quarter or around €100 million
+fiscal year.
+per
+Planning for the 2024 fiscal year is based on an assumed exchange rate of US$1.05
+to the euro.
+External growth prospects for the global economy
+and the semiconductor market
+In the course of the 2023 fiscal year, the global economy continued to be affected
+by the consequences of the Russian invasion of Ukraine and high inflation. Due to
+significant rises in interest rates and difficult financing conditions as a result, economic
+activity slowed down considerably compared with the previous year. However, most
+countries have so far avoided going into recession. According to the forecasts of the
+International Monetary Fund (IMF), global economic growth in the 2023 calendar year
+will be around 2.5 percent, a somewhat higher figure than the 2.1 percent forecast
+in autumn 2022. Growth of 2.4 percent is forecast for the 2024 calendar year ( R01).
+This means that current growth rates for the global economy are remaining more
+or less stable, although they are below their historical average. Risks of a further
+weakening in the global economy also remain.
+Market analysts at Omdia expect Infineon's reference market (i.e., the semiconductor
+market excluding DRAM and NAND flash memory chips and microprocessors) to see
+a slight decline of 1 percent in revenue in US dollar terms in the 2023 calendar year
+(R03). Demand for semiconductors for automotive and industrial applications is
+again higher than average, whereas revenue from semiconductors in the consumer
+market segment and in the area of cellular infrastructure will decrease significantly.
+The experts at Omdia expect the Infineon reference market to grow by 6 percent in the
+2024 calendar year (R03). The long-term trends decarbonization and digitalization
+are continuing to drive demand for semiconductors, especially in the automotive
+and industrial sectors. In the areas of consumer electronic goods and cellular infra-
+structure, the forecast is for a noticeable recovery in revenue in the 2024 calendar
+year following the decline in revenue in the 2023 calendar year.
+Outlook for the 2024 fiscal year
+The following outlook is based on current business developments and internal
+forecasts.
+Revenue of €17 billion plus or minus €500 million expected
+Based on the forecasts for the growth of the global economy and the semiconductor
+market segments relevant for Infineon described above and an assumed exchange
+rate of US$1.05 to the euro, Infineon forecasts that Group revenue will grow in the 2024
+fiscal year to €17 billion, plus or minus €500 million. This is equivalent to a 4 percent
+increase in revenue compared with the prior year. Revenue growth in the Automotive
+segment is expected to be in the low double-digit percentage range. Revenue in the
+Assumed euro/US dollar exchange rate
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+The Supervisory Board's Investment, Finance and Audit Committee monitors the
+appropriateness and effectiveness of both systems (ICS and ERM).
+Infineon | Annual Report 2023
+As part of the group audit, the external Group auditor also examines the early risk
+detection system pursuant to section 91, paragraph 2 of the German Stock Corporation
+Act (AktG) to ascertain its suitability to detect risks at an early stage that could pose
+a threat to Infineon's going-concern status in accordance with IDW Auditing Standard
+340 and reports thereon annually to the Chief Financial Officer (CFO) and to the
+Investment, Finance and Audit Committee of the Supervisory Board.
+Compliance with the ICS and ERM approaches is monitored by the corporate function
+responsible for risk management and ICS using procedures incorporated into business
+processes. Group Internal Audit also performs tests for compliance with certain legal
+requirements and Infineon guidelines and, where appropriate, rules relating to the
+ICS and ERM and recommends corrective measures.
+Risk and Opportunity Managers are designated at appropriate hierarchy levels to
+manage and monitor identified risks and opportunities according to their relevance.
+They are responsible for formally determining a set of appropriate risk and opportunity
+management strategies (in the case of risks: avoidance, mitigation, control, transfer
+or acceptance). Working closely with corporate functions and individual managers
+responsible for measures, the Risk and Opportunity Managers are also responsible
+for defining and monitoring the measures aimed at implementing the management/
+control strategy. The active and specific management and monitoring of risks and
+opportunities are critical to the success of our system.
+All risks and opportunities reported for Infineon are reviewed for possible cumulative
+effects and analyzed using an Infineon-specific categorization model that also takes
+non-financial and sustainability-related risks into account. Interdisciplinary work-
+shops held at division, corporate and regional levels support our risk and opportunity
+analysis and enhance our risk and opportunity management culture. Important
+information relevant for Infineon's ICS and ERM is available to all employees via
+our intranet system, including access to our guidelines containing job descriptions
+for all functions involved in the process as well as all the information required for
+reporting purposes.
+5 Q = < 67 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Management Board and Supervisory Board
+Compliance Management System
+Infineon | Annual Report 2023
+5
+Very high risk
+5
+4 60-90% Probable
+3 40-60% Possible
+2 10-40% Unlikely
+Likelihood of occurrence
+In conjunction with the adjustments to the revenue forecast, the expected Segment
+Result Margin was also adjusted upwards in the course of the fiscal year. Originally,
+a Segment Result Margin of around 24 percent was forecast for the 2023 fiscal year.
+The most recent forecast was a figure of around 27 percent. The actual figure was
+27.0 percent, so the forecast was met.
+4 €200-400 million Significant
+>€400 million Major
+>90% Virtually certain
+Management Board and Supervisory Board
+We have implemented a Group-wide Compliance Management System (CMS) to
+manage compliance-related risks in a systematic, comprehensive and sustainable
+manner. We are continuously enhancing the key elements of our CMS to prevent, detect
+and respond to compliance-related incidents. The Corporate Compliance Officer
+reports to the Chief Financial Officer and, on a quarterly basis, to the Management
+Board and the Investment, Finance and Audit Committee of the Supervisory Board.
+As part of the CMS, a formal annual assessment of our risks is conducted with
+a particular emphasis on corruption and antitrust laws. Any necessary measures
+derived from this assessment are summarized in Infineon's compliance program.
+Furthermore, all legal entities, divisions and relevant corporate functions confirm in
+a Representation Letter that all business transactions, all assets and liabilities, and
+all income and expense items have been duly recognized in the financial statements.
+At the end of the annual cycle, the main legal entities review and confirm the appro-
+priateness and effectiveness of the ICS with respect to the financial reporting process.
+The Management Board and the Investment, Finance and Audit Committee of the
+Supervisory Board are regularly informed about any significant control deficiencies
+identified in the ICS with respect to the financial reporting process and about the
+effectiveness of the internal controls in place.
+We systematically assess the appropriateness and effectiveness of the ICS with
+respect to the financial reporting process. An annual risk analysis is initially performed,
+and the defined controls are revised as and when required. The assessment involves
+identifying and updating significant risks relating to accounting and financial reporting
+in the relevant legal entities and corporate functions. The controls defined for identi-
+fying risks are documented in accordance with Group-wide guidelines. Regular random
+tests are performed to assess the appropriateness and effectiveness of these controls.
+The tests constitute the basis for assessing the appropriateness of the design and
+effectiveness of the controls. The results are documented and reported in a global
+IT system. Any deficiencies identified are remedied, with due consideration given to
+their potential impact.
+Assessment of appropriateness and effectiveness
+> processes are in place for the segregation of duties and for the four-eye principle
+in the context of preparing financial statements, as well as for authorization and
+access rules for relevant IT accounting systems.
+> processes and controls are in place to explicitly guarantee the completeness and
+correctness of the financial reporting in the Separate and Consolidated Financial
+Statements; and
+> issues relevant for financial reporting and disclosures in connection with agreements
+entered into are recognized and appropriately presented;
+> intragroup transactions are fully accounted for and properly eliminated;
+> Group-wide financial reporting, measurement and accounting guidelines are
+continually updated and adhered to;
+The system monitors compliance with policies and procedures using preventive
+and detective controls. Among other things, we regularly check that
+In structuring its CMS, Infineon has for years complied with IDW Auditing Standard
+980 and has engaged an external auditing firm to confirm the appropriateness,
+implementation and effectiveness of its CMS globally in the areas of "antitrust law"
+and "corruption prevention" (last time in the 2018/2019 fiscal year). Since that time,
+adherence to the CMS in the respective legal entities has been monitored by regular
+internal audits.
+-
+The overriding objective of our “Internal Control System with respect to the financial
+reporting process" as part of the general ICS and ERM described above is to monitor
+and ensure the correctness, appropriateness and effectiveness of our accounting and
+financial reporting. The ICS with respect to the financial reporting process, aims to
+minimize the risk of misstatement in Group accounting and external reporting and to
+provide reasonable assurance that the Consolidated Financial Statements comply
+with all relevant regulations. For this to be the case, Group-wide compliance with
+legal and internal regulations must be ensured. Clear responsibilities are assigned to
+each of the processes.
+Internal Control System with respect to the
+financial reporting process
+Report on outlook, risk and opportunity
+Risk and opportunity report
+5 Q = 68
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+The ICS with respect to the financial reporting process is also based on the framework
+developed by the COSO "Internal Control – Integrated Framework" (2013) and is
+part of the accounting process in all relevant legal entities and corporate functions.
+Revenue for the 2023 fiscal year was originally forecast in November 2022 to be
+€15.5 billion, plus or minus €500 million. In light of Infineon's positive business
+performance, this outlook was raised incrementally in the following quarters to an
+expected revenue of around €16.2 billion. The actual amount of revenue generated in
+the 2023 fiscal year was €16,309 million. This figure was within the projected range
+of the final forecast on 3 August 2023 and significantly above the original forecast in
+November 2022. The good level of demand and price increases both had a positive
+impact on revenue.
+Consolidated Financial Statements
+1 The forecast presented here corresponds to the forecast last finalized in the second and third quarters of the 2023 fiscal year.
+332
+351
+2019
+2020
+2021
+2022
+2023
+Interested parties may participate in telephone conferences via a webcast broadcast in the Investor Relations section of the
+Infineon website.
+www.infineon.com/investor
+1 Proposal to the Annual General Meeting to be held on 23 February 2024.
+Retail investors can contact us by email (investor.relations@infineon.com)
+and by telephone (+49 89 234-26655).
+Management Board and Supervisory Board
+Combined Management Report
+Overall statement on Infineon's financial condition
+3 €100-200 million Moderate
+Further information
+Overall statement on Infineon's financial condition
+Geopolitical and macroeconomic disruptions once again led to a volatile market
+environment in the past fiscal year. Our target markets developed correspondingly
+differently.
+On a positive note, structural demand for many of our semiconductors for electro-
+mobility applications remains unbroken. We saw a similarly healthy demand picture
+for renewable energy applications as well as for power and charging infrastructure,
+supported by government decarbonization initiatives. By contrast, demand for end
+consumer applications such as PCs and smartphones declined following the corona-
+virus pandemic. Consumers and companies were reluctant to spend in a persistently
+inflationary and uncertain environment.
+Despite the challenging conditions, Infineon was very successful in the 2023 fiscal year.
+This is also reflected in our current figures, see the chapters "Group performance",
+p. 42 f., "Review of results of operations”, ☐ p. 49 ff., "Review of financial condition”,
+p. 53 f., and "Review of liquidity", p. 55 ff..
+Infineon | Annual Report 2023
+Infineon | Annual Report 2023
+2018
+2016
+ROCE
+Management Board and Supervisory Board
+Combined Management Report
+Infineon on the capital market
+Consolidated Financial Statements
+Further information
+5 Q = < 60 →
+Dividend
+Our dividend policy is aimed at letting shareholders adequately participate in Infineon's
+economic development and, in general, at paying out at least an unchanged dividend
+even in the event of stagnating or declining earnings. The dividend payout for the
+2021 fiscal year was increased by €0.05 per share compared with the previous year.
+The dividend payout for the 2022 fiscal year was then increased again by €0.05, to
+€0.32 per share. It is now planned to put forward a proposal at the Annual General
+Meeting in February 2024 for a further increase in the dividend of €0.03. The reason
+for this is Infineon's even better business performance in the 2023 fiscal year compared
+with the previous year while at the same time retaining the financial headroom of
+the Company for profitable growth. If the planned proposal is approved at the Annual
+General Meeting, the dividend for the 2023 fiscal year would rise to €0.35 per share.
+The number of shares issued remained unchanged as of 30 September 2023 at
+1,305,921,137. This figure now includes 2,171,026 shares owned by the Company
+that are not entitled to a dividend. The total amount to be distributed to shareholders
+is therefore anticipated to rise to €456 million, compared with €417 million one
+year earlier.
+C12 Dividend per share for the 2014 to 2023 fiscal years
+2017
+in € cents
+27
+27
+25
+22
+22
+20
+18
+2014
+2015
+27
+Management Board and Supervisory Board
+Combined Management Report
+Report on outlook, risk and opportunity
+Outlook
+Consolidated Financial Statements
+16.6%
+Outlook for
+FY 2024
+Around 24%
+(at a revenue level
+of around €17 billion)
+Around €0.4 billion
+Around 13%
+Revenue increase
+Selected supplementary
+performance indicators
+Revenue respectively
+14,218
+Revenue increase
+Around 15%
+16,309
+to around €16.2 billion
+compared to
+to €17 billion plus
+or minus €500 million
+previous year
+Investments
+2,994
+2,310
+Around €3.0 billion
+Around €3.3 billion
+change in revenue
+12.6%
+1,158
+Around €1.2 billion
+Further information
+5 α = < 62 →
+Report on outlook, risk and opportunity
+Outlook
+Actual and target values for performance indicators
+The following table and subsequent comments compare the actual and forecast
+values of Infineon's key performance indicators for the 2023 fiscal year (FY) and show
+the outlook for the 2024 fiscal year.
+€ in millions,
+Outlook for
+FY 20231
+Actuals
+FY 2023
+Actuals
+except percentages
+FY 2022
+Principal performance
+indicators
+Segment Result Margin
+23.8%
+Around 27%
+(at a revenue level
+27.0%
+of around €16.2 billion
+Free Cash Flow from
+continuing operations
+ROCE
+1,648
+Comparison of original outlook with actual figures
+for the 2023 fiscal year
+2 €40-100 million Minor
+For the 2024 fiscal year, Return on Capital Employed (ROCE) is forecast to reach
+around 13 percent.
+<€40 million Marginal
+Risk and opportunity report
+Risk policy: Basis of our risk and
+opportunity management
+Effective risk and opportunity management is an important element of our business
+activities and supports the implementation of our strategy to achieve our strategic
+goals. Infineon's risk and opportunity situation continues to be characterized by the
+dynamic market environment in the semiconductor industry, a substantial need for
+capital investment to achieve and sustain its market position, extraordinarily rapid
+technological change, decarbonization and digitalization. Competition to gain an
+innovative edge also occurs at the legal level, as evidenced, for example, by patents.
+Against this background, Infineon's risk policy is aimed at quickly realizing the
+opportunities that arise in a way that increases its enterprise value. It also focuses
+on identifying risks early and actively mitigating them - particularly those risks that
+might pose a threat to Infineon's going-concern status - by adopting appropriate
+countermeasures. Risk management at Infineon is therefore closely linked to corporate
+planning and the implementation of our strategy. The ultimate responsibility for
+risk management lies with the Infineon Management Board.
+Coordinated risk management and control system elements are in place that enable
+us to implement our risk policy. In addition to the Risk and Opportunity Management
+System (ERM) and the Internal Control System (ICS) described below, these elements
+include, in particular, the related forecasting, management and internal reporting
+processes as well as our Compliance Management System (CMS).
+ERM and ICS systems
+The new IDW Auditing Standard 340 on the audit of the early risk detection system
+came into force on 1 January 2021. We therefore adapted our Risk and Opportunity
+Management System in the 2022 fiscal year to the methodology of the new standard.
+Significant changes involved implementing a risk-bearing capacity concept based on
+shareholders' equity and improving risk aggregation by using Monte Carlo simulations.
+Furthermore, in addition to categorizing risks (classifying risk events into various
+thematic blocks) and setting threshold levels for risk tolerance, the review period for
+risk reporting (with regard to the degree of impact of the risks and opportunities) was
+amended. The review period is divided into three time segments: the impact in the
+current fiscal year, in the coming fiscal year, and a trend statement for years three to
+five. This adjustment of the risk assessment now enables us to calculate the risk-bearing
+capacity for the individual fiscal years.
+Infineon's centralized ERM system is based on a Group-wide, management-oriented
+ERM approach, which aims to cover all relevant risks and opportunities. This approach
+is based on the “Enterprise Risk Management - Integrating with Strategy and Per-
+formance” (2017) framework developed by the Committee of Sponsoring Organi-
+zations of the Treadway Commission (COSO). The objective of the system is the early
+identification, assessment and management of risks and opportunities that could
+have a significant influence on Infineon's ability to achieve its strategic, operational,
+financial, legal and compliance targets. Infineon's Internal Control System is also
+based on a framework developed by COSO ("Internal Control - Integrated Framework"
+(2013)). This framework describes the various elements in a control system (the control
+environment, risk assessment, control activities, information and communication,
+and monitoring) and sets out the basis for the evaluation of the appropriateness and
+effectiveness of the ICS.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+5 Q = < 66
+The responsibility for processes and systems relating to the ICS and the ERM rests
+with the Risk Management and ICS function within the Group Finance department
+as well as with designated Risk and Control Officers working at divisional, corporate
+function and regional levels. Responsibility for the identification, measurement,
+management and reporting of risks and opportunities, as well as for their mitigation
+and control, lies with the management of the organizational unit concerned.
+In organizational terms, implementation of the ICS and ERM is via a closed-loop,
+multiple-stage process that stipulates the manner and criteria to be applied to identify,
+measure, manage, mitigate, control and report on risks and opportunities and defines
+how the system is to be monitored as a whole. Major components of the system are
+a quarterly analysis of risks and opportunities, a reporting of all units included, an
+analysis of the overall situation at divisional and Group levels, and reporting to the
+Management Board on the risk and opportunity situation, the results of tests of the
+controls, and the major management and control measures undertaken. The Manage-
+ment Board, in turn, reports regularly to the Supervisory Board's Investment, Finance
+and Audit Committee on the developments and results of the ICS and ERM. Where
+necessary, standard I processes are supplemented by ad hoc reporting of any major
+risks identified between the regular reporting dates.
+We define a risk or an opportunity as the occurrence of future uncertainties that
+could result in either a negative or a positive variance from the business plan. We
+incorporate all relevant organizational units within the Group in this analysis, thus
+covering all divisions, significant corporate functions and regions.
+Risks and opportunities under ERM are measured on a net basis by taking into
+account any existing management and mitigation measures. The time periods and
+measurement categories used are closely linked to our short-term and medium-term
+business planning and entrepreneurial targets.
+All relevant risks and opportunities are assessed uniformly across the Group in
+quantitative or qualitative terms, based on two factors: degree of impact on
+the Segment Result and/or on business objectives, reputation, compliance, and
+likelihood of occurrence.
+The scales used to measure these two factors (degree of impact and likelihood of
+occurrence) and the resulting risk assessment matrix for the presentation of risks
+for impact years 1 and 2 are depicted in chart C13. The scale used to measure the
+degree of impact on the Segment Result has been adjusted in comparison with the
+previous year for the measurement of risks in the coming years to take account of the
+profitable growth and the increased size of Infineon's business.
+Based on the potential degree of impact as well as the estimated likelihood of
+occurrence, a risk is classified as “very high”, “high”, “medium” or “low”.
+C13 Risk assessment matrix
+Degree of impact
+4
+3
+2
+Report on outlook, risk and opportunity
+Risk and opportunity report
+5 Q = < 65 →
+5
+Consolidated Financial Statements
+Further information
+1
+on Segment Result¹
+Degree of impact
+1 Relating to a planning year.
+High risk
+Medium risk
+Low risk
+5
+4
+2 3
+1
+1
+Likelihood of occurrence
+Investments and depreciation/amortization
+1 <10% Very unlikely
+Management Board and Supervisory Board
+Based on forecasts for the development of the global economy and the semicon-
+ductor market in the 2024 calendar year, Infineon expects Group revenue to grow
+to €17 billion, plus or minus €500 million. The Segment Result Margin is forecast, at
+the middle of the range for the revenue forecast, to be around 24 percent of revenue.
+Investments are expected to be at around €3.3 billion. Depreciation and amortization
+are expected to total about €2.1 billion. Free Cash Flow from continuing operations
+should reach around €0.4 billion. Return on Capital Employed (ROCE) is forecast to be
+around 13 percent.
+Overall statement on expected developments
+at Infineon
+Depreciation and amortization are predicted to be around €2.1 billion in the
+2024 fiscal year. Approximately €0.4 billion relates to the amortization of purchase
+price allocations, mainly in connection with the acquisition of Cypress.
+Infineon | Annual Report 2023
+A significant amount of investment is also planned in order to expand capacity and
+implement structural measures at backend facilities, albeit at a much lower level
+than for frontend facilities.
+Investments (defined by Infineon as the sum of investments in property, plant and
+equipment, investments in other intangible assets and capitalized development
+costs) are planned at around €3.3 billion for the 2024 fiscal year.
+In the 2023 fiscal year, investments totaled €2,994 million, comprising €2,739 million
+for property, plant and equipment and €255 million for capitalized development
+costs and other intangible assets. In the 2024 fiscal year, investments in capitalized
+development costs and other intangible assets are expected to be at a slightly higher
+level than in the 2023 fiscal year.
+Most of the investment relates to the construction and expansion of frontend
+manufacturing facilities. The main focus is on the completion of Phase 1 and the
+commencement of Phase 2 of the third fabrication facility at the Kulim site, which is
+designed to manufacture compound semiconductors, as well as on the construction
+of the fourth module in Dresden.
+Combined Management Report
+Considerable funds are also being invested in acquiring equipment for the production
+of products based on silicon carbide and gallium nitride. Further amounts invested
+in frontend facilities will be used to implement structural measures, optimize product
+quality, increase the degree of automation and promote innovation.
+The net figure for other income/expenses improved, primarily as a result of currency
+fluctuations, especially with regard to the US dollar exchange rate. There was also an
+improvement in the interest result, due in particular to the positive performance of
+the plan assets for pensions and similar commitments. The improvement in earnings
+before tax of €928 million resulted in an increase in the income tax expense of
+€154 million.
+The net profit of Infineon Technologies AG in the 2023 fiscal year was €1,420 million,
+following a net profit of €646 million in the previous fiscal year. After transferring a total
+of €710 million to retained earnings, unappropriated profit amounted to €710 million.
+Statement of income of Infineon Technologies AG in accordance with
+the German Commercial Code (condensed)
+€ in millions
+www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
+2023
+2022
+absolute
+in %
+Revenue
+9,865
+Change
+(5,894)
+1,945
+25
+Cost of goods sold
+(4,682)
+(1,212)
+(26)
+Gross profit
+3,971
+Unlike the Consolidated Financial Statements, which are prepared in accordance with
+International Financial Reporting Standards (IFRS), the Separate Financial Statements
+of Infineon Technologies AG are prepared in accordance with the provisions of the
+German Commercial Code (HGB). The complete Separate Financial Statements are
+published separately.
+3,238
+7,920
+Infineon Technologies AG is the parent company of Infineon and performs the Group's
+management and corporate functions. It is responsible for key Group-wide functions
+such as Finance and Accounting, Treasury Management, Investor Relations, Corporate
+Compliance, Internal Audit, Business Continuity, Business Excellence, Information
+Technology, Strategy, Mergers and Acquisitions, Legal and Patents, Human Resources,
+strategic and production-oriented research and development activities and Corpo-
+rate and Marketing Communication worldwide. Furthermore, it manages supply
+chain processes throughout the Group. Infineon Technologies AG also has its own
+manufacturing facilities, located in Regensburg and Warstein (both in Germany).
+Opportunities relating to our ability to meet supply requirements
+with available capacity (C)
+Infineon Technologies AG
+733
+We are constantly striving to develop new technologies, products and solutions and
+to improve on existing ones, both separately and in collaboration with customers.
+We therefore continually invest in areas such as research and development into
+the use of new technologies and materials. Those in current use may well lose their
+predominance in the foreseeable future (such as Si, which is reaching its physical
+limits in some applications).
+We therefore see numerous opportunities for working with new materials, such as
+SiC and GaN, to develop more powerful and/or lower-cost products. These materials
+could well have a positive influence on our ability to attain our strategic growth and
+profitability targets.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Consolidated Financial Statements
+Further information
+Opportunities relating to market access and activities in China
+China is one of the world's largest automotive markets, and its growth potential
+remains high. In particular, high rates of growth for electric-powered vehicles make
+China one of the largest markets for electromobility.
+The expansion of renewable energy sources in China has also become hugely important.
+Our presence in this market, alongside our collaboration with leading companies in
+the wind and solar power sectors, will create further opportunities for long-term growth.
+In addition to reporting on Infineon as a whole, in the following section we also
+provide information on the performance of Infineon Technologies AG.
+Operational opportunities
+Financial opportunities
+Currency opportunities (B)
+Just as there are risks arising from currencies, as described in the risk section above,
+there are also opportunities for Infineon in this area if exchange rates move in a way
+that is favorable to the Group. This may have a positive impact on Infineon's financial
+condition, liquidity and results of operations.
+Other opportunities arising from Infineon's liquidity situation (C)
+Our current liquidity position, which is described in detail in the chapter "Review of
+liquidity", p. 55 ff., provides us with the financial headroom for organic growth and
+growth by acquisition and enables us to make use of favorable refinancing conditions,
+if necessary.
+Infineon | Annual Report 2023
+Management Board and Supervisory Board
+Combined Management Report
+Infineon Technologies AG
+Consolidated Financial Statements
+Further information
+5 α = 79
+Our in-house manufacturing capacities, together with those of our external partners,
+provide us with a degree of flexibility to meet demand. In particular, the further
+expansion of 300-millimeter production and the planned new investment in the
+fourth manufacturing module in Dresden (Germany), the second fully automated
+300-millimeter factory at the Villach site (Austria), the third manufacturing module
+in Kulim Phase 1 (Malaysia) currently under construction, and the new planned
+expansion of wide band gap capacity in Kulim Phase 2 (Malaysia) will strengthen
+our ability to meet the growing demand for power semiconductors. Furthermore,
+additional production capacity, including external capacity, can help to meet future
+customer demand.
+23
+4
+(1,599)
+(3)
+7
++++
+(263)
+(109)
+(154)
+1,420
+646
+774
++++
+Opportunities arising from new technologies and materials
+(710)
+(482)
+710
+292
+70
+Earnings position
+Continuing high demand for semiconductor products (which had an impact on both
+volumes and prices) led to an increase in revenue for Infineon Technologies AG of
+25 percent to €9,865 million (2022: €7,920 million). Gross profit rose accordingly by
+23 percent to €3,971 million (2022: €3,238 million). Operating expenses (research
+and development expenses, selling, general and administrative expenses) increased
+in the 2023 fiscal year at a lower rate than revenue, by €226 million to €2,453 million
+(2022: €2,227 million), thus comprising 24.9 percent of revenue (2022: 28.1 percent).
+Other income (expense), net
+Result from investments, net
+Interest result
+Other financial result
+Income tax
+Income after taxes/net profit
+Transfers to retained earnings
+Unappropriated profit
+Infineon | Annual Report 2023
+(228)
+Research and development expenses
+93
+(201)
+(1,394)
+(205)
+(15)
+Selling expenses
+(550)
+(533)
+(17)
+(3)
+General and administrative expenses
+(304)
+187
+(300)
+(1)
+132
+(119)
+251
++++
+43
+67
+(24)
+(36)
+(14)
+(4)
+We are convinced that current global carbon emissions targets cannot be achieved
+without further electrification. The need for increased efforts in this field is relevant
+not only for electromobility (i.e., hybrid, plug-in hybrid and all-electric vehicles)
+but also for power units in vehicles with combustion engines. Moreover, the trend
+towards automated and assisted driving offers great potential for our sensors and
+microcontrollers.
+418
+Growth opportunities relating to data centers and mobile applications
+The ongoing trends in the areas of artificial intelligence (AI) training and machine
+learning (ML) are reflected in the high level of demand for solutions that will ensure
+efficient and effective power management (high-voltage and low-voltage power
+transistors, driver ICs and control ICs) for data centers.
+The reliability and security of Infineon's data, systems and networks are of crucial
+importance. At the same time, the world has seen a rise in threats in cyberspace. This
+increasingly applies to the use of IT systems to support business processes as well as
+supporting internal and external communications. Despite the array of precautionary
+measures put in place, any major disruption to these systems could result in risks
+relating to the confidentiality, availability and integrity of data used in research and
+development, manufacturing, selling or administration functions, which, in turn, could
+have an adverse impact on our reputation, production capability, competitiveness
+and operations.
+Risks relating to the areas of cyber security, information security
+and IT security (C)
+In some cases, we have used derivatives to hedge price risks with respect to the
+amount of gold wire and electricity required for the 2024 fiscal year.
+In particular, a restriction of or interruption in the supply of natural gas for manufac-
+turing sites in Europe could lead to significant disruptions to production. In the event
+of an interruption to the natural gas supply and associated production disruptions,
+we have secured in 2023 the supply of alternative energy sources for the operation of
+the combined heat and power plants at selected locations and implemented further
+energy-saving measures (such as heat recovery).
+Moreover, our dependence on energy supplies for our production, as well as on
+various components (such as wafers), raw materials (including gold and copper) and
+specialty gases, exposes us to substantial price and supply risks. Price risks are also
+attributable in part to the prevailing rate of inflation. In such a situation, if we are
+unable to offset cost increases or pass them on to our customers, it could have an
+adverse impact on our liquidity and results of operations.
+Risks that semiconductor companies operating in-house manufacturing facilities
+typically face is that of construction delays at new manufacturing sites and delays
+in the ramping up of production volumes at those sites, or delays in the transfer of
+technology. One good example is the Automotive division, where customers' product
+approval and testing processes can be conducted over an extended period of time,
+thus influencing our global manufacturing strategy as well as our short-term and
+medium-term capacity utilization. Failure to anticipate these changes in the manu-
+facturing process in good time may result in capacity shortages and hence lower
+revenue or lead to idle costs due to underutilized capacity and therefore have an
+adverse impact on earnings.
+Infineon | Annual Report 2023
+Thus, despite the fact that our manufacturing processes and sites have become even
+more flexible due to cross-location production optimization, fluctuations in capacity
+utilization levels or purchase commitments that have been entered into, coupled
+with idle costs at the manufacturing sites, nevertheless continue to pose a cost risk.
+In addition, frontend and backend manufacturing processes need to be optimally
+synchronized to enable Infineon to develop and manufacture competitive, high-quality
+products designed to provide new technological solutions. In view of the rapid pace
+of technological change and the dynamics of customer requirements, we consider
+this coordination needs to be increasingly sophisticated. Failure to make the required
+progress in this area could result in quality problems, delays in product development
+or market rollout, as well as higher research and development expenses, and hence
+adversely impact Infineon's liquidity and results of operations.
+5 Q = < 72
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+feasible to the extent envisaged. The dynamic markets and the increasing customer
+need for flexibility, combined with short-term adjustments to order quantities, could
+result in rising costs due to the underutilization of manufacturing capacities, higher
+inventory levels and unfulfilled commitments to suppliers.
+Furthermore, our medium-term and long-term forecasts are based on expected
+manufacturing cost trends for our products. In this context, measures aimed at
+optimizing manufacturing costs for raw materials and supplies, energy, labor and
+automation, as well as for bought-in services from external partners, may not be
+Management Board and Supervisory Board
+Consolidated Financial Statements
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Risks relating to the availability of qualified employees (C)
+One of the key factors in our success is qualified employees. There is a general risk
+of not being able to recruit enough people or people who are sufficiently qualified
+to work at Infineon, of losing existing qualified staff or failing to provide them with
+adequate training, and of not retaining people in the business. A lack of technical or
+management personnel could, among other things, restrict future growth and hence
+adversely impact Infineon's liquidity and results of operations.
+Our processes and initiatives to ensure continuous improvement are aimed, among
+other things, at identifying and eliminating the causes of quality-related problems
+at an early stage.
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+To avoid quality risks, we have adopted various quality management strategies such
+as "FMEA" (Failure Mode and Effects Analysis) and "Six Sigma” in order to prevent
+or solve problems and to continue to improve all our business processes. Our Group-
+wide quality management system has been certified for a number of years in accor-
+dance with ISO 9001 and ISO/TS 16949 and also encompasses the development
+processes of our suppliers.
+A structured project management system is in place to handle development projects,
+including those of a customer-specific nature. To help us identify potential project
+risks at an early stage and use specific measures to counter these risks, we require
+projects to have clear project milestones, ongoing verification procedures and clearly
+defined limits of approval authority.
+This situation is exacerbated by the fact that some of our products are highly depen-
+dent on the degree of commercial success achieved by individual customers in their
+own markets. Furthermore, there is the risk of losing future business and design wins
+if we are unable to deliver volumes above our contractual obligations if called upon
+by customers to do so. These factors could have an adverse impact on Infineon's
+liquidity and results of operations.
+Risks relating to the development process and product lifecycle (C)
+The ever-increasing complexity of technologies and products, shorter development
+cycles and dynamic customer demands can cause a great deal of tension in the
+field of product development. Buffer times built into processes to compensate for
+potential delays are reduced accordingly. If we are unable to execute our development
+plans, this could result in delays and increased development costs.
+Potential cyber-attacks on data, systems and networks used in our manufacturing
+processes present risks that could result in production downtime and supply bottle-
+necks. In addition, cyber-attacks with industrial espionage intent and any related
+potential loss of intellectual property or patents pose risks that could jeopardize our
+investment in research and development and impair our long-term competitiveness.
+Infineon has had a global cyber security program in place for many years now to
+ensure that it is suitably protected and prepared for the constantly changing cyber
+security threat situation. A key element of this program is our Cyber & Information
+Security Management System (CISMS). This system, which takes a structured approach,
+aims to identify and evaluate risks to our data, information systems, networks, products,
+solutions and services, to constantly improve our protective measures, processes and
+tools and to adapt them to the threat situation. Our CISMS covers all areas of Infineon's
+business and is certified in accordance with international standards (including TISAX).
+The effectiveness of the CISMS is continuously monitored in the course of regular
+internal and external audits.
+5 Q = 73
+Further information
+Product quality assurance is of crucial importance. Shortfalls in product quality can
+lead to product recalls at our customers and related potential costs for liability claims.
+In addition, quality risks could also damage Infineon's reputation and thus have a
+significant adverse impact on its future business, liquidity and results of operations.
+Our South-East Asian and European manufacturing sites are of great importance for
+our production. If, for example, political upheavals, natural disasters or pandemic
+outbreaks in one of these regions were to restrict or completely obstruct our ability to
+manufacture at these sites at the planned scale or to export products manufactured
+at the sites, this would have an adverse impact on our financial condition, liquidity
+and results of operations.
+Risks arising from manufacturing (B)
+To take account of the growing importance of Infineon's ecosystem partners (enter-
+prises with which Infineon shares a significant long-term economic interest and which
+represent added value for Infineon's products), we have implemented a partner risk
+evaluation system for Go2Market and IP/R&D partners (intellectual property/research
+and development). This partner risk assessment addresses Infineon's dependence
+on its ecosystem partners. As a result, the high-risk ecosystem partners throughout
+the Group are identified and continuously assessed. Additionally, corrective risk miti-
+gation measures are implemented to avoid an adverse impact on Infineon's financial
+condition, liquidity and results of operations and/or on its business objectives, repu-
+tation and compliance.
+The spread of new technological developments in a global market also results in
+greater replaceability of products. Due to the resulting price competition, we may be
+unable to achieve our long-term strategic goals of gaining and/or maintaining market
+share and of product pricing. Moreover, accelerating M&A (merger and acquisition)
+activities within the semiconductor industry or government subsidies restricted
+to specific regions could result in even tougher competition. Potential benefits for
+Risks arising from increased market competition and
+commoditization of products
+If we were unprepared for market fluctuations or the mitigation strategy we had
+adopted proved to be inappropriate, this could have a sustained adverse impact on
+Infineon's financial condition, liquidity and results of operations.
+The worldwide semiconductor market is dependent on global economic growth and
+hence subject to fluctuations. Our target markets are therefore exposed to the risk of
+short-term market fluctuations. As a result, our forecasts of Infineon's future business
+performance are subject to uncertainties. The absence of hitherto projected market
+growth or an unforeseen decline in market growth (related, for example, to the expan-
+sion of renewables or electromobility) would make it considerably more difficult to
+attain our own growth target. We are countering this by entering into long-term sales
+contracts as well as service contracts that are not dependent on the cycle. We also
+address the fluctuations in economic conditions and customer demand that are typical
+of the semiconductor business by continuously monitoring vital early warning indi-
+cators and, as far as possible, by adopting specific mitigation strategies. Examples of
+these strategies include making systematic adjustments to capacity and inventories
+at an early stage, introducing cost-cutting measures and making flexible use of
+external production facilities for both frontend and backend manufacturing.
+General market risks
+Risks arising from cyclical market and sector trends (A)
+competitors in this market include improved cost structures and more effective sales
+channels. There is also the risk that an increased volume of previously imported
+semiconductors will be manufactured in China and that a greater volume of those
+made in that country will be exported. Overall, this situation could have an adverse
+impact on Infineon's results of operations.
+Strategic risks
+5 Q = 70 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Opportunities arising from the growth of semiconductor content in vehicles
+We expect semiconductor content per vehicle to continue growing. The primary
+driving force behind this trend is the rising demand for electromobility, active safety
+and comfort features, and driver assistance systems.
+Management Board and Supervisory Board
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Corporate strategy risks (B)
+Risks arising from an uncertain political and economic environment
+As a globally operating company, our business is highly dependent on global economic
+developments. A worldwide economic downturn – particularly in the markets we
+serve - may result in not achieving our forecasted revenue and contribution to earn-
+ings. Risks could also arise due to political and social changes, particularly when
+those changes occur in countries in which we manufacture and/or sell our products.
+Geopolitical risks in the 2023 fiscal year continue to be seen as very high, especially
+as a result of the ongoing war in Ukraine, the conflict over Taiwan and the tensions
+in the Middle East, which has significantly reduced the predictability of economic
+development. The war in Ukraine is giving rise to risks and adverse impacts, such as
+price increases and scarcity of energy and raw materials. Any escalation of the con-
+flict beyond Ukraine would further increase the risk of a global economic downturn.
+Rising inflation and increases in interest rates may also lead to a significant decline in
+consumption.
+In general, we seek to minimize procurement-related risks through our purchasing
+strategies and the use of appropriate product and cost analyses ("Best Cost Country
+Sourcing" and "Focus on Value"), as well as through geographical diversification.
+These programs include cross-functional teams of experts who are responsible for
+standardizing procurement processes for materials and technical equipment.
+measures, evaluating the construction of its own solar plants, and forming partnerships
+with local solar and wind farm operators).
+Another risk is the limited global availability of renewable energy, which could jeop-
+ardize Infineon's declared goal of becoming carbon-neutral by 2030. Infineon has
+adopted a variety of measures to counter this risk (such as adopting its own efficiency
+We cooperate with numerous suppliers who provide us with materials and services
+or manage parts of our supply chain for whom there are not always multiple alter-
+natives. We therefore partly depend on the delivery capability of our suppliers and the
+quality of their supplies. At the same time, we face price increases from our suppliers,
+and there is a risk that it will not be possible to pass on these increases in full to
+our customers. In addition, the current conflict over Taiwan may affect the supply
+situation for our Taiwanese partners. Any failure of one or more of these suppliers
+to meet their obligations to Infineon could have an adverse impact on Infineon's
+liquidity and results of operations.
+Purchasing and logistical risks (B)
+Operational risks
+Risks arising from acquisitions and cooperation arrangements (C)
+In order to develop or expand our existing business, it may be appropriate for us
+to make further acquisitions or enter into other forms of partnership with external
+companies. In the case of acquisitions, there is a risk that we may be unsuccessful,
+particularly regarding the integration of employees and products in existing business
+structures. These issues could adversely impact Infineon's financial condition and
+results of operations.
+In addition to the risks mentioned above, the government debt situation worldwide,
+which has changed very little in the 2023 fiscal year, continues to present a risk that,
+regardless of our assessment of scenarios and potential outcomes within this complex
+set of risks, may have an adverse impact on Infineon's financial condition, liquidity
+and results of operations.
+5 Q = 71
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+Furthermore, customs disputes, export controls and export bans for advanced tech-
+nology and/or critical basic materials, as well as trade restrictions such as those
+between the USA and China, may constrain global trade, thereby dampening global
+economic growth. This includes the risk of a decline in foreign demand from a Chinese
+perspective and hence a decline in China's gross domestic product. All of this may
+have a significant impact on Infineon's liquidity and results of operations.
+Further information
+5 Q = < 74
+Macroeconomic risks
+Business continuity risks (C)
+Overall statement by Group management
+Asian markets are particularly important to our long-term growth strategy. Our
+operations in China are influenced by a legal system that may be subject to change.
+One example is the fact that local regulations could make it mandatory to enter into
+partnerships with local companies. These circumstances could lead to Infineon's
+intellectual property no longer being sufficiently protected or to intellectual property
+developed by Infineon in China not being freely transferable to other countries and
+locations, thus impairing Infineon's financial condition and results of operations.
+Our global business strategy requires the maintenance of research and development
+locations and manufacturing sites throughout the world. The location of such facilities
+is determined by market entry hurdles and by technology and cost factors. Risks
+could therefore arise if economic and geopolitical crises were to impact our regional
+markets and if country-specific legislation and regulations were to influence invest-
+ment activities and the ability to trade freely. Differing practices in the way tax, judicial
+and administrative regulations are interpreted could also restrict business activities.
+In addition, we could also be exposed to the risk of fines, sanctions and reputational
+damage.
+Risks arising from our global operations
+Further information regarding litigation and government inquiries is provided in
+note 24 to the Consolidated Financial Statements. p. 136 ff.
+One of the ways in which we counter patent-related risks is by adopting a specific
+patent strategy. This includes patent searches in relation to development projects,
+the systematic registration of our own patents and patent cross-licensing arrange-
+ments with major competitors. However, no such opportunities exist to safeguard
+against risks of this nature in the case of companies specializing in the exploitation
+of patent rights.
+We cannot rule out that patent infringement claims will be upheld in a court of law,
+thus resulting in significant claims for damages or restrictions on selling the products
+concerned. Any such outcome could, in turn, have an adverse impact on Infineon's
+financial condition, liquidity and results of operations.
+5 Q = < 76 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Management Board and Supervisory Board
+Infineon | Annual Report 2023
+As with many other companies in the semiconductor industry, allegations are made
+against us from time to time that we have infringed upon other parties' protected
+rights. Regardless of the prospects of success of such claims, substantial legal defense
+costs can arise.
+Provisions are recognized in connection with these matters as of 30 September 2023.
+The provisions reflect the amount of those liabilities that management believes are
+probable and can be estimated with reasonable accuracy as of that date. There can
+be no assurance that these provisions will be sufficient to cover all liabilities that may
+be incurred in conjunction with the insolvency proceedings relating to Qimonda.
+Risks relating to intellectual property rights and patents
+on the risk situation
+The insolvency proceedings relating to Qimonda and the resulting actions of the
+insolvency administrator expose Infineon to potential risks, which are described in
+detail in note 24 to the Consolidated Financial Statements. ☐ p. 136 ff.
+The overall risk assessment is based on a consolidated view of all significant
+individual risks. The risk situation as a whole remains essentially unchanged from
+the previous year. We are currently not aware of any individual risks capable of
+jeopardizing Infineon's going-concern status.
+Opportunities arising from decarbonization, digitization and the strategic approach
+"Product to System" have already been included in the forecast report and are
+described here as additional overarching opportunities.
+Opportunities arising from cyclical market and sector trends (A)
+Strategic opportunities
+To counter these risks, Infineon has set up its own work group. The specific remit of
+this work group is employee recruitment, retention and training.
+The principal opportunities are described in the following section, divided into
+"Strategic opportunities”, “Operational opportunities” and “Financial opportunities",
+which are to be seen in addition to the future business prospects mentioned in the
+forecast report. However, these represent only a selection of the opportunities avail-
+able to Infineon. Our assessment of opportunities is also subject to continual change.
+This reflects the fact that our business, our markets and the technologies we deploy
+are constantly subject to new developments, bringing with them fresh opportunities
+and causing others to become less relevant or otherwise changing the significance
+of an opportunity from our perspective.
+Opportunities arising from our strategic approach "Product to System"
+With the strategic approach "Product to System", we seek to identify additional
+benefits for our customers at a system level from within our broad portfolio of tech-
+nologies and products. This strategy enables us to exploit further revenue growth
+potential, reduce customers' development costs and shorten the lead times required
+to bring their products to market and thereby support our growth and margin targets.
+Additional opportunities are arising from accelerated and/or broader market
+pene-
+tration by digital products. In this context, the issue of "security and data integrity"
+plays a very important role. We are able to address this issue by offering our customers
+appropriate security chips and security solutions.
+The trend towards digitalization offers substantial business potential for Infineon. This
+is reflected in the optimization of internal processes, such as for our interconnected
+manufacturing lines on a global scale, as well as in sales and administration. Further-
+more, our portfolio of sensors, microcontrollers, power semiconductors, security chips
+and security solutions, as well as specific software, puts us in an excellent position
+to successfully exploit growing market potential. The strategic approach "Product
+to System" we have already implemented makes us very well prepared to penetrate
+and develop the markets involved. Good examples already apparent today include
+automated driving, the smart home and the advancing development of the lot.
+Opportunities arising from digitalization
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Report on outlook, risk and opportunity
+Risk and opportunity report
+Management Board and Supervisory Board
+Infineon Annual Report 2023
+To achieve this target, it will be necessary to develop renewable sources of energy
+at a faster rate than originally envisaged. This should lead to an increase in demand
+for our products, as Infineon's semiconductors enable electric power to be generated
+more efficiently from renewable energy sources. Indeed, they offer efficiency gains
+at all stages of the energy industry's conversion chain, whether in generation, trans-
+mission, storage or, above all, in the use of electric power. They form the basis for the
+intelligent and efficient use of electric power, for instance, in industrial applications,
+power supplies for computers, consumer electronics and vehicles.
+With a constantly growing world population and increasing industrialization, global
+demand for energy is rising. Electric power is becoming the most important energy
+form of the 21st century, while renewables are playing a key role in curbing carbon
+emissions. The long-term objective is to achieve global decarbonization by the end
+of the century, as resolved at the Climate Change Conference held in Paris (France)
+in December 2015. As part of its Green Deal concept, the European Union intends to
+become carbon-neutral by 2050.
+Significant opportunities
+Risks arising from the Qimonda insolvency
+The classification into “A”, “B” or “C” in brackets after the respective title of the
+opportunity is carried out in the same way as the classification for the risks.
+Opportunities arising from decarbonization and the acceleration
+of the energy transition
+In principle, there is a risk that there could be a violation of laws and regulations
+relating to the processing and use of personal data, which could lead to data breaches,
+resulting in severe penalties and/or reputational damage. The Data Protection
+Management System (DPMS) established by Infineon to mitigate this risk sets out
+rules and standards for the Group-wide processing of personal data and monitors
+compliance with these rules and standards.
+Infineon could be exposed to tax risks arising from prior assessment periods and
+changes in tax legislation or jurisdiction. Unforeseen tax expenses might occur relating
+to prior assessment periods that have not yet been the subject of a tax audit or are
+currently the subject of a tax audit in the various countries in which Infineon operates.
+The realization of any of these risks could result in fines and penalties and therefore
+have an adverse impact on the Group's financial condition, liquidity and results
+of operations.
+Tax risks (C)
+In principle, there is a risk that a breach in the financial covenants of capital market
+instruments (such as the net debt ratio) might lead to a credit event (default) and
+potentially to a cross-default, resulting in possible changes to existing or outstanding
+debts. However, this risk is currently considered to be very low. Nonetheless, regular
+monitoring of our projected Segment Result and of our liquidity and debt enables
+us to identify any aggravation of this risk at an early stage and to apply appropriate
+countermeasures.
+Other financial risks (C)
+Further information regarding the management of financial risks is provided in
+note 28 to the Consolidated Financial Statements. p. 150 ff.
+despite various state-insured deposit protection mechanisms – by a combination of
+risk avoidance analyses and risk-spreading measures. The failure of these measures
+could have a materially adverse impact on Infineon's financial condition and liquidity.
+-
+The relatively high level of our holdings of liquid funds (gross cash position) exposes
+us to the potential risk of a default of one or more of the banking and financing
+partners with whom we do business. We mitigate this risk – which could still arise
+Risk of default of banks and financing partners (C)
+Specified currencies are hedged Group-wide by means of derivative financial instru-
+ments. These hedges are based on forecasts of future cash flows, the occurrence
+of which is uncertain. Under these circumstances and despite hedging measures,
+exchange rate fluctuations could adversely impact Infineon's results of operations.
+The international orientation of our business activities creates cash flows in a num-
+ber of currencies other than the euro, primarily in US dollars. A significant share of
+revenue, operating costs and capital expenditures is denominated in US dollars and
+correlated currencies. For the most part, Infineon generates a US dollar surplus from
+these transactions.
+Currency risks (C)
+Financial risks
+Other legal risks (C)
+We counter these risks on an individual site basis with appropriate mitigation mea-
+sures, business interruption insurances and other business continuity structures,
+all of which are reviewed regularly by conducting stress tests to ensure their appro-
+priateness and effectiveness.
+Infineon adopts a number of strategies to mitigate these risks. These include,
+among others, regular employee training, a Tax Compliance Management System for
+selected sites, and internal audits to ensure adherence to important compliance
+regulations in all legal entities of the Group (Framework for Internal Controls in the
+Tax Process).
+Infineon | Annual Report 2023
+-
+An increasing number of events, such as extreme weather conditions (e.g., floods,
+drought, storms) and other damaging events (e.g., earthquake, fire, chemical accidents,
+power failures) could pose a threat at any time to our production facilities and office
+buildings in all the main operating segments and thus have an adverse impact on our
+business success.
+Management Board and Supervisory Board
+Data protection risks
+As a result of the increasing complexity and frequent changes to export control
+regulation in all the countries in which Infineon operates, there is a risk of not com-
+plying fully with all applicable national and international export control laws and
+regulations, which might result in fines and penalties. This could have an impact on
+Infineon's results of operations or could influence the availability of export permits.
+The central Export Control department is responsible for the implementation of
+effective measures relating to export control legislation and foreign trade to avoid
+sanctions and fines being imposed on Infineon. To prevent divergence from the
+relevant regulations, Infineon has introduced organizational measures (such as
+appointing local managers responsible for export control) and implemented training
+We have therefore introduced a Group-wide Compliance Management System (CMS)
+to manage these compliance-related risks in a systematic, comprehensive and sus-
+tainable manner. We continue to refine the key elements of our CMS. One of the ways
+we are doing this is by providing specific employee training designed to prevent,
+detect and react to compliance-related incidents. The Corporate Compliance Officer
+reports on a regular basis to the Chief Financial Officer, the Management Board as
+a whole and the Investment, Finance and Audit Committee of the Supervisory Board.
+Export control risks
+There is a risk that, due to inappropriate business conduct by employees, Infineon
+could violate antitrust regulations or laws combating bribery and corruption. Potential
+consequences might include heavy financial penalties, compensation claims, the
+cost of external support (such as lawyers' fees), damage to Infineon's reputation and
+exclusion from tendering for public contracts.
+measures for all the employees concerned. It is also using Group-wide approval
+routines in all relevant processes, conducting internal audits of export control and
+implementing other control measures.
+Regulatory risks (B)
+Legal and compliance risks
+Compliance risks
+Report on outlook, risk and opportunity
+Risk and opportunity report
+5 Q = 75 →
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Elke Reichart
+Based on or includes research from Omdia:
+Dr. Sven Schneider
+R03
+Management Board
+Neubiberg, 21 November 2023
+Semiconductor Industry Blue Book History. October 2023.
+Jochen Hanebeck
+World Semiconductor Trade Statistics (WSTS):
+5 Q = < 87 →
+International Monetary Fund (IMF):
+R02
+R01
+List of references
+Further information
+Consolidated Financial Statements
+Infineon | Annual Report 2023
+Application Market Forecast Tool - 3Q23. September 2023.
+Management Board and Supervisory Board
+Combined Management Report
+List of references
+World Economic Outlook. October 2023.
+R04
+Management Board and Supervisory Board
+Competitive Landscaping Tool CLT Quarterly - 2Q23. August 2023.
+Revenue
+€ in millions
+Cost of goods sold
+The references to the Remuneration Report are not audited as part of the audit of
+the financial statements. The Remuneration Report was subjected to a separate
+substantive audit by the auditor in accordance with IDW PS 490. This audit also
+includes the formal audit required by section 162, paragraph 3 of the German Stock
+Corporation Act (AktG).
+Change
+Consolidated Statement of Profit or Loss
+5 Q = 4 89 >
+Further information
+Consolidated Financial Statements
+Combined Management Report
+5988 →
+Infineon | Annual Report 2023
+95 Notes to the Consolidated Financial Statements
+Consolidated Statement of Changes in Equity
+93
+22-235
+Gross profit
+90 Consolidated Statement of Comprehensive Income
+91 Consolidated Statement of Financial Position
+92 Consolidated Statement of Cash Flows
+89 Consolidated Statement of Profit or Loss
+Consolidated Financial Statements
+Infineon | Annual Report 2023
+Dr. Rutger Wijburg
+Andreas Urschitz
+Based on or includes research from Omdia:
+The Remuneration Report is publicly available.
+www.infineon.com/remuneration-report
+129
+The Statement on Corporate Governance pursuant to sections 289f and 315d of the
+German Commercial Code (HGB) is publicly available.
+www.infineon.com/declaration-on-corporate-governance
+(21)
+(52)
+(73)
+49
+63
+192
+(2)
+(34)
+(1,565)
+(1,599)
+(40)
+4
+(187)
+(1,798)
+(1,985)
+4
+-
+Information pursuant to the German Commercial Code (HGB)
+Research and development expenses
+Corporate Governance
+Combined Management Report
+Management Board and Supervisory Board
+(10)
+Remuneration Report
+3,948
+1,103
+Statement on Corporate Governance
+pursuant to sections 289f and 315d
+of the German Commercial Code (HGB)
+The conditions of both the Performance Share Plan and the Restricted Stock Unit Plan,
+in which Infineon managers and other selected employees worldwide participate,
+contain rules that are triggered in the event of a defined change of control. For the
+most part, these rules specify that the vesting periods that are envisaged by the
+relevant plans are aborted in the event of a change of control. Although Management
+Board members also participate in the Performance Share Plan, the rules therein
+relating to a change of control do not apply to Management Board members, given
+that their service contracts take precedence.
+The change-of-control clauses agreed to by Management Board members are
+intended to provide financial security to those members in the event of a change of
+control, with a view to preserving their independence in this situation.
+If a Management Board member leaves their position in connection with a defined
+change of control, that member is entitled to continued payment of the relevant
+annual remuneration for the remaining contract term up to a maximum period of
+24 months. Further details are contained in the Remuneration Report (see the chapter
+"Remuneration Report").
+Information pursuant to the German Commercial Code (HGB) |
+Statement on Corporate Governance of the German Commercial Code (HGB) | Remuneration Report
+Further information
+Consolidated Financial Statements
+Corporate Governance
+Combined Management Report
+Management Board and Supervisory Board
+2,845
+Infineon | Annual Report 2023
+Various financing agreements with lending banks and capital market creditors
+contain defined change-of-control clauses that give creditors the right to demand
+early repayment; these clauses reflect standard market practice.
+Significant agreements of the Company that are subject to the
+condition of a change of control as a result of a takeover bid and
+remuneration agreements with Management Board members
+or employees in the event of a takeover bid
+The use of own shares acquired through derivatives is governed by the same rules
+as those applicable for the direct acquisition of own shares.
+Shareholders have a right to sell their Infineon shares in this connection only insofar
+as the Company is required to accept the shares under the derivative transactions.
+No other right to sell shares shall apply in this connection.
+If own shares are acquired using derivatives in accordance with the requirements
+stipulated in the authorization, any right of the shareholders to conclude such deriva-
+tive transactions with the Company will be excluded in the analogous application
+of section 186, paragraph 3, sentence 4 AktG. Shareholders have no right to conclude
+derivative transactions with the Company.
+According to a resolution passed by the Annual General Meeting on 16 February 2023,
+shares in Infineon Technologies AG may also be acquired using equity derivatives.
+The total number of shares that can be acquired using derivatives may not exceed
+5 percent of the Company's share capital, either at the time of this authorization
+becoming effective or at the time of its exercise through the use of the derivatives.
+The shares acquired through the exercise of this authorization are to be counted
+toward the acquisition threshold for the shares acquired in accordance with the
+authorization to acquire own shares as described above. The authorization stipulates
+other restrictions when derivatives are deployed, including with regard to their
+execution, term, servicing and price.
+Infineon shares acquired or being acquired on the basis of this or an earlier authoriza-
+tion may - if not sold either via the stock exchange or by means of a public offer to
+purchase addressed to all shareholders – be used for all legally permissible purposes.
+The shares may also be canceled or offered to third parties in conjunction with busi-
+ness combinations or the acquisition of companies, parts of companies or participa-
+tions in companies, as well as being offered and transferred to other depositable
+assets related to such an acquisition project. Under specified circumstances, subject
+to the approval of the Supervisory Board, the shares may also be sold to third parties
+in return for cash payment (including by means other than through the stock
+exchange or through an offer to all shareholders); used to meet the Company's obli-
+gations under convertible bonds and bonds with warrants; offered for sale or granted
+as a remuneration component to members of the Company's Management Board,
+members of the management boards and other boards of affiliated companies, and
+employees of the Company or of its affiliated companies; and, finally, used to repay
+securities-backed loans. The subscription right of shareholders is excluded in the
+cases mentioned above. In addition, the subscription rights of shareholders are
+excluded in respect of fractional amounts in instances in which the shares are sold
+through a public offer addressed to all shareholders.
+105
+4
+39
+Furthermore, certain patent cross-licensing agreements, development agreements,
+subsidy agreements and approvals, supply contracts, joint venture agreements and
+license agreements contain customary change-of-control clauses, which, in the event
+of a change of control at Infineon Technologies AG, make the continuation of the
+agreement dependent on the consent of the contracting party, grant special rights
+to the contracting party that may be unfavorable for Infineon, or even entitle the
+contracting party to terminate the agreement.
+Selling, general and administrative expenses
+2,186
+Other operating expenses
+(782)
+(537)
+(245)
+(46)
+3,139
+953
+44
+7
+(2)
+(7)
+6
+5
+3,137
+2,179
+958
+44
+Shareholders and hybrid capital investors of Infineon Technologies AG
+3,137
+2,179
+958
+44
+Basic earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:¹
+Basic earnings per share (in euro) from continuing operations
+71
+8
+44
+2,723
+7
+5 Q = 4 85
+98
++++
+4
+(159)
+(168)
+9
+5
+Share of profit (loss) of associates and joint ventures accounted for using the equity method
+1,198
+5
+39
+(12)
+(31)
+Profit (loss) from continuing operations before income taxes
+Income taxes
+Profit (loss) from continuing operations
+Profit (loss) from discontinued operations, net of income taxes
+Profit (loss) for the period
+Attributable to:
+3,921
+27
+Other operating income
+2.39
+0.73
+44
+1 The calculation of earnings per share is based on unrounded figures.
+Infineon | Annual Report 2023
+7,413
+(10)
+(809)
+(8,087)
+(8,896)
+4
+15
+0.73
+2,091
+16,309
+4,29
+in %
+absolute
+2022
+2023
+Notes
+Financial expenses
+Financial income
+Operating profit
+14,218
+1.66
+1.65
+8
+44
+Basic earnings (loss) per share (in euro) from discontinued operations
+8
+(0.01)
+(0.01)
+Basic earnings per share (in euro)
+8
+2.38
+1.65
+0.73
+2.38
+44
+Diluted earnings per share (in euro) from continuing operations
+8
+2.38
+1.65
+0.73
+44
+Diluted earnings (loss) per share (in euro) from discontinued operations
+8
+-
+Diluted earnings per share (in euro)
+Diluted earnings per share (in euro) attributable to shareholders of Infineon Technologies AG:¹
+Further information
+135
+Infineon | Annual Report 2023
+3,958
+1
+36
+3,545
+3,581
+Capital reserves
+Retained earnings
+Unappropriated profit
+Shareholders' equity
+0
+3
+2,605
+2,608
+3,241
+11
+20,766
+22,990
+(1)
+1
+Active difference resulting from offsetting
+Total assets
+(1)
+(2)
+137
+16
+1,186
+2,224
+7,326
+717
+710
+4,632
+3,881
+14
+189
+1,335
+1,524
+22
+203
+935
+1,138
+22
+(4)
+400
+386
+Provisions for pensions and similar commitments
+Other provisions
+Provisions
+11
+1,048
+9,809
+10,857
+70
+292
+418
+(14)
+(751)
+8,512
+(55)
+absolute
+ber 2022
+30 Septem-
+30 Septem-
+ber 2023
+Change
+Share capital
+Inventories
+Non-current assets
+€ in millions
+Statement of financial position of Infineon Technologies AG
+in accordance with the German Commercial Code (condensed)
+in %
+For information on Infineon's own shares, please see the comments relating to
+section 160, paragraph 1, no. 2 of the German Stock Corporation Act (AktG) provided
+in the Separate Financial Statements of Infineon Technologies AG.
+www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
+Provisions for pensions and similar commitments decreased by a total of €14 million,
+due to an increase in the value of the plan assets that exceeded the increase in
+the settlement amount. Other provisions rose by €203 million, mainly due to the
+increase of €128 million in tax provisions. Liabilities increased in the 2023 fiscal year
+by €988 million to €10,608 million, mainly due to the development of liabilities
+to affiliated companies as a result of the higher volume of business.
+The increase in equity of €1,048 million was mainly due to the net profit for the
+2023 fiscal year of €1,420 million, offset by the dividend paid out for the 2022 fiscal year
+of €417 million.
+Total assets increased by 11 percent, from €20,766 million as of 30 September 2022 to
+€22,990 million as of 30 September 2023. Non-current assets rose by €1,041 million,
+mainly due to an increase in loans to affiliated companies. Current assets increased
+by €1,186 million as a result of the higher volume of business. Receivables and other
+assets rose by €627 million and inventories by €614 million. Offsetting these increases
+was the decrease in cash and cash equivalents and marketable securities of €55 million
+to €3,347 million (30 September 2022: €3,402 million). Cash and cash equivalents
+and marketable securities accounted for 39 percent of current assets.
+Net assets and financial position
+Further information
+Consolidated Financial Statements
+Combined Management Report
+Infineon Technologies AG
+Management Board and Supervisory Board
+21
+1,282
+The equity ratio at 30 September 2023 was 47.2 percent, the same figure as of the
+end of the previous year.
+(2)
+Intangible assets, property, plant and equipment
+Financial assets
+620
+3,402
+3,347
+Cash and cash equivalents, marketable securities
+Current assets
+Prepaid expenses
+27
+627
+2,323
+2,950
+Receivables and other assets
+38
+614
+680
+1,601
+8
+1,041
+13,302
+14,343
+8
+981
+12,682
+13,663
+10
+60
+2,215
+Consolidated Financial Statements
+(16)
+(1)
+Combined Management Report
+Management Board and Supervisory Board
+5 Q = 83
+Further information
+Consolidated Financial Statements
+Infineon | Annual Report 2023
+Shares with special rights that confer control rights
+No shares conferring special control rights have been issued.
+Section 33, paragraph 1 WpHG requires each shareholder whose voting rights reach,
+exceed or, after exceeding, fall below 3, 5, 10, 15, 20, 25, 30, 50 or 75 percent of the
+voting rights of a listed corporation to notify such corporation and the German Federal
+Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht -
+“BaFin”) immediately. As of 30 September 2023, we have not been notified of any
+direct or indirect shareholdings reaching or exceeding 10 percent of the voting rights.
+The shareholdings notified to us as of 30 September 2023 are presented in the Notes
+to the Separate Financial Statements of Infineon Technologies AG under the infor-
+mation pursuant to section 160, paragraph 1, number 8 AktG.
+Direct or indirect shareholdings exceeding 10 percent
+of the voting rights
+Pursuant to section 67, paragraph 2 AktG, rights and obligations arising from shares
+in relation to Infineon Technologies AG exist only for and from the parties entered
+in the share register. In order to be recorded in the share register, shareholders are
+required to submit to Infineon Technologies AG the number of shares held by them
+and their name or company name, their postal and electronic address and, where
+applicable, their registered office and their date of birth. Pursuant to section 67,
+paragraph 4 AktG, Infineon Technologies AG is entitled to request information from
+the party listed in the share register regarding the extent to which the shares relating
+to the entry in the share register are actually owned by the registered party and, if
+not, to receive the information necessary for the maintenance of the share register
+in relation to the party for whom the shares are held. Section 67, paragraph 2 AktG
+stipulates that the shares concerned do not confer voting rights until such time as the
+information requested has been supplied in the appropriate manner.
+Corporate Governance
+Restrictions on voting rights or the transfer of shares
+Restrictions on the voting rights of shares may, in particular, arise as a result of the
+regulations set out in the German Stock Corporation Act (Aktiengesetz – “AktG”). For
+example, pursuant to section 136 AktG, shareholders are prohibited from voting under
+certain circumstances and, pursuant to section 71b AktG, Infineon Technologies AG
+has no voting rights on its own shares. Furthermore, non-compliance with the notifi-
+cation requirements pursuant to section 33, paragraphs 1 or 2 of the German Securi-
+ties Trading Act (Wertpapierhandelsgesetz - "WpHG") and section 38, paragraph 1, or
+section 39, paragraph 1 WpHG can, pursuant to section 44 WpHG, have the effect that
+certain rights (including the right to vote) may, at least temporarily, not exist. We are
+not aware of any contractual restrictions on voting rights or on the transfer of shares.
+The share capital of Infineon Technologies AG stood at €2,611,842,274 as of
+30 September 2023. This sum is divided into 1,305,921,137 no par value registered
+shares, each of which represents a notional portion of the share capital of €2
+per share. Each share carries one vote and gives an equal right to the profit of the
+Company based on the profit appropriation resolved by the shareholders at the
+Annual General Meeting.
+Structure of the subscribed capital
+Information pursuant to
+section 289a, paragraph 1 and
+section 315a, paragraph 1 of the
+German Commercial Code (HGB)
+Corporate Governance
+Information pursuant to the German Commercial Code (HGB)
+Corporate Governance
+Combined Management Report
+5 Q = 4 82
+Further information
+Consolidated Financial Statements
+The Company held 2,171,026 of the abovementioned issued shares as own shares
+as of 30 September 2023 (30 September 2022: 3,689,901). Own shares held by the
+Company on the date of the Annual General Meeting do not carry a vote and are not
+entitled to participate in profit.
+Management Board and Supervisory Board
+Information pursuant to the German Commercial Code (HGB)
+Statutory regulations and Articles of Association provisions governing
+the appointment and dismissal of members of the Management Board
+and amendments to the Articles of Association
+A resolution passed by the Annual General Meeting on 16 February 2023 authorized
+Infineon Technologies AG, in the period through 15 February 2028, to acquire its own
+shares, within the statutory boundaries, in an aggregate amount not exceeding
+10 percent of the share capital at the time the resolution was passed or - if the latter
+amount is lower - of the share capital in existence at the time the authorization is
+exercised. The Company may not use the authorization for the purpose of trading in
+its own shares. The Management Board decides whether own shares are acquired
+through the stock exchange, by means of a public offer to purchase addressed to
+all shareholders, a public invitation to submit offers for sale, or via a bank or other
+entity that meets the requirements of section 186, paragraph 5, sentence 1 AktG.
+The authorization includes differentiating requirements – in particular with regard to
+the permissible purchase price – for each method of acquisition.
+Authorization to acquire own shares
+Subject to the requirements resolved by the shareholders at the Annual General
+Meeting, the Management Board is authorized to determine the further details of the
+bond issue, including its terms and conditions.
+Even if the dilution protection regulations are applied, the conversion or option
+price must equal at least 80 percent of the arithmetic mean of the closing prices
+of the Company's share in Xetra trading on the Frankfurt Stock Exchange (or a com-
+parable successor system). Further details – including the conditions under which the
+conversion or option price may be reduced - are set out in the authorization.
+> insofar as bonds are issued in return for a capital contribution in kind, provided
+that the value of any such capital contribution in kind is appropriate in relation to
+the market value of the bonds.
+> in order to exclude fractional amounts resulting from a given subscription ratio
+from the subscription rights of the shareholders to the bonds or insofar as any such
+action is necessary in order to grant holders of conversion or option rights arising
+from bonds that have already been or will in future be issued by the Company
+or its subordinated Group companies subscription rights to that extent to which
+they would be entitled after exercising their rights, or after the fulfillment of any
+conversion or option obligations; or
+> if the issue price is not substantially lower than the bonds' theoretical market
+value as determined in accordance with accepted valuation methods, particularly
+those based on financial mathematics. However, this right of exclusion only
+applies insofar as the aggregate value of the shares to be issued to service the con-
+version or option rights established on this basis does not exceed 10 percent of the
+share capital, neither at the time the resolution concerning this authorization was
+passed by the Annual General Meeting, at the time of this authorization becoming
+effective, nor at the time it is exercised;
+Authorization to issue convertible bonds and/or bonds with warrants
+The Annual General Meeting held on 20 February 2020 authorized the Management
+Board, in the period through 19 February 2025, either once or in partial amounts, to
+issue convertible bonds and/or bonds with warrants (referred to collectively as "bonds")
+of an aggregate nominal amount of up to €4,000,000,000, to guarantee such bonds
+issued by subordinated Group companies of the Company and to grant bond creditors
+and/or bondholders conversion or option rights to up to 130,000,000 no par value
+registered Company shares, representing a notional portion of the share capital of up
+to €260,000,000 in accordance with the relevant terms of the bonds. With the approval
+of the Supervisory Board, the Management Board is authorized to exclude the right
+of shareholders to subscribe to the bonds
+Information pursuant to the German Commercial Code (HGB)
+Corporate Governance
+Nature of control over voting rights when employees participate in
+the Company's capital and do not exercise their control rights directly
+Employees who participate in the capital of Infineon Technologies AG exercise
+their control rights directly in accordance with the applicable laws and the Articles
+of Association, just like other shareholders.
+Combined Management Report
+5 Q = < 84
+Further information
+Consolidated Financial Statements
+Infineon | Annual Report 2023
+The power of the Management Board to issue shares derives from section 4 of the
+Articles of Association of the Company, in conjunction with applicable legal provisions.
+Further information relating to the Company's existing Authorized and Conditional
+Capital can be found in note 20 to the Consolidated Financial Statements, p. 129 ff..
+Powers of the Management Board, particularly with respect to
+issuing or buying back of shares
+Pursuant to section 179, paragraph 1 AktG, responsibility for amending the Articles of
+Association rests with the Annual General Meeting. However, section 10, paragraph 4
+of the Articles of Association gives the Supervisory Board the authority to amend the
+Articles of Association insofar as any such amendment relates merely to the wording,
+such as changes in the share capital amount resulting from a capital increase out of
+conditional or authorized capital or a capital decrease by means of cancellation of own
+shares. Unless the Articles of Association provide for another majority, section 179,
+paragraph 2 AktG stipulates that resolutions of the Annual General Meeting regarding
+the amendment of the Articles of Association require a majority of at least three-
+quarters of the share capital represented. Section 17, paragraph 1 of the Articles of
+Association of Infineon Technologies AG provides in principle for resolutions to be
+passed with a simple majority of the votes cast and, when a capital majority is required,
+with a simple majority of the capital, unless a higher majority is required by law or
+in accordance with other stipulations contained in the Articles of Association.
+Pursuant to section 84, paragraph 1, sentence 1 AktG, the maximum term of appoint-
+ment for Management Board members is five years. Re-appointment or an extension
+of the term of office, in each case for a maximum of five years, is permitted (section 84,
+paragraph 1, sentence 2 AktG). Section 5, paragraph 1 of the Articles of Association
+and section 84, paragraph 2 AktG stipulate that the Supervisory Board may appoint
+a chairman and a deputy chairman to the Management Board. The Supervisory Board
+may revoke the appointment of a Management Board member and the chairman of
+the Management Board for good cause (section 84, paragraph 4 AktG).
+In urgent cases, if the Management Board does not have the required number of
+members, the local court ("Amtsgericht” of Munich) makes the necessary appointment
+upon the petition of a party concerned pursuant to section 85, paragraph 1 AktG.
+Section 5, paragraph 1 of the Articles of Association stipulates that the Management
+Board of Infineon Technologies AG is required to consist of at least two members.
+With effect from 15 April 2021, the Management Board comprises five members
+(previously four members). Management Board members are appointed and dis-
+missed by the Supervisory Board pursuant to section 84, paragraph 1 AktG. As
+Infineon Technologies AG falls within the scope of the German Co-Determination Act
+(Mitbestimmungsgesetz – “MitbestG"), the appointment or dismissal of Management
+Board members requires a two-thirds majority of the votes of the Supervisory Board
+members (section 31, paragraph 2 MitbestG). If the required majority is not achieved
+at the first ballot, the appointment may be approved on the recommendation of
+the Mediation Committee at a second ballot by a simple majority of the votes of the
+Supervisory Board members (section 31, paragraph 3 MitbestG). If the required
+majority is still not achieved, a third ballot is held in which the chairman of the Super-
+visory Board has two votes (section 31, paragraph 4 MitbestG).
+Management Board and Supervisory Board
+1
+Infineon | Annual Report 2023
+Most transactions within the Group involving derivative financial instruments are
+handled by Infineon Technologies AG. The comments provided in "Principles and
+structure of Infineon's treasury” within the chapter "Review of liquidity”, □ p. 57,
+regarding the nature and scope of transactions with derivative financial instruments
+and hedged risks also apply to Infineon Technologies AG. Information on this subject
+is also provided in the Notes to the Separate Financial Statements of Infineon
+Technologies AG.
+2
+1
+Deferred income
+10
+988
+9,620
+7
+62
+896
+958
+10,608
+(1)
+Liabilities
+1,433
+3,627
+5,060
+42
+193
+464
+657
++++
+52
+52
+40
+www.infineon.com/cms/en/about-infineon/investor/reporting/financial-statements-hgb/
+(50)
+22,990
+Expected developments at Infineon Technologies AG and the associated significant
+risks and opportunities are essentially identical to those of the Group as a whole.
+As a general rule, Infineon Technologies AG participates in the risks of its subsidiaries
+and equity investments on the basis of the extent of its shareholding. As the parent
+company of the Group, Infineon Technologies AG is integrated into the Group-wide
+risk management and internal control systems. For more information on this topic,
+expected developments and associated significant risks and opportunities, see the
+chapter "Risk and opportunity report”. p. 65 ff.
+Expected developments and associated
+significant risks and opportunities
+For information regarding Infineon's long-term dividend policy, see the "Dividend"
+paragraph in the chapter "Infineon on the capital market”. □ p. 60
+The Company paid a dividend of €0.32 per share (€417 million in total) for the
+2022 fiscal year.
+The ultimate parent company Infineon Technologies AG, after making a transfer to
+other retained earnings, reported unappropriated profit of €710 million in its financial
+statements for the fiscal year ended 30 September 2023. With regard to the 2023
+fiscal year, a proposal will be made to pay a dividend of €456 million, or €0.35 per
+dividend-entitled share, out of the unappropriated profit of Infineon Technologies AG.
+The disbursement of the proposed dividend is subject to approval by the shareholders.
+In accordance with the German Stock Corporation Act (AktG), the amount of the divi-
+dend available for distribution to shareholders is based on the level of unappropriated
+profit recorded by the ultimate parent company, as determined in accordance with
+the provisions of the German Commercial Code (HGB).
+Dividend
+5 Q = 81
+Further information
+Consolidated Financial Statements
+Total liabilities and shareholders' equity
+Combined Management Report
+Infineon Technologies AG
+Infineon | Annual Report 2023
+Other liabilities
+Liabilities to affiliated companies
+Trade payables
+Advance payments received
+Loans payable to banks
+Bonds
+11
+2,224
+20,766
+Management Board and Supervisory Board
+6,131