##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C. 20549
      FORM 20-F
  REGISTRATION STATEMENT PURSUANT
    TO SECTION 12(b) OR (g)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
    o
    OR
 ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
    x
 For the fiscal year ended
    September 30, 2007
 OR
 TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
 For the transition period from
    ­
    ­to
    ­
    ­.
    o
 OR
 SHELL COMPANY REPORT PURSUANT TO
    SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT
    OF 1934
    o
    Date of event requiring this shell company report
    ­
    ­.
  Commission file
    number: 1-15000
  Infineon Technologies
    AG
 (Exact name of Registrant as
    specified in its charter)
  Federal Republic of
    Germany
 (Jurisdiction of incorporation or
    organization)
  Am Campeon 1-12,
 D-85579 Neubiberg
 Federal Republic of
    Germany
 (Address of principal executive
    offices)
  Securities registered or to be
    registered pursuant to Section 12(b) of the Act:
  Name of each exchangeTitle of each class

on which registeredAmerican Depositary Shares, each representing 
    one ordinary share, notional value 2.00 per share 
    Ordinary shares, notional value 2.00 per share*

New York Stock Exchange 
    New York Stock Exchange    *
    Listed, not for trading or quotation purposes, but only in
    connection with the registration of American Depositary Shares
    pursuant to the requirements of the Securities and Exchange
    Commission                        x o
     o x
      x o
  Rule 12b-2
  Large
    accelerated filer
    x
    Accelerated
    filer
    o
    Non-accelerated
    filer
    o    o x
  Rule 12b-2
  o x
      o o




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##### Table of Contents



INFINEON
    TECHNOLOGIES AG
  ANNUAL REPORT ON
    FORM 20-F
 FOR THE FISCAL YEAR
    ENDED
 SEPTEMBER 30, 2007




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##### Table of Contents



CROSS
    REFERENCES TO
    FORM 20-F
  PagePART I:Item 1:

Identity of Directors, Senior Management and Advisers


n/aItem 2:

Offer Statistics and Expected Timetable


n/aItem 3:

Key Information:Selected Financial Data


1Exchange Rate Information


119Risk Factors


42Item 4:

Information on the Company:History and Development of the Company


53Business Overview


53Organizational Structure


116Property, Plant and Equipment


72,90Item 4A:

Unresolved Staff Comments


noneItem 5:

Operating and Financial Review and Prospects


2Operating Results


9Liquidity and Capital Resources


22Research and Development; Patents and Licenses


77Trend Information


37Off-Balance Sheet Arrangements


25Contractual Obligations


24Item 6:

Directors, Senior Management and Employees:Directors and Senior Management


91Compensation


100Board Practices


97Employees


27Share Ownership


109Item 7:

Major Shareholders and Related Party Transactions:Principal Shareholders


109Related Party Transactions


110Item 8:

Financial Information


F-1Litigation


83Dividend Policy


117Significant Changes


117Item 9:

The Offer and Listing:Price History of the Stock


117Markets


117Item 10:

Additional Information:Articles of Association


111Material Contracts


127Exchange Controls


124Taxation


119Documents on Display


125Subsidiary Information


116Item 11:

Quantitative and Qualitative Disclosure About
    Market Risk


35Item 12:

Description of Securities Other Than Equity Securities


n/aPART II:Item 13:

Defaults, Dividend Arrearages and Delinquencies


noneItem 14:

Material Modifications to the Rights of Security Holders and Use
    of Proceeds


noneItem 15:

Controls and Procedures


125Item 16A:

Audit Committee Financial Expert


126Item 16B:

Code of Ethics


126Item 16C:

Principal Accountant Fees and Services


126Item 16D:

Exemption from the Listing Standards for Audit
    Committees


127Item 16E:

Purchases of Equity Securities by the Issuer and Affiliated
    Purchasers


nonePART III:Item 18:

Financial Statements


F-1Item 19:

Exhibits (See Exhibit Index)


  i




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##### 



CONTENTS
  PageCross References to
    Form 20-F


iPresentation of Financial and Other
    Information


iiiSelected Consolidated Financial Data


1Operating and Financial Review


2Overview of the 2007 Fiscal Year


2Our Business


5The Semiconductor Industry and Factors that
    Impact Our Business


5Results of Operations


9Financial Condition


20Financial Ratios


21Liquidity


22Capital Requirements


24Employees


27Critical Accounting Policies


27Quantitative and Qualitative Disclosure About
    Market Risk


35Outlook


37Subsequent Events


40Risk Factors


42Business


53Overview


53Industry Background


56Strategy


56Products and Applications


58Customers, Sales and Marketing


66Competition


70Manufacturing


71Research and Development


77Intellectual Property


80Strategic Alliances


81Acquisitions and Dispositions


82Employees


83Legal Matters


83Environmental Protection and Sustainable
    Management


88Real Estate


90Management


91Principal Shareholders


109Related Party Transactions and Relationships


110Articles of Association


111Additional Information


116Organizational Structure


116Dividend Policy


117Significant Changes


117Market Information


117Exchange Rates


119Taxation


119Exchange Controls and Limitations Affecting
    Shareholders


124Documents on Display


125Controls and Procedures


125Audit Committee Financial Expert


126Code of Ethics


126Principal Accountant Fees and Services


126Exemptions from the Listing Standard for Audit
    Committees


127Material Contracts


127Glossary


128Index to Consolidated Financial Statements


F-1Exhibit 1.1Exhibit 1.2Exhibit 1.3Exhibit 1.4Exhibit 4.25.2Exhibit 4.28.1Exhibit 4.28.2Exhibit 12.1Exhibit 12.2Exhibit 13Exhibit 14.1   ii




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PRESENTATION
    OF FINANCIAL AND OTHER INFORMATION
    
    our company are to Infineon Technologies AG; and
    we, us or Infineon are to
    Infineon Technologies AG and, unless the context otherwise
    requires, to its subsidiaries including Qimonda, and its
    predecessor, the former semiconductor group of Siemens
    AG; and
    Qimonda are to Qimonda AG and its subsidiaries, and
    its predecessor, the former memory products segment of Infineon.        Forward-Looking
    Statements
    Use of
    Non-U.S.
    GAAP Financial Measures
  non-U.S. GAAP Non-U.S. GAAP non-U.S. GAAP non-U.S. GAAP
  Principal
    Business Address
   iii




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##### Table of Contents



SELECTED
    CONSOLIDATED FINANCIAL DATA
  You should read the following selected consolidated financial
    data in conjunction with our consolidated financial statements,
    the related notes and Operating and Financial
    Review, all of which appear elsewhere in this annual
    report.
    For the years ended September
    30,(1)2003


2004


2005


2006


2007


2007(2)(3)(in millions, except per share data)Selected Consolidated Statement of Operations dataNet sales


6,152



7,195



6,759



7,929



7,682


$
10,923Cost of goods sold


4,614



4,670



4,909



5,854



6,092



8,662Gross profit


1,538



2,525



1,850



2,075



1,590



2,261Research and development expenses


1,089



1,219



1,293



1,249



1,169



1,662Selling, general and administrative expenses


679



718



655



751



700



995Restructuring
    charges(4)


29



17



78



23



45



64Other operating expense, net


85



257



92



108



46



66Operating income (loss)


(344
)


314



(268
)


(56
)


(370
)


(526
)Interest expense, net


(52
)


(41
)


(9
)


(92
)


(33
)


(46
)Equity in earnings (losses) of associated companies, net


18



(14
)


57



78



117



166Gain (loss) on subsidiaries and associated company share
    issuance,
    net(5)


(2
)


2







19







Other non-operating income (expense), net


21



(64
)


26



(33
)


13



18Minority interests


8



18



2



(23
)


19



27Income (loss) before income taxes


(351
)


215



(192
)


(107
)


(254
)


(361
)Income tax (expense) benefit


(84
)


(154
)


(120
)


(161
)


(79
)


(112
)Loss before extraordinary loss


(435
)


61



(312
)


(268
)


(333
)


(473
)Extraodinary loss, net of tax


















(35
)


(50
)Net income (loss)


(435
)


61



(312
)


(268
)


(368
)

$
(523
)Basic and diluted earnings (loss) per share:Net (loss) income before extraordinary loss


(0.60
)


0.08



(0.42
)


(0.36
)


(0.45
)

$
(0.64
)Net (loss) income


(0.60
)


0.08



(0.42
)


(0.36
)


(0.49
)

$
(0.70
)Weighted average shares outstanding  basic (millions)


721



735



748



748



749



749Weighted average shares outstanding  diluted
    (millions)


721



737



748



748



749



749Selected Consolidated Balance Sheet dataCash and cash equivalents


969



608



1,148



2,040



1,819


$
2,586Marketable securities


1,784



1,938



858



615



475



675Working capital (deficit), excluding cash and cash equivalents
    and marketable securities


419



(124
)


186



(279
)


137



196Total assets


10,875



10,864



10,284



11,185



10,679



15,184Short-term debt and current maturities


149



571



99



797



336



478Long-term debt, excluding current portion


2,343



1,427



1,566



1,208



1,376



1,957Shareholders equity


5,666



5,978



5,629



5,315



4,914



6,987Selected Consolidated Cash Flow
    data(6)Net cash provided by operating activities


731



1,857



1,090



1,003



1,207



1,716Net cash used in investing activities


(1,522
)


(1,809
)


(289
)


(853
)


(867
)


(1,233
)Depreciation and amortization expenses


1,437



1,320



1,316



1,405



1,276


$
1,814   Notes
  (1)
    Columns may not add up due to rounding.(2)
    Unaudited.(3)
    Converted from Euro into U.S. dollars at an exchange rate of
    1 = $1.4219, which was the noon buying rate on
    September 28, 2007.(4)
    These charges relate to the implementation of cost-reduction
    programs.(5)
    In 2003, ProMOS Technologies, Inc. (ProMOS)
    initiated a share repurchase program. In 2004, Inotera Memories,
    Inc. (Inotera) distributed employee bonuses in the
    form of shares. As a result of these share issuances
    (repurchases), our interest was diluted (increased), while our
    proportional share of the shareholders equity of these
    companies increased (decreased). In 2006 Inotera completed an
    initial public offering on the Taiwanese Stock Exchange and a
    public offering on the Luxembourg Stock Exchange. As a result of
    these transactions, we recognized a non-operating gain of
    72 million, which was partially offset by a
    non-operating loss of 53 million resulting from the
    dilution of our interest in Qimonda following its initial public
    offering on the New York Stock Exchange.(6)
    Dividends received from associated companies, previously
    reported as part of cash flows from investing activities in the
    consolidated statements of cash flows, have been reclassified to
    cash flows from operating activities. 1




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##### Table of Contents



OPERATING
    AND FINANCIAL REVIEW
  This discussion and analysis of our consolidated financial
    condition and results of operations should be read in
    conjunction with our audited consolidated financial statements
    and other financial information included elsewhere in this
    annual report. Our audited consolidated financial statements
    have been prepared on the basis of a number of assumptions more
    fully explained in Note 1 (Description of Business and
    Basis of Presentation) and Note 2 (Summary of Significant
    Accounting Policies) to our audited consolidated financial
    statements appearing elsewhere in this annual report.
  Overview
    of the 2007 Fiscal Year
      
    Despite unfavorable currency exchange rates and pricing
    pressure, we were able to maintain net sales in our combined
    logic segments at approximately the same level as in the 2006
    fiscal year. In fact, our Automotive, Industrial &
    Multimarket segment was able to significantly increase net sales
    in the 2007 fiscal year despite wide pricing pressure.
    Furthermore, during the 2007 fiscal year, our Communication
    Solutions segment began to compensate for the decrease in
    revenues in the wireless business that had resulted from the
    insolvency of BenQs German subsidiary in the 2006 fiscal
    year. This was achieved by increased shipments of complete
    mobile phone platform solutions to other leading customers.
    Overall, our net sales decreased by 3 percent, from
    7,929 million in the 2006 fiscal year to
    7,682 million in the 2007 fiscal year, primarily due
    to a 29 percent decline in DRAM prices and the weakening of
    the U.S. dollar against the Euro, which resulted in a
    207 million decrease in net sales in our Qimonda
    segment.
    EBIT in our Automotive, Industrial & Multimarket
    segment further improved primarily due to an increase in net
    sales. Also, in our Communication Solutions segment, EBIT
    continued to improve despite a further decline in net sales, as
    no significant charges were recognized and further cost
    reduction measures were successfully implemented. The
    unfavorable market conditions in our Qimonda segment and the
    loss we incurred from further sales of our interest in Qimonda
    negatively impacted our results of operations in the 2007 fiscal
    year. Our net loss increased by 37 percent, from
    268 million in the 2006 fiscal year to
    368 million in the 2007 fiscal year. Earnings before
    interest and taxes (EBIT) were negative 15 million in
    the 2006 fiscal year and negative 256 million in the
    2007 fiscal year.
    Our cash flow from operations increased from
    1,003 million in the 2006 fiscal year to
    1,207 million in the 2007 fiscal year.
    In October 2006, we announced our plan to focus our mobile
    communication activities on business with recently acquired and
    future customers following the insolvency of BenQs German
    subsidiary. As a result, during the 2007 fiscal year we
    successfully increased shipments of complete mobile phone
    platform solutions to several leading customers, including LG
    Electronics Inc., Seoul, Korea (LG), Panasonic
    Mobile Communications Co. Ltd., Yokohama, Japan
    (Panasonic) and ZTE Corporation, Shenzhen, China
    (ZTE).
    In addition, we announced that Nokia Oyj, Espoo, Finland
    (Nokia), selected our single-chip solution
    E-GOLDtmvoice
    for selected future entry level mobile phones, that Ericsson
    Mobile Platforms, a business unit of Ericsson AB,
    Stockholm, Sweden, selected our RF transceiver
    SMARTi®
    3G for their U310 and U360 EDGE/HSDPA platforms and that we
    signed an agreement with Motorola Inc., Schaumburg, Illinois,
    USA, to develop a 3G RF transceiver.
    In April 2007, we entered into a definitive agreement with Avago
    Technologies, Ltd., San José, California, USA
    (Avago) under which Avago acquired our Polymer
    Optical Fiber (POF) business, based in Regensburg,
    Germany. 2




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##### Table of Contents




    During 2007, we announced two acquisitions to further strengthen
    our activities in communication fields. In June 2007, we entered
    into an agreement with Texas Instruments Inc. (TI)
    to acquire its DSL Customer Premises Equipment (CPE)
    business. The transaction closed in the fourth quarter of the
    2007 fiscal year. In August 2007, we announced the planned
    acquisition of the mobility products business of LSI Corporation
    (LSI). The transaction closed in October 2007.  
    In September 2007, we executed a combined capital markets
    offering to further reduce our equity interest in Qimonda. One
    part of the transaction was a secondary sale by us of
    28.75 million Qimonda American Depositary Shares
    (ADSs), reducing our interest in Qimonda to
    77.5 percent. In addition, Infineon Technologies Investment
    B.V., a wholly owned subsidiary of Infineon Technologies AG,
    issued exchangeable subordinated notes supported by a share
    lending agreement. The notes are exchangeable for Qimonda ADSs
    during the exchange period through maturity on August 31,
    2010. If all noteholders were to exercise their exchange rights,
    we would deliver an aggregate of 20.5 million Qimonda ADSs
    for the redemption of the exchangeable subordinated
    notes  equivalent to approximately 6 percent of
    Qimondas share capital.  
    In August 2007, we and International Business Machines
    Corporation, New York, USA (IBM) signed an agreement
    in principle to divest our respective shares in ALTIS
    Semiconductor S.N.C., Essonnes, France (ALTIS) via a
    sale to Advanced Electronic Systems AG (AES). Under
    the terms of the agreement in principle, AES will purchase the
    equity, which includes the real estate and technology assets of
    ALTIS, from us and IBM, and AES agreed to maintain the level of
    industrial activity of ALTIS. Pursuant to the agreement, we will
    enter into a two-year supply contract with ALTIS, and IBM and we
    will license certain manufacturing process technologies to AES
    for use by ALTIS. The agreement is subject to governmental and
    regulatory approval and works council consultation.
    We strengthened our research and development
    (R&D) activities through a strategic
    cooperation for the development of automotive electronics with
    Hyundai Motor Company (Hyundai) and the expansion of
    our R&D center in Singapore to better serve the growing
    demand for products in the energy efficiency, communications and
    security areas.
    As part of our ongoing efforts to improve our production
    processes and expand our production capabilities, we:  
    continued to invest in our first Asian-based front-end power
    fabrication facility located in Kulim
    Hi-Tech
    Park, Malaysia. The maximum capacity will be approximately
    100,000 wafer starts per month using 200-millimeter wafers. At
    the end of the 2007 fiscal year aggregate capital expenditures
    to date were 379 million and the production was
    running at 30,000 wafer starts per month. The new facility
    produces power and logic chips used in industrial and automotive
    power applications;
    qualified our 65-nanometer technology at several manufacturing
    partners and began transfer of our 45-nanometer technology to
    one of our manufacturing partners;
    extended our joint development agreements with IBM and its
    development and manufacturing partners to the 32-nanometer
    generation. This agreement builds on the success of earlier
    joint development and manufacturing agreements at 65-nanometer
    and 45-nanometer;
    we signed a memorandum of understanding (MoU) with
    Hindustan Semiconductor Manufacturing Corporation
    (HSMC), a newly established semiconductor company,
    whereby HSMC would license our leading-edge 130-nanometer CMOS
    process technology. This MoU will help build a foundation for
    the production of integrated circuits for mobile phones, ID
    cards and automotives in India for the Indian market. 3




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##### Table of Contents




    We continued to invest heavily in research and development and
    achieved a number of significant milestones and product
    developments during the year:  Energy Efficiency
  
    the presentation of the
    HybridPACKtm
    power module technology, using the IGBT (Insulated Gate Bipolar
    Transistor) chip technology, which increases energy efficiency
    of hybrid drives;
    the introduction of
    CIPOStm
    (Control Integrated Power System) modules, a new family of
    highly integrated intelligent power modules that contain nearly
    all of the semiconductor components required to drive
    electronically controlled variable-speed electric motors,
    designed to enable energy-efficient operation of consumer
    appliances such as washing machines and air conditioners,
    offering efficiencies of up to 94 percent;
    the announcement of an 8-bit embedded flash microcontroller
    product family, XC866Hot, that is qualified for high-temperature
    applications of up to +140°C, diminishing cooling
    requirements and thus reducing overall system cost in high
    temperature applications such as motor controls for heating and
    furnace systems, and electronic controls embedded inside motor
    drives;  Security
  
    the selection of our 32-bit security chip card flash
    microcontroller family as a winner of the 2006 Sesames Award in
    the category of Best Hardware for the unique combination of
    high-security and flash memory at the Cartes Trade Show in Paris;
    Infineon supplied secure memories and microcontrollers to
    government ID projects worldwide such as E-Passports in USA,
    Scandinavia and Hong Kong. By this, Infineon holds a leading
    position in the Government ID market.
    the announcement of a new software suite version for the
    management of computers using Trusted Platform Modules
    (TPM) in enterprise environments, which builds a
    comprehensive and Windows Vista ready secure solution compliant
    with the Trusted Computing Groups (TCG) 1.2
    specification;  Communications
  
    the introduction of the
    S-GOLD®radio,
    a single-chip solution for EDGE mobile phones. The
    S-GOLD®radio
    significantly reduces system component count, the modem printed
    circuit board area and the overall engineering bill-of-material;
    the presentation of two new single-chip RF CMOS transceivers,
    the
    SMARTi®
    PM+ and
    SMARTi®
    UE for EDGE and multi-mode 3G mobile phones, respectively;
    the introduction of Amazon-SE, a new ADSL2+
    system-on-a-chip
    solution for DSL modems and routers that will help drive
    broadband penetration in emerging markets.  Qimonda
  
  
    the validation of Qimondas DDR3 Memory components and
    modules on Intel reference platforms;
    the announcement of an agreement with SanDisk Corporation
    (SanDisk) to jointly develop and manufacture MCPs
    (Multi-Chip Packages) utilizing SanDisks NAND flash and
    controllers, and Qimondas low power mobile DRAM;
    the sampling of ultra-low power 512 Mbit Mobile-RAM for
    mobile applications. Qimonda uses a specifically designed
    75-nanometer low-power trench technology platform that is the
    basis for an entire Mobile DRAM product family in this node. The
    new Mobile-RAM is available as DDR and SDR via bond option and
    comes with two interfaces (x16/x32) and a single/dual sided pad
    out to fit any component, MCP, or system in package
    (SIP); 4




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##### Table of Contents




    the announcement of plans to build a new DRAM module
    manufacturing facility in Johor, Malaysia. The overall
    investment for this new DRAM module manufacturing facility,
    including IT integration, infrastructure and equipment, is
    expected to total up to 150 million over the next
    five years;
    the announcement of plans to build a new 300-millimeter
    front-end manufacturing facility in Singapore. Depending on the
    growth and development of the world semiconductor market,
    Qimonda plans to invest approximately 2 billion in
    the site over the next five years. With 20,000 square
    meters of clean room space, the new fab is expected to add
    60,000 wafer starts per month to Qimondas overall
    front-end capacity when fully ramped.  Our
    Business
      
    Our Automotive, Industrial & Multimarket segment
    designs, develops, manufactures and markets semiconductors and
    complete system solutions primarily for use in automotive,
    industrial and security applications, and applications with
    customer-specific product requirements.
    Our Communication Solutions segment designs, develops,
    manufactures and markets a wide range of ICs, other
    semiconductors and complete system solutions for wireline and
    wireless communication applications.
    Our majority-owned subsidiary Qimonda designs memory
    technologies and develops, manufactures, and markets a large
    variety of memory products on a module, component and chip level.    The
    Semiconductor Industry and Factors that Impact Our
    Business
    Cyclicality
   5




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Substantial
    Capital and R&D Expenditures
    per-unit
    ramp-up ramp-up
 6




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##### Table of Contents



ramp-up
    ramping-up
    Technological
    Development and Competition
    per-unit
  Seasonality
    Product
    Development Cycles
   7




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##### Table of Contents



Acquisition
    and Divestiture Strategy
    Intellectual
    Property
    Challenges
    that Lie Ahead
    Semiconductor
    Market Conditions in the 2007 Fiscal Year
   8




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##### Table of Contents



Results
    of Operations
  Results of
    Operations as a Percentage of Net Sales
    For the years ended September
    30,(1)2005


2006


2007Net sales


100.0
%


100.0
%


100.0
%Cost of goods sold


(72.6
)


(73.8
)


(79.3
)Gross profit


27.4



26.2



20.7Research and development expenses


(19.1
)


(15.8
)


(15.2
)Selling, general and administrative expenses


(9.7
)


(9.5
)


(9.1
)Restructuring charges


(1.2
)


(0.3
)


(0.6
)Other operating expense, net


(1.4
)


(1.4
)


(0.6
)Operating loss


(4.0
)


(0.8
)


(4.8
)Interest expense, net


(0.1
)


(1.2
)


(0.4
)Equity in earnings of associated companies, net


0.9



1.0



1.5Gain on subsidiaries and associated company share issuance, net


0.0



0.2



0.0Other non-operating income (expense), net


0.4



(0.4
)


0.2Minority interests


0.0



(0.3
)


0.2Loss before income taxes


(2.8
)


(1.5
)


(3.3
)Income tax expense


(1.8
)


(2.0
)


(1.0
)Loss before extraordinary loss


(4.6
)


(3.5
)


(4.3
)Extraordinary loss, net of tax


0.0



0.0



(0.5
)Net loss


(4.6
)%


(3.5
)%


(4.8
)%   (1)
    Columns may not add up due to rounding.  Reorganization
    Disclosure about
    Segments of an Enterprise and Related Information
     9




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##### Table of Contents



Net
    Sales
    
    Our logic products, which include a wide array of chips and
    components used in electronic applications ranging from wireless
    and wireline communication systems, chip cards, automotive
    electronics and industrial applications.
    Our memory products, such as DRAM products, which are used in
    computers and other electronic devices.        
    The market prices for our products, particularly our memory
    products;
    Our overall product mix and sales volumes;
    The stage of our products in their respective life
    cycles; and
    The effects of competition and competitive pricing strategies.  For the years ended September 30,2005


2006


2007( in millions, except percentages)Net sales


6,759



7,929



7,682Changes
    year-on-year






17
%


(3
)%Of which:License income


175



29



28% of net sales


3
%


0
%


0
%Effect of foreign exchange over prior year


(177
)


142



(174
)% of net sales


(3
)%


2
%


(2
)%Impact of acquisitions over prior year


2



40



16% of net sales


0
%


0
%


0
%    10




---



##### Table of Contents



Net Sales by
    Segment
  For the years ended September 30,2005


2006


2007( in millions, except percentages)Automotive, Industrial & Multimarket


2,516



37
%


2,839



36
%


3,017



39
%Communication
    Solutions(1)


1,391



21



1,205



15



1,051



14Other Operating
    Segments(2)


285



4



310



4



219



3Corporate and
    Eliminations(3)


(258
)


(4
)


(240
)


(3
)


(213
)


(3
)Subtotal


3,934



58



4,114



52



4,074



53Qimonda


2,825



42



3,815



48



3,608



47Total


6,759



100
%


7,929



100
%


7,682



100
%   (1)
    Includes inter-segment sales of 30 million for fiscal
    year ended September 30, 2007, and none in the 2005 and
    2006 fiscal years, from sales of wireless communication
    applications to Qimonda.(2)
    Includes inter-segment sales of 273 million,
    256 million and 189 million for fiscal
    years ended September 30, 2005, 2006 and 2007,
    respectively, from sales of wafers from Infineons
    200-millimeter facility in Dresden to Qimonda under foundry
    agreements.(3)
    Includes the elimination of inter-segment sales of
    273 million, 256 million and
    219 million for fiscal years ended September 30,
    2005, 2006 and 2007, respectively.  
    Automotive, Industrial & Multimarket In the 2006 fiscal year, the segment experienced
    healthy growth as sales volumes increased, particularly for
    automotive and industrial power applications, more than
    offsetting ongoing pricing pressure caused by technological
    developments and competition. We experienced strong pricing
    pressure in the market for chipcard ICs throughout the 2006
    fiscal year. Despite continued segment wide pricing pressure we
    were able to increase net sales in the 2007 fiscal year. The
    sales growth was mainly driven by continuing strong demand for
    high power products in industrial applications, an increase of
    sales for energy efficient devices in industrial and multimarket
    applications and increasing demand for government ID
    applications.
    Communication Solutions In the 2006 fiscal
    year, net sales in the Communication Solutions segment declined
    year-on-year
    due to a decrease in revenues in the wireless business mainly
    due to a continued decline in demand for baseband products, as
    well as ongoing pricing pressure. This decline was partly
    compensated by a strong increase in revenues in the wireline
    business. The decline in net sales in the 2007 fiscal year was
    primarily caused by a continued decrease in revenues in the
    wireless business mainly driven by the insolvency of BenQs
    German subsidiary as well as ongoing pricing pressure that could
    not be compensated by increased shipments of complete mobile
    phone platform solutions to leading customers such as LG,
    Panasonic, and ZTE. In addition, revenues in the wireline
    business declined mainly due to the phase-out of our fiber
    optics business during the 2006 fiscal year.
    Qimonda  Net sales in the 2006 fiscal year
    increased compared to the previous year mainly due to increased
    bit shipments and a favorable U.S. dollar/Euro exchange
    rate. The higher bit shipments resulted from the
    ramp-up of
    Qimondas 300-millimeter manufacturing facility in
    Richmond, the conversion of an increasing share of capacities to
    90-nanometer technology, and access to additional capacities of
    Qimondas joint venture partners and foundry partners, as
    well as the overall demand growth in the DRAM market and
    Qimondas successful diversification in new market
    segments, particularly with graphic DRAM products. These
    positive effects were partly offset by price declines in the
    DRAM market. The majority of Qimondas memory products
    sales reflected 512 Mbit DRAMs in the 2006 fiscal year. Net
    sales in the 2007 fiscal year decreased by
    207 million, or 5 percent, compared to the prior
    year, primarily due to the 29 percent decline in DRAM
    prices and the weakening in the U.S. dollar/Euro exchange
    rate. Offsetting these effects in part were higher bit 11




---



##### Table of Contents



shipments, which increased 44 percent. In the 2007 fiscal
    year, considerable progress was made with Qimondas
    diversification strategy by increasing the share of net sales of
    infrastructures, graphics, mobile and consumer DRAMs, which
    generally command higher and more stable prices than standard
    DRAMs. The share of net sales from DRAMs for these products
    increased to 60 percent in the 2007 fiscal year as compared
    to 51 percent in the 2006 fiscal year.    DRAM Price
    Development
  
  build-up
  
    Other Operating Segments Net sales in the
    2005, 2006, and 2007 fiscal years were mainly inter-segment
    sales of wafers from Infineons 200-millimeter facility in
    Dresden to Qimonda under foundry agreements which are eliminated
    in the Corporate and Eliminations segment. 12




---



##### Table of Contents



Net Sales by
    Region and Customer
  For the years ended September 30,2005


2006


2007( in millions, except percentages)Germany


1,354



20
%


1,327



17
%


1,164



15
%Other Europe


1,210



18



1,360



17



1,218



16North America


1,504



22



2,126



27



1,887



25Asia/Pacific


2,223



33



2,498



31



2,632



34Japan


332



5



461



6



661



9Other


136



2



157



2



120



1Total


6,759



100
%


7,929



100
%


7,682



100
%           Cost of Goods
    Sold and Gross Margin
    
    Direct materials, which consist principally of raw wafer costs;
    Labor costs;
    Overhead, including maintenance of production equipment,
    indirect materials, utilities and royalties;
    Depreciation and amortization;
    Subcontracted expenses for assembly and test services;
    Production support, including facilities, utilities, quality
    control, automated systems and management functions; and
    Foundry production costs.    
    Factory utilization rates and related idle capacity costs;
    Amortization of purchased intangible assets;
    Product warranty costs; 13




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##### Table of Contents




    Provisions for excess or obsolete inventories; and
    Government grants, which are recognized over the remaining
    useful life of the related manufacturing assets.    For the years ended September 30,2005


2006


2007( in millions, except percentages)Cost of goods sold


4,909



5,854



6,092Changes
    year-on-year






19
%


4
%% of net sales


73
%


74
%


79
%Gross margin


27
%


26
%


21
%     
    Automotive, Industrial & Multimarket In the 2006 fiscal year, our gross margin
    increased mainly due to a reduction in idle capacity costs. The
    gross margin remained on the same level in the 2007 fiscal year,
    as pricing pressure and certain corporate overhead expenses that
    resulted from the Qimonda carve out were compensated with
    productivity measures.
    Communication Solutions In the 2006 fiscal
    year, gross margin improved, mainly as a result of lower idle
    capacity costs and the successful implementation of productivity
    measures, which more than offset the inventory write-downs
    resulting from the insolvency of BenQs German subsidiary.
    In the 2007 fiscal year, the gross margin of this segment
    remained stable.
    Qimonda The gross margin decreased slightly
    during the 2006 fiscal year, primarily as a result of the lower
    level of license income. The Qimonda gross margin was under
    particular pressure early in the 2006 fiscal year when pricing
    pressure was higher, and improved later in the fiscal year. The
    gross margin decreased from 20 percent in the 2006 fiscal
    year to 6 percent in the 2007 fiscal year, primarily due to
    lower average selling prices, the weakening of the
    U.S. dollar, and inventory write downs of
    85 million. These negative effects could not be
    offset by lower production costs per unit resulting from
    increased manufacturing productivity.  Research and
    Development Expenses
   14




---



##### Table of Contents



For the years ended September 30,2005


2006



2007( in millions, except percentages)Research and development expenses


1,293



1,249




1,169Changes
    year-on-year






(3
)
%


(6
)
%% of net sales


19
%


16

%


15

%Government subsidies


50



67




115% of net sales


1
%


1

%


1

%     
    Automotive, Industrial & Multimarket In the 2006 fiscal year, R&D expenses
    remained approximately on the same level as in the 2005 fiscal
    year in absolute terms and slightly decreased as a percentage of
    net sales. In the 2007 fiscal year, R&D expenses remained
    stable as a percentage of net sales and slightly increased in
    absolute terms mainly driven by automotive and industrial
    applications.
    Communication Solutions In the 2006 fiscal
    year, R&D expenses declined in absolute terms but remained
    stable as a percentage of net sales as the effect of previously
    implemented efficiency programs was realized. In the 2007 fiscal
    year, R&D expenses continued to decline in absolute terms
    and remained stable as a percentage of net sales, reflecting the
    implementation of cost reduction measures in response to the
    insolvency of BenQs German subsidiary.
    Qimonda In the 2006 fiscal year, R&D
    expenses increased in absolute terms due to Qimondas
    effort to strengthen its development capabilities with respect
    to next-generation memory technologies and the further
    diversification of its portfolio of memory products, but
    decreased as a percentage of net sales due to the growth in net
    sales. In the 2007 fiscal year, R&D expenses decreased due
    to the completion of R&D work on 80-nanometer and
    75-nanometer technology platforms earlier in the 2007 fiscal
    year, and the focus on production support research before
    development efforts on 58-nanometer technology platform took off
    towards the end of the 2007 fiscal year. Qimonda also initiated
    cost saving measures in order to increase the productivity of
    development efforts.  Selling,
    General and Administrative (SG&A) Expenses
      For the years ended September 30,2005


2006


2007( in millions, except percentages)Selling, general and administrative expenses


655



751



700Changes
    year-on-year






15
%


(7
)
%% of net sales


10
%


9
%


9

%    15




---



##### Table of Contents



Other
    Items Affecting Earnings
  For the years ended September 30,2005


2006



2007( in millions, except percentages)Restructuring charges


78



23




45% of net sales


1
%


0

%


1

%Other operating expense, net


92



108




46% of net sales


1
%


1

%


1

%Equity in earnings of associated companies, net


57



78




117% of net sales


1
%


1

%


2

%Gain on subsidiaries and associated company
    share issuance, net






19




% of net sales


0
%


0

%


0

%Other non-operating income (expense), net


26



(33
)



13% of net sales


0
%


0

%


0

%Extraordinary loss, net of tax











(35
)% of net sales


0
%


0

%


0

%   Restructuring Charges.
  Other Operating Expense, net.
  Equity in Earnings of Associated Companies,
    net.
 16




---



##### Table of Contents



Gain on Subsidiaries and Associated Company Share Issuance,
    net.
    Other Non-Operating Income (Expense),
    net.
  Extraordinary Loss, net of tax. Consolidation of
    Variable Interest Entities  an Interpretation of ARB
    No. 51
 17




---



##### Table of Contents



Earnings
    Before Interest and Taxes (EBIT)
    For the years ended September 30,2005


2006


2007( in millions)Net loss


(312
)


(268
)


(368
)Add: Income tax expense


120



161



79Interest expense, net


9



92



33EBIT


(183
)


(15
)


(256
)     For the years ended September 30,2005


2006


2007( in millions)Automotive, Industrial & Multimarket


134



246



300Communication Solutions


(295
)


(231
)


(160
)Other Operating Segments


4



4



(12
)Corporate and Eliminations


(137
)


(236
)


(177
)Subtotal


(294
)


(217
)


(49
)Qimonda(1)


111



202



(207
)Total


(183
)


(15
)


(256
)   (1)
    EBIT of Qimonda for the period following its IPO are reported
    net of minority interests results.    
    Automotive, Industrial & Multimarket The EBIT improvement in the 2006 fiscal year was
    mainly due to higher sales volumes and improved gross margin,
    partially offset by continued strong price pressure especially
    in the automotive and chipcard businesses, costs related to
    product transfers in connection with the phase-out of production
    at Munich-Perlach, and costs incurred in connection with our
    production site in Kulim, Malaysia. In the 2007 fiscal year,
    EBIT further improved due to an increase in net sales and
    despite being negatively impacted by additional corporate
    expense allocations subsequent to the Qimonda carve out. In
    addition, a 17 million gain was realized from the
    sale of our POF business in June 2007 to Avago, which also had a
    positive impact on EBIT in the 2007 fiscal year.
    Communication Solutions In the 2006 fiscal
    year, EBIT was negatively impacted by charges aggregating
    91 million, primarily in connection with allowances
    recorded in response to the insolvency of BenQs German
    subsidiary. Despite these charges, EBIT improved in the 2006
    fiscal year mainly due to lower idle capacity costs and the
    implementation of cost reduction measures. In the 2007 fiscal
    year, EBIT continued to improve despite a further decline in net
    sales, as no significant charges were recognized and further
    cost reduction measures were successfully implemented. 18




---



##### Table of Contents




    Qimonda In the 2006 fiscal year, EBIT
    increased primarily due to sales volume growth, higher bit
    shipments and a favorable U.S. dollar/Euro exchange rate
    compared to the 2005 fiscal year. In the 2007 fiscal year, EBIT
    decreased significantly primarily due to deteriorating
    conditions in the DRAM market and inventory write-downs,
    resulting from negative DRAM price development and the weakening
    of the U.S. dollar with respect to the Euro.
    Other Operating Segments EBIT in the 2005
    fiscal year was positively impacted by a gain of
    13 million realized on the sale of our venture
    capital activities. EBIT in the 2006 fiscal year remained
    unchanged compared to the 2005 fiscal year. In the 2007 fiscal
    year, EBIT was negatively impacted by a downward adjustment of
    transfer prices resulting from the 200-millimeter wafer supply
    agreement between Infineon and Qimonda.
    Corporate and Elimination  EBIT declined in
    the 2006 fiscal year mainly due to aggregate charges of
    approximately 80 million incurred in connection with
    the formation of Qimonda, the dilution of our interest in
    Qimonda following its IPO, and our sale of Qimonda shares in
    that offering. In the 2007 fiscal year, EBIT of this segment was
    positively impacted by a reduction in idle production capacities
    at ALTIS compared to the 2006 fiscal year, a revision to accrued
    personnel costs of 22 million, and a decrease in
    stock option expenses of 13 million. On the other
    hand, we incurred a loss of 84 million from the sale
    of an additional 28.75 million Qimonda ADSs in the 2007
    fiscal year, which was recorded in this segment. Also,
    restructuring expenses increased by 22 million in
    comparison to the 2006 fiscal year.  Interest
    Expense, Net
    For the years ended September 30,2005

2006

2007( in millions, except percentages)Interest expense, net


(9
)



(92
)



(33
)% of net sales


0

%


(1
)
%


0

%     Income
    Taxes
  For the years ended September 30,2005


2006


2007( in millions, except percentages)Income tax expense


(120
)


(161
)


(79
)% of net sales


(2
)%


(2
)%


(1
)
%Effective tax rate


(63
)%


(150
)%


(31
)
%    19




---



##### Table of Contents



Net
    Loss
    Financial
    Condition
  As of September 30,% Change2006


2007


year-on-year( in millions, except percentages)Current assets


5,681



5,278



(7
)
%Non-current assets


5,504



5,401



(2
)
%Total assets


11,185



10,679



(5
)
%Current liabilities


3,305



2,847



(14
)
%Non-current liabilities


1,725



1,885



9

%Total liabilities


5,030



4,732



(6
)
%Minority Interests


840



1,033



23

%Shareholders equity


5,315



4,914



(8
)
%        20




---



##### Table of Contents



Financial
    Ratios
  As of September 30,2005



2006



2007Non-current asset
    intensity(1)


56

%


49

%


51

%Current asset
    intensity(2)


44

%


51

%


49

%Degree of wear of fixed
    assets(3)


67

%


72

%


72

%Depreciation rate of fixed
    assets(4)


11

%


10

%


9

%Inventory
    intensity(5)


10

%


11

%


11

%Inventory
    turnover(6)


6.8




7.1




6.4Inventory turnover in
    days(7)


53




50




57Days sales
    outstanding(8)


53




50




50Equity
    ratio(9)


55

%


48

%


46

%Return on
    equity(10)


(5
)
%


(5
)
%


(7
)
%Return on
    assets(11)


(3
)
%


(2
)
%


(3
)
%Equity-to-fixed-assets
    ratio(12)


150

%


141

%


135

%Debt-to-equity
    ratio(13)


30

%


38

%


35

%     (1)
    
    Non-current asset intensity =
    non-current assets / total assets(2)
    
    Current asset intensity = current
    assets / total assets(3)
    
    Degree of wear of fixed assets =
    accumulated depreciation on fixed assets / historical costs of
    fixed assets at the end of the fiscal year(4)
    
    Depreciation rate of fixed assets =
    annual depreciation of fixed assets / historical costs of fixed
    assets at the end of the fiscal year(5)
    
    Inventory intensity = inventory /
    total assets(6)
    
    Inventory turnover = annual net
    sales / average inventory(7)
    
    Inventory turnover in days =
    average inventory x 360 days / annual net sales(8)
    
    Days sales outstanding = average
    accounts receivable x 360 days / annual net sales(9)
    
    Equity ratio = equity / total assets(10)
    
    Return on equity = net income
    (loss) for the year / average equity(11)
    
    Return on assets = net income
    (loss) for the year / average total assets(12)
    
    Equity-to-fixed-assets ratio =
    equity / property, plant and equipment(13)
    
    Debt-to-equity ratio = (short-term
    debt + long-term debt) / equityThe average of a balance sheet
    position is calculated as the arithmetic average of the amount
    as of the balance sheet dates of the current and the prior years.         21




---



##### Table of Contents



Liquidity
  Cash
    Flow
      For the years ended September 30,2005


2006


2007( in millions)Net cash provided by operating activities


1,090



1,003



1,207Net cash used in investing
    activities(1)


(289
)


(853
)


(867
)Net cash provided by (used in) financing activities


(266
)


762



(521
)Cash and cash equivalents at end of year


1,148



2,040



1,819   (1)
    In the 2006 fiscal year the amount
    includes a 119 million cash increase as a result of
    the initial consolidation of ALTIS.        Free Cash
    Flow
   22




---



##### Table of Contents



For the years ended September 30,2005


2006


2007( in millions)Net cash provided by operating activities


1,090



1,003



1,207Net cash used in investing
    activities(1)


(289
)


(853
)


(867
)Sales of marketable securities, net


(1,082
)


(238
)


(133
)Free cash flow


(281
)


(88
)


207   (1)
    In the 2006 fiscal year, the amount includes a
    119 million cash increase as a result of the initial
    consolidation of ALTIS.  Net Cash
    Position
    Payments due by periodLessthan

1-2


2-3


3-4


4-5


AfterAs of September 30, 2007

Total

1 year

years


years


years


years


5 years( in millions)Cash and cash equivalents


1,819


1,819


















Marketable securities


475


475


















Gross cash position


2,294


2,294


















LessLong-term debt


1,376





207



1,002



95



26



46Short-term debt and current maturities


336


336


















Total financial debt


1,712


336


207



1,002



95



26



46Net cash position


582


1,958


(207
)


(1,002
)


(95
)


(26
)


(46
)            23




---



##### Table of Contents



Capital
    Requirements
    
    Finance our operations;
    Make scheduled debt payments;
    Settle contingencies if they occur; and
    Make planned capital expenditures.    
    Cash flows generated from operations;
    Cash on hand and securities we can sell; and
    Available credit facilities.    Commitments
    and Contingencies
  Payments Due/Expirations by PeriodLessthan

1-2

2-3

3-4

4-5

AfterAs of September 30,
    2007(1)(2)

Total

1 year

years

years

years

years

5 years( in millions)Contractual commitments:Operating lease payments


870


90


78


65


62


57


518Unconditional purchase commitments


1,212


1,161


29


11


6


1


4Other commitments


77


71


2


2


1


1


Total commitments


2,159


1,322


109


78


69


59


522Other contingencies:Guarantees(3)


209


25


22


1


14


30


117Contingent government
    grants(4)


462


125


40


56


171


30


40Total contingencies


671


150


62


57


185


60


157   (1)
    Certain payments of obligations or expiration of commitments
    that are based on the achievement of milestones or other events
    that are not date-certain are included for purposes of this
    table, based on our estimate of the reasonably likely timing of
    payments or expirations in each particular case. Actual outcomes
    could differ from those estimates.(2)
    Product purchase commitments associated with capacity
    reservation agreements are not included in this table, since the
    purchase prices are based, in part, on future market prices, and
    are accordingly not quantifiable at September 30, 2007.
    Purchases under such agreements aggregated
    1,165 million for the year ended September 30,
    2007.(3)
    Guarantees are mainly issued for the payment of import duties,
    rentals of buildings and contingent obligations related to
    government grants received.(4)
    Contingent government grants refer to amounts previously
    received, related to the construction and financing of certain
    production facilities, which are not guaranteed otherwise and
    could be refundable if the total project requirements are not
    met.   24




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Capital
    Expenditures
  For the years ended September 30,2005


2006


2007( in millions)Non-memory
    businesses(1)


442



567



496Qimonda


926



686



879Total


1,368



1,253



1,375   (1)
    Includes elimination of inter-segment transfers of
    149 million, 37 million and
    2 million for fiscal years ended September 30,
    2005, 2006 and 2007, respectively.    Credit
    Facilities
    As of September 30, 2007Nature of financial



AggregateTerm

institution commitment

Purpose/intended use

facility


Drawn


Available( in millions)Short-term

firm commitment

working capital, guarantees


164



127



37Short-term

no firm commitment

working capital, cash management


336



28



308Long-term(1)

firm commitment

general corporate purposes


766



165



601Long-term(1)

firm commitment

project finance


354



354



Total






1,620



674



946   (1)
    Including current maturities.   25




---



##### Table of Contents



Pension Plan
    Funding
           26




---



##### Table of Contents



Financial
    Instruments
    Employees
    As of September 30,2005


2006


2007Function:Production


25,114



29,641



30,210Research & Development


7,401



7,745



8,339Sales & Marketing


2,016



2,101



2,223Administrative


1,909



2,164



2,307Total


36,440



41,651



43,079Region:Germany


16,119



15,736



15,223Europe


5,482



7,244



7,739North America


3,193



3,295



3,536Asia/Pacific


11,451



15,148



16,365Japan


158



187



216Other


37



41



Total


36,440



41,651



43,079       Critical
    Accounting Policies
   27




---



##### Table of Contents



Revenue
    Recognition
      Revenue Recognition No. 00-21, Revenue Arrangements with Multiple Elements
  Recoverability
    of Long-Lived Assets
    Goodwill and Other Intangible Assets
     28




---



##### Table of Contents



Valuation of
    Inventory
  build-up
      Recoverability
    of Long-Term Investments
         29




---



##### Table of Contents



Realization of
    Deferred Tax Assets
          Purchase
    Accounting
      Pension Plan
    Accounting
  projected-unit-credit
 30




---



##### Table of Contents



Employers Accounting for Pensions
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans  an amendment of FASB
    Statements No. 87, 88, 106, and 132(R)
  Consolidated Balance Sheets.
        Consolidated Statements of
    Operations.
     31




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As of September 30,2006


2007( in millions)Accumulated other comprehensive income


87



42Less income tax effect






3Accumulated other comprehensive income, net of income taxes


87



45Non-current pension assets






60Current pension liabilities






5Non-current pension liabilities


134



111   Consolidated Statements of Cash
    Flows.
    Pension benefits  Sensitivity
    Analysis.
  Effect on net periodic pension costsOne percentage


One percentageincrease


decrease( in millions)Discount rate


(5
)


3Rate of compensation increase


3



(4
)Rate of projected future pension increases


1



(2
)Expected return on plan assets


(4
)


4       Contingencies
     32




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Recent
    Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes 
    an Interpretation of FASB Statement 109
  Fair Value Measurements
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans  an amendment of FASB
    Statements No. 87, 88, 106, and 132(R),
  The Fair Value Option for Financial Assets and
    Financial Liabilities  including an amendment of FASB
    Statement No. 115 instrument-by-instrument
 33




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International
    Financial Reporting Standards (IFRS)
        
    Under U.S. GAAP, development costs are expensed as
    incurred. IFRS requires capitalization and amortization of
    development costs when specific criteria are met.
    Our convertible and exchangeable subordinated notes are
    accounted for differently under U.S. GAAP and IFRS. Under
    U.S. GAAP, the convertible and exchangeable subordinated
    notes are recorded in their entirety as debt and accreted to
    face value through maturity. In contrast to U.S. GAAP,
    under IFRS the convertible and exchangeable notes are considered
    hybrid financial instruments that require bifurcation into a
    debt component which is accreted through maturity, and a
    conversion right component which is classified as equity.
    Employee benefits are accounted for differently under
    U.S. GAAP and IFRS. We currently intend to adopt the so
    called SoRIE approach (Statement of Recognized Income and
    Expense) under IAS 19, Employee
    Benefits, for accounting for pension and other post
    employment benefits. Under the SoRIE approach, the funded status
    of defined benefit plans is recognized in the consolidated
    balance sheets, and actuarial gains and losses are recorded in a
    consolidated statement of recognized income and
    expense which is presented in lieu of a statement in
    changes of equity. Unlike U.S. GAAP, under the IFRS
    application of the SoRIE approach there is no recycling of
    actuarial gains and losses previously recorded in the statement
    of other comprehensive income (loss) through the consolidated
    statements of operations in subsequent periods.
    The adjustments described above will also result in differences
    between the carrying amount of assets and liabilities in the
    consolidated financial statements and their tax bases, which
    will give rise to additional deferred tax assets and
    liabilities. Furthermore, there are additional differences
    between U.S. GAAP and IFRS in areas of accounting such as
    deferred tax treatment of intra-group transfers and temporary
    differences arising at the initial recognition of certain assets
    and liabilities.   34




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Quantitative
    and Qualitative Disclosure about Market Risk
      Commodity
    Price Risk
      Foreign
    Exchange and Interest Risk
   35




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Derivative
    Financial Instruments
  Averagecontractual


Fair valueContract amount


forward


September 28,buy/(sell)


exchange rate


2007( in millions)





( in millions)Foreign currency forward contracts:U.S. dollar


356



1.34147



(20
)U.S. dollar


(735
)


1.37113



25Japanese yen


73



157.56630



(2
)Japanese yen


(17
)


159.56780



Singapore dollar


24



2.07241



Great Britain pound


6



2.10100



Malaysian ringgit


83



4.74346



(2
)Malaysian ringgit


(3
)


4.78000



Norwegian krone


7



7.94509



Norwegian krone


(2
)


7.92011



Other currencies


1







Interest rate swaps


700



n/a



(10
)Other


231



n/a



20Fair value, net










11     Accounting for Derivative
    Instruments and Hedging Activities
   36




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Interest Rate
    Risk
      Outlook
  Industry
    Environment and Outlook
    Outlook for
    Infineon excluding Qimonda
  Significant planning assumptions:
  Net Sales of Infineon excluding Qimonda:
 37




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EBIT of Infineon excluding Qimonda:
  ramp-ups
 38




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Fixed assets investment and depreciation for Infineon
    excluding Qimonda:
  Expenditures for research & development for
    Infineon excluding Qimonda: system-on-a-chip
 39




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Qimonda
    Segment
    75-nanometer
    cost-per-bit ramp-up
        Subsequent
    Events
     40




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Wi-LAN
     41




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RISK
    FACTORS
  You should carefully consider the risks described below
    before making an investment decision. The occurrence of any of
    the following events could harm us. If these events occur, the
    trading price of our companys shares could decline, and
    you may lose all or part of your investment. Additional risks
    not currently known to us or that we now deem immaterial may
    also harm us and affect your investment.
  Risks related to
    the semiconductor industry
  We operate in
    a highly cyclical industry and our business could suffer from
    periodic downturns.
        Industry
    overcapacity could require us to lower our prices, particularly
    for Qimondas memory products.
      The
    semiconductor industry, particularly in the memory products
    arena, is characterized by intense competition, which could
    reduce our sales or put continued pressure on our
    prices.
   42




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
    design and develop new products and introduce them in a timely
    manner;
    develop and successfully implement improved manufacturing
    process technologies to reduce its per-megabit costs; and
    broaden its DRAM customer base, to reduce its dependence on a
    small number of customers and position itself to increase its
    market share.    
    the extent to which and the pace at which customers incorporate
    its memory products into their devices;
    whether electronics manufacturers design their products to use
    DRAM configurations or new types of memory products that Qimonda
    does not offer;
    the number and nature of its competitors; and
    general economic conditions.    A mismatch
    between the specific DRAM chips Qimonda or the DRAM industry
    generally are producing and the platforms for which equipment
    manufacturers require DRAMs can lead to declining prices for the
    DRAMs Qimonda produces and consequently to material inventory
    write-downs.
      Risks related to
    our operations
  We may not be
    able to protect our proprietary intellectual property and may be
    accused of infringing the intellectual property rights of
    others.
   43




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Our results
    may suffer if we are not able to match our production capacity
    to demand.
        Qimonda may be
    unable to reduce its per megabit manufacturing costs at the same
    rate as in the past.
    Fluctuation in
    the mix of products sold may adversely affect our financial
    results.
    Our business
    could suffer from problems with manufacturing.
   44




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We may be
    unable to successfully integrate businesses we acquire, and may
    be required to record charges related to the goodwill or other
    long-term assets associated with the acquired
    businesses.
      If we fail to
    successfully implement an optimum make-or-buy strategy, our
    business could suffer from higher costs.
    Our business
    could suffer due to decreases in the volume of demand of our
    customers.
    New business
    is often subject to a competitive selection process that can be
    lengthy and uncertain and that requires us to incur significant
    expenses. Even if we win and begin a product design, a customer
    may decide to cancel or change its product plans, which could
    cause us to generate no sales from a product and adversely
    affect our results of operations.
   45




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We have a
    limited number of suppliers of manufacturing equipment and raw
    materials, and we could suffer shortages if they were to
    interrupt supply or increase prices.
  just-in-time
  Our success
    depends on our ability to recruit and retain a sufficient number
    of qualified key personnel.
  and/or
  Our business
    could suffer if we do not have adequate access to
    capital.
     46




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Our business
    could suffer if we are not able to secure the development of new
    technologies or if we cannot keep pace with the technology
    development of our competition.
    We rely on our
    strategic partners and other third parties, and our business
    could be harmed if they fail to perform as expected or
    relationships with them were to be terminated.
  and/or
  
    reduced control over delivery schedules and product costs;
    manufacturing costs that are higher than anticipated;
    the inability of our manufacturing partners to develop
    manufacturing methods appropriate for our products and their
    unwillingness to devote adequate capacity to produce our
    products;
    a decline in product reliability;
    an inability to maintain continuing relationships with our
    suppliers; and
    limited ability to meet customer demand when faced with product
    shortages.    Our business
    could suffer as a result of volatility in different parts of the
    world.
    
    negative economic developments in foreign economies and
    instability of foreign governments, including the threat of war,
    terrorist attacks, epidemic or civil unrest;
    changes in laws and policies affecting trade and
    investment; and
    varying practices of the regulatory, tax, judicial and
    administrative bodies in the jurisdictions where we operate. 47




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Our operating
    results may fluctuate significantly from quarter to quarter, and
    as a result we may fail to meet the expectations of securities
    analysts and investors, which could cause our stock price to
    decline.
    
    the overall cyclicality of, and changing economic and market
    conditions in, the semiconductor industry, as well as
    seasonality in sales of consumer products into which our
    products are incorporated;
    our ability to scale our operations in response to changes in
    demand for our existing products and services or demand for new
    products requested by our customers;
    intellectual property disputes, customer indemnification claims
    and other types of litigation risks;
    the gain or loss of a key customer, design win or order;
    the timing, rescheduling or cancellation of significant customer
    orders and our ability, as well as the ability of our customers,
    to manage inventory; and
    additional changes in accounting rules, such as the change
    requiring the recording of expenses for employee shares options
    and other stock-based compensation expense, which commenced in
    the 2006 fiscal year.    Our results of
    operations and financial condition can be adversely impacted by
    changes in exchange rates.
      Changes in tax
    regulations could result in lower earnings and cash
    flows.
   48




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Environmental
    laws and regulations may expose us to liability and increase our
    costs.
            Products that
    do not meet customer specifications or that contain, or are
    perceived to contain, defects or errors or that are otherwise
    incompatible with their intended end use could impose
    significant costs on us.
    Qimonda may
    face difficulties in shifting to new memory technologies that
    are not based on silicon.
   49




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We are subject
    to the risk of loss due to explosion and fire because some of
    the materials we use in our manufacturing processes are highly
    combustible.
    Reductions in
    the amount of government subsidies we receive or demands for
    repayment could increase our reported expenses or limit our
    ability to fund our capital expenditures.
          We are a
    subject of investigations in several jurisdictions in connection
    with pricing practices in the DRAM industry, and are a defendant
    in civil antitrust claims in connection with these
    matters.
     50




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Purported
    class action lawsuits have been filed against us alleging
    securities fraud.
    We might be
    faced with product liability or warranty claims.
    Siemens
    exercises partial control over some of our intellectual property
    rights and could use these rights to compete with
    us.
   51




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As the
    majority shareholder in Qimonda we may be negatively impacted by
    adverse developments in the business of Qimonda or declines in
    the market price of its securities.
    The carve-out
    of Qimonda and its subsequent public listing may fail to produce
    the long-term strategic, operational and financing benefits we
    envision.
    
    increased market responsiveness through an exclusive focus on
    our respective customers;
    access to separate and distinct investor bases;
    employee incentives more directly tied to the performance of the
    individual companies; and
    increased flexibility to pursue strategic options.   52




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BUSINESS
  Overview
          Corporate
    Developments
  Infineon
    Logic
  
    In February 2007, we signed an agreement with Nokia to supply
    baseband and RF chips for GSM mobile handsets. The highly
    integrated single-chip
    E-GOLDtmvoice
    will be incorporated in selected future entry-level Nokia
    phones.
    In March 2007, we and Hyundai announced a strategic cooperation
    for the development of automotive electronics, pursuant to which
    we will develop automotive electronic system solutions for
    Hyundai and Kia vehicles. Under the agreement, the companies
    will also open a joint innovation center for further development
    in this regard.
    In March 2007, we entered into a definitive agreement with Avago
    Technologies, under which Avago acquired our POF business, based
    in Regensburg, Germany. The transaction closed in the third
    quarter of the 2007 fiscal year.
    In April 2007, we decided to expand our R&D operations in
    Singapore with an investment of approximately
    200 million. We will focus on next-generation
    home-networking
    technologies, Customer Premises Equipment (CPE),
    Integrated Access Devices (IAD), mobile phone
    platforms (ultra-low cost), Digital Video Broadcasting
    (DVB) for mobile TV, digital power control for power
    management, microcontroller for automotive and industrial
    applications, process technologies for wafer fabrication and
    packaging, and Application Specific IC (ASIC) design.
    In May 2007, we expanded technology agreements with IBM,
    Chartered, Samsung and Freescale. The most recent agreement is
    in effect through 2010, and includes 32-nanometer bulk
    complementary metal oxide semiconductor (CMOS)
    process technology and joint development of process design kits
    (PDK) to support product designs in those advanced
    technologies.
    In June 2007, we entered an agreement with Texas Instruments
    Inc. to acquire its DSL CPE business. We plan to continue
    supporting Texas Instruments Inc.s product portfolio and
    existing customer designs while leveraging the acquired
    experience in future product generations. The transaction closed
    in the fourth quarter of the 2007 fiscal year.
    In August 2007, we entered into an agreement to acquire the
    Mobility Products Group of LSI Corporation, which will further
    strengthen our wireless communications business. The transaction
    closed in the first quarter of the 2008 fiscal year. 53




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##### Table of Contents




    Also in August 2007, we, IBM and Advanced Electronic Systems AG
    (AES) entered into an agreement under which AES will
    acquire ALTIS Semiconductor S.N.C. from Infineon and IBM, each
    of which currently holds a 50 percent interest. The
    agreement is subject to governmental and regulatory approval,
    and works-council consultation, and is expected to close in the
    first quarter of the 2008 fiscal year. We further agreed to
    enter into a two-year supply contract with ALTIS, and IBM and we
    agreed to license key manufacturing process technologies to AES
    for use by ALTIS.
    In September 2007, we entered into a joint venture agreement
    with Siemens AG (Siemens), whereby we would
    contribute all assets and liabilities of our high power bipolar
    business (including licenses, patents, and front-end and
    back-end production assets) into a newly formed legal entity
    called Infineon Technologies Bipolar GmbH & Co. KG
    (Bipolar) and Siemens would acquire a
    40 percent interest in Bipolar for 37 million.
    The transaction closed in the first quarter of the 2008 fiscal
    year.
    In September 2007, we sold an additional 28.75 million
    Qimonda ADSs (including the underwriters
    over-allotment option) for an offering price of $10.92 per ADS,
    resulting in net proceeds of 216 million. As a
    result, our ownership interest in Qimonda decreased to
    77.5 percent. In parallel, our fully owned subsidiary
    Infineon Technologies Investment B.V. issued notes exchangeable
    into ADSs of Qimonda in the amount of 215 million
    (including the underwriters over-allotment option).
    In September 2007, we entered into an agreement with Motorola to
    develop a new multi-mode, single-chip 3G radio frequency
    (RF) transceiver based on Infineons
    SMARTi®
    UE chip. The new RF chip will address the growing market for 3G
    services by offering maximum HSDPA and HSUPA performance,
    efficient power consumption and slim design.  Qimonda
  
    In March 2007, Qimonda announced plans to construct a new DRAM
    module manufacturing facility in Johor, Malaysia. The overall
    investment for this new facility, including IT integration,
    infrastructure and equipment, is expected to total up to
    150 million over the next five years.
    In April 2007, Qimonda and Spansion signed a strategic supply
    agreement to deliver optimized memory subsystems to mobile
    customers by combining Qimondas low-power specialty DRAM
    with
    Spansion®
    MirrorBit®
    NOR and
    ORNANDtm
    devices into Multi-Chip Packages (MCP) memory
    solutions for mobile devices.
    In April 2007, Qimonda and SanDisk entered into an agreement to
    jointly develop and manufacture MCPs utilizing SanDisks
    NAND flash and controllers and Qimondas low power mobile
    DRAM.
    In April 2007, Qimonda announced plans to build a new
    300-millimeter front-end manufacturing facility in Singapore.
    Depending on the growth and development of the world
    semiconductor market, Qimonda plans to invest approximately
    2 billion in the site over the next five years. The
    20,000 square meter clean room space is expected to add 60,000
    wafer starts per month to Qimondas overall front-end
    capacity when fully ramped.
    In June 2007, Qimonda extended its foundry agreement with
    Winbond. Under the terms of this agreement, Qimonda will
    transfer its 75-nanometer and 58-nanometer DRAM trench
    technology to Winbonds 300-millimeter facility in
    Taichung, Taiwan. In return, Winbond will manufacture DRAMs for
    computing applications using these technologies exclusively for
    Qimonda.
    In August 2007, Qimonda expanded its foundry agreement with
    SMIC. Under the terms of the agreement, Qimonda will transfer
    its 80-nanometer DRAM trench technology to SMICs
    300-millimeter
    facility in Beijing and SMIC will manufacture DRAMs for
    computing applications using this technology exclusively for
    Qimonda. Furthermore, the agreement includes the option to
    transfer Qimondas 75-nanometer technology to SMIC in the
    future.
    In August 2007, Qimonda announced its plans to set up a new
    Development Center for the development of memory products in
    Suzhou, China. The additional development capacities will 54




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serve Qimondas target to further expand and diversify its
    product portfolio. The Development Center started operations in
    October 2007.  Technical and
    Product Developments
  Infineon
    Logic
  
    Our stand-alone
    FlexRaytm
    communication controller CIC-310 for high-speed in-vehicle
    communications passed the FlexRay conformance test. We are one
    of the first semiconductor suppliers to deliver high-volumes of
    FlexRay-enabled microcontroller solutions in conformance with
    the FlexRay protocol specification V2.1.
    We successfully ramped-up our 32bit TriCore (TM) AUDO-NG
    products in our 130-nanometer embedded flash technology in the
    Dresden (Germany) facility. The AUDO-NG product family
    comprising of TC1796, TC1766 and further derivatives is
    optimized for mid-range to highest-end powertrain applications.
    With the successful ramp-up to high volume production at highest
    quality, we have enabled our automotive customer base to
    introduce new engine platforms at the car manufactures to
    increase fuel efficiency.
    We began to supply our highly-secure contact-less smartcard
    microcontrollers in connection with MasterCards PayPass
    deployments in 13 countries worldwide, including Taiwan,
    Malaysia, Australia and the US.
    We introduced our new miniature silicon microphone
    for consumer and computer communication devices. It is
    approximately one-half the size and operates on just one-third
    the power of conventional microphones and contains silicon MEMS
    (micro-electrical-mechanical system) technology. The new
    microphone achieves the same acoustic and electrical properties
    as conventional microphones, but is more rugged and exhibits
    higher heat resistance.
    We announced our next-generation family of power semiconductors
    used for DC/DC converter applications in computers,
    telecommunications and consumer electronic devices, enabling
    significant power savings.
    We introduced the first two members of our new family of
    electronic power modules designed for hybrid electric vehicle
    (HEV) motor drive systems: the HybridPACK1 and
    HybridPACK2 power modules. These systems reduce electrical
    power losses by one-fifth, enabling simpler cooling systems.
    We introduced the
    SMARTi®
    WiMAX, a single-chip multi-mode dual-band CMOS RF-transceiver
    for WiMAX/WiFi applications that supports the entire spectrum of
    licensed WiMAX frequencies, allowing for worldwide
    implementation and seamless roaming using a single RF device.
    We introduced
    S-GOLD®
    radio, a single-chip solution for EDGE mobile phones. The
    S-GOLD®
    radio significantly reduces system component count, the modem
    printed circuit board area and the overall engineering
    bill-of-materials.
    We presented two new single-chip RF CMOS transceivers, the
    SMARTi®
    PM+ and
    SMARTi®
    UE for EDGE and multi-mode 3G mobile phones, respectively.
    We introduced Amazon-SE, a new ADSL2+ system-on-a-chip solution
    for DSL modems and routers that will help drive broadband
    penetration in emerging markets.
    We introduced a wireless broadband integrated access device
    (IAD) reference design for Digital Home Network.  Qimonda
  
    Qimonda launched the industrys first Mobile-RAM with
    183MHz performance. 55




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##### Table of Contents




    Intel validated Qimondas Advanced Memory Buffer Chip,
    supporting next-generation server memory.
    Qimonda introduced the industrys first quad-rank, 8GB DDR2
    Fully-Buffered
    Dual-In-Line
    Memory Modules (FB-DIMMs), an enabling technology to
    drive the next generation of multi-core server performance while
    lowering server power consumption.
    Qimonda DDR3 Memory components and modules were validated on
    Intel reference platforms.
    Qimonda sampled ultra-low power 512 Mbit Mobile-RAM for
    mobile applications. Qimonda uses a specifically designed
    75-nanometer low-power trench technology platform that is the
    basis for an entire Mobile DRAM product family in this node.  Industry
    Background
      Strategy
      
    Build on our market leadership position in the field of
    semiconductors, in particular by helping to improve energy
    efficiency.We believe that our success to
    date has been based on a deep understanding of a wide range of
    applications for the automotive and industrial sectors as well
    as for personal computers and other consumer devices. Our
    leading position in these areas is built on high-performance
    products, superior process technologies and optimized in-house
    manufacturing capabilities. We see significant growth potential
    for our power business, driven by high energy costs and the need
    for ever longer battery lifetimes in mobile devices.
    Provide the technology to be connected every
    day & everywhere  from home, in the office
    or on the way.We seek to continue to profit
    from our key strengths in areas such as RF technology and
    wireline access. In order to benefit from the ever-increasing
    need for mobility and communication in all aspects of day-to-day
    life, we intend to broaden our customer base and to focus on the
    most promising solutions for future profitable growth, such as
    cellular phone platforms and broadband customer premises
    equipment. 56




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
    Strengthen our leadership position in security
    solutions.  We intend to leverage our know-how
    to address applications in new areas, and believe we are well
    positioned to benefit from future trends like the transition to
    e-passports
    and the implementation of digital rights management in consumer
    devices. We believe that the ever-increasing digitalization and
    increasing mobility in daily life will be a key driver for our
    security & safety business.
    Selectively strengthen our core businesses through
    strategic acquisitions.Following the
    carve-out of the Qimonda business, we have been seeking to
    expand the breadth and depth of our core operations in
    automotive and industrial applications and communications, in
    particular through selective acquisitions of other businesses
    and technologies. We anticipate that we will use a portion of
    the proceeds of any further sales of Qimonda shares to pursue
    additional acquisition opportunities.
    Manage carefully the mix of make-versus-buy in
    manufacturing and process technology
    development.We intend to continue to invest
    in those process technologies where Infineon has a clear
    competitive advantage such as power, embedded flash and RF
    technologies. At the same time, in standard CMOS below
    90-nanometer, we will continue to share risks and expand our
    access to leading-edge technology through long-term strategic
    partnerships with other leading industry participants. We do not
    intend to invest in in-house capacity for standard-CMOS
    processes below the 90-nanometer node, and we will make more
    extensive use of manufacturing at silicon foundries.    
    Improve its average selling prices by increasing its focus on
    DRAM products for advanced infrastructure, graphics, mobile and
    consumer applications.
    Leverage its technology leadership and increase its presence in
    low-cost regions to continue to reduce unit costs.
    Improve profitability and return on capital throughout the
    memory product industrys business cycle.   57




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##### Table of Contents



Products
    and Applications
    Principal
    Products, Applications and Customers
  FourLargestCustomersin the 2007FiscalSegment

Principal Products

Principal Applications

YearAutomotive, Industrial & Multimarket

Power semiconductors (discretes, ICs and modules), sensors and
    microcontrollers (8-bit, 16-bit, 32-bit) with and without
    embedded memory, silicon discretes, chip card and security ICs,
    ASIC design solutions including secure ASICs, Trusted Platform
    Modules

Automotive: Powertrain (engine control, transmission control,
    hybrid), body and convenience (comfort electronics, air
    conditioning), safety and vehicle dynamics (ABS, airbag,
    stability control), infotainment (wireless communication,
    telematics/navigation)

Avnet, Bosch, Siemens, Silicon Application CorporationIndustrial & Multimarket: Power management &
    supplies, lighting, drives, power generation and distribution,
    industrial control, discrete commodity products (e.g., handsets)Security & ASICs: Chip card and security ICs (e.g.,
    for mobile communication, identification, finance), platform
    security for computers and in networks (i.e., Trusted Platform
    Modules), hard disks, game consoles, hearing aids, computer
    peripheralsCommunication Solutions

Baseband ICs, RF transceivers, power management ICs, single chip
    ICs integrating these components, mobile phone platform
    solutions including software, DECT chipsets, tuner ICs,
    RF-power
    transistors, ICs for voice access and core access (e.g., CODECs,
    SLICs, ISDN, T/E), broadband access ICs for xDSL CO/CPE, VoIP,
    switch and PHY, system solutions for DSL-modems, home-gateways

Mobile telephone systems for major standards (GSM, GPRS, EDGE,
    UMTS), cordless telephone systems for major standards (WDCT,
    DECT), RF connectivity solutions (e.g., Bluetooth, GPS),
    cellular base stations, voice access and core access, broadband
    access solutions for central office, broadband customer premises
    equipment and home networking equipment

Avnet, LG, Nokia, SiemensQimonda

Standard DRAM components (DDR, DDR2)

Memory modules,
    components-on-mainboards,
    consumer devices (digital TV, set-top boxes, DVD recorders)

Dell, HP, Kingston, SonyPersonal system DRAM modules (Unbuffered DIMMs with and without
    ECC, SO-DIMMs, Micro-DIMMs)

Desktop computers, workstations,
    entry-level
    servers, notebook computers, sub-notebooks, ultra-mobile PCsInfrastructure DRAM modules (Registered DIMMs, FB-DIMMs,
    VLP-DIMMs)

Servers, Workstations, blade serversNetworking, storage and industrial DRAM products

Networking, telecom and industrial equipment, storageGraphics (DDR2, GDDR3)

Graphic cards in desktop and notebook computers, game consolesMobile and Consumer (Mobile-RAM, Cellular-RAM)

Top- and mid-range mobile phones (2.5G/3G), PDAs, digital still
    cameras, digital audio players, GPS  58




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##### Table of Contents



Automotive,
    Industrial & Multimarket
    Automotive
      
    Semiconductors for power train applications, which perform
    functions such as engine and transmission control and hybrid
    power trains;
    Semiconductors for safety management, which manage tasks such as
    the operation of airbags, anti-lock braking systems, electronic
    stability systems, power steering systems and tire pressure
    monitoring systems;
    Semiconductors for body and convenience systems, which include
    light modules, heating, ventilation and air conditioning
    systems, door modules (power windows, door locks, mirror
    control) and electrical power distribution systems; and
    Semiconductors for infotainment, such as those used for wireless
    communication and navigation/telematics.       59




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##### Table of Contents



tm
  Industrial &
    Multimarket
          
    Power supplies (AC/DC), divided into two main categories:
    uninterruptible power supplies, such as power backbones for
    Internet servers; and switched-mode power supplies for PCs,
    servers and consumer electronics such as televisions and gaming
    consoles, as well as battery chargers for mobile phones,
    notebook computers and other handheld devices;
    DC/DC power converters for computing and communication
    applications such as motherboards, telecommunications equipment
    and graphic cards;
    Lighting (electronic lamp ballast and control);
    Drives for machine tools, motor controls, pumps, fans and
    heating, ventilation, consumer appliances (such as washing
    machines), air-conditioning systems and transportation as well
    as power supplies for additional consumer appliances such as
    inductive cooking;
    Industrial automation, meters and sensors;
    Power generation, especially in the fields of renewables and
    power distribution systems; and
    Other industrial applications such as medical equipment.    
    AF (audio frequency) discretes (general purpose diodes and
    transistors, switching diodes, digital transistors);
    RF (radio frequency) discretes (diodes, transistors, Small Scale
    Integrated Circuits (SSICs), Monolithic ICs); 60




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##### Table of Contents




    HIPACtm
    (High Performance Active and Passive Integration) devices
    offering ESD/EMI (Electro Static Discharge/Electro Magnetic
    Interference) protection and high integration in advanced
    applications (e.g. in mobile communication devices); and
    SMM (Silicon MEMS Microphone): acoustical sensors based on MEMS
    (Micro-Electro-Mechanical System) semiconductor technology (for
    use in mobile phone applications, for example).  Security &
    ASICs
              
    Systems on Chip (SoC) for hard disk drive
    (HDD) applications;
    Products for computer and gaming peripherals (e.g., in wireless
    control pads or memory sticks);
    Secure ASICs, taking advantage of our security know-how (e.g.,
    for authentication or copy protection);
    Trusted Platform Module (TPM) products
    (hardware-based security for trusted computing); and
    Customer designs manufactured by us on a foundry basis.    Communication
    Solutions
    Wireless
    Communications
  single-chip radio-frequency
 61




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##### Table of Contents




    GSM, or Global System for Mobile Communication, which is the de
    facto wireless telephone standard in Europe and available in
    more than 120 countries. GSM is a wireless mobile
    telecommunication standard that includes General Packet Radio
    Service (GPRS), Enhanced Data rate for GSM Evolution
    (EDGE), and Universal Mobile Telecommunications
    System (UMTS). We offer products and solutions such
    as baseband ICs, RF transceivers, power management ICs,
    single-chip ICs integrating these components, mobile software,
    and reference designs addressing all of these wireless
    communication standards;
    UMTS, a GSM-based standard for third-generation (3G)
    broadband, packet-based transmission of text, digitized voice,
    video, and multimedia at data rates up to 2 megabits per second
    (Mbps). We offer complete multimedia mobile phone
    platforms, RF transceivers and mobile software for UMTS and also
    for the next generation HSDPA standard (High-Speed Downlink
    Packet Access) that supports data rates of up to 7.2 Mbps;
    DECT (Digital Enhanced Cordless Telecommunications) and WDCT
    (Worldwide Digital Cordless Telecommunications) standards for
    digital cordless phones. We offer complete WDCT system solutions
    for the 2.4 GHz ISM frequency band, which is available
    worldwide, as well as complete DECT system solutions for the
    whole range of telephone models required from the
    market  from
    low-featured
    entry models to high-featured comfort models. This includes all
    necessary RF components, including low-noise transceivers and
    power amplifiers, as well as all baseband components such as
    residential handset and base station controllers;
    DVB (Digital Video Broadcasting), covering a number of generally
    accepted protocol standards for digital television. DVB-T
    (Digital Video Broadcasting  Terrestrial) and DVB-H
    (Digital Video Broadcasting  Handhelds) are
    television protocol standards that enable digital transmission
    of digital content for moving reception devices, such as mobile
    phones and PDAs (Personal Digital Assistants). We offer tuner
    ICs for stationary, portable and mobile television receivers for
    the analog (PAL, NTSC) and digital (DVB-C/T, ISDB, ATSC, DAB,
    DVB-H, T-DMB, ISDB-T) TV standards;
    The Global Positioning System (GPS), a location
    system based on a network of satellites. GPS is widely used in
    automotive, wireless, mobile computing and consumer
    applications. Together with a development partner we have
    introduced the Hammerhead product family, a single-chip Assisted
    Global Positioning System (A-GPS) receiver for
    mobile telephones, smart phones and PDAs;
    Bluetooth, a computing and telecommunications industry
    specification that allows mobile phones, computers and PDAs to
    connect with each other and with home and business phones and
    computers using a short-range wireless connection. We offer
    BlueMoon UniCellular, a fast and energy-efficient Bluetooth-chip
    which supports the Bluetooth enhanced data rate
    (EDR) protocol; and 62




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Wireline
    Communications
    
    a growing demand for a single network offering voice, video and
    data (triple play) applications, which creates
    increasing demand for high performance broadband access products;
    the convergence of voice and data networks into a single
    Internet Protocol network infrastructure, which we believe will
    drive demand for DSLAM/digital loop carrier
    (DLC) integrated voice and data
    (IVD) line-card products, particularly in the
    North American market; and
    increased investment by carriers in MAN (Metropolitan Area
    Network) core infrastructure to support increased data bandwidth
    requirements.        
    voice access, core access and enterprise applications, e.g.,
    analog line cards, ISDN, T/E, ATM and PBX;
    broadband access solutions for the central office, such as xDSL
    line cards; and
    broadband CPE and home networking equipment such as DSL/VoIP
    routers, gateways and WLAN access points.    Qimonda
   63




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##### Table of Contents



price-per-bit
  Calendar Year

2001


2002


2003


2004


2005


2006DRAM market in billion $


11



15



17



27



26



34DRAM market in billion megabits


400



563



785



1,260



1,912



2,809Year-over-year change average price per bit


(76
)%


(3
)%


(22
)%


0
%


(37
)%


(10
)%   build-up
  DRAMs for
    Infrastructure, Graphics, Mobile and Consumer
    Applications
    Infrastructure
    Applications.
  Graphics Applications.
 64




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##### Table of Contents



Mobile and Consumer
    Applications. tm
  
    mobile phones;
    mobile consumer products, such as digital still cameras and
    digital audio players; and
    stationary consumer products, such as digital televisions and
    DVD recorders.    tm tm tm
  tm tm
    Standard DRAMs
    for PC, Notebook and Workstation Applications
  SO-DIMMs
 65




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##### Table of Contents



Other
    Products
        Customers,
    Sales and Marketing
  Customers
             66




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##### Table of Contents



Automotive,
    Industrial & Multimarket
  Automotive
    Industrial &
    Multimarket
    Security &
    ASICs
      Communication
    Solutions
  Wireless
    Communications
  E-GOLDvoice
 67




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Wireline
    Communications
        Qimonda
    Sales and
    Marketing
    Infineon
    Logic
       68




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##### Table of Contents



Qimonda
        Backlog
  Standard
    Products
    Non-Standard
    Products
   69




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##### Table of Contents



Competition
      Key Competitors
    by Segment
  Automotive, Industrial & Multimarket

Freescale, International Rectifier, Mitsubishi, NXP, Renesas,
    Samsung, ST Microelectronics, Texas InstrumentsCommunication Solutions

Broadcom, Conexant, Freescale, NXP, Qualcomm, Texas InstrumentsQimonda

Elpida Memory, Hynix Semiconductor, Micron Technology, Nanya
    Technology (with which we also have a joint venture), Samsung
    Electronics       
    successful and timely development of new products, services and
    manufacturing processes;
    product performance and quality;
    manufacturing costs, yields and product availability;
    pricing;
    our ability to meet changes in our customers demands by
    altering production at our facilities;
    our ability to provide solutions that meet our customers
    specific needs;
    the competence and agility of our sales, technical support and
    marketing organizations; and
    the resilience of our supply chain for services that we
    outsource and the delivery of products, raw materials and
    services by third party providers needed for our manufacturing
    capabilities. 70




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Manufacturing
    Front-end
    65-nanometer
      Back-end
     71




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##### Table of Contents



Manufacturing
    Facilities
    Manufacturing
    Facilities in 2007
  Year ofcommencementof firstproduction line


Principal products or functionsFront-end facilities  wafer fabrication
    plantsInfineon Logic:Dresden, Germany


1996


DRAM, ASICs with embedded flash memory, logic ICsEssonnes,
    France(1)


1963
(2)

Logic ICs and ASICs with embedded flash memoryHorten, Norway


1985


MEMSKulim, Malaysia


2006


Power, smart powerRegensburg, Germany


1986


Power, smart power, sensors, mixed signalVillach, Austria


1979


Power, smart power and discretesWarstein, Germany


1965
(2)

High powerQimonda:Dresden 300mm, Germany


2001


DRAMRichmond 200mm, Virginia


1998


DRAMRichmond 300mm, Virginia


2005


DRAMTaoyuan,
    Taiwan(3)


2004


DRAMBack-end facilities  assembly and final
    testing plantsInfineon Logic:Batam, Indonesia


1996


Leaded power and non-power ICsCegléd, Hungary


1997


High powerMorgan Hill, California


2002


RF-powerRegensburg, Germany


2000


Chip card modules, sensors and pilot linesSingapore


1970


Leadless and leaded non-power ICs, wafer testSkoppum, Norway


1991


SensorsWarstein, Germany


1965
(2)

High powerWuxi, China


1996


Discretes, chip card modulesMalacca, Malaysia


1973


Discretes, power packages, sensors, logic ICsQimonda:Dresden, Germany


1996


DRAM components and modulesMalacca, Malaysia


1973


DRAM components and modulesPorto, Portugal


1997


DRAM components and modulesSuzhou,
    China(4)


2004


DRAM components and modules   (1)
    ALTIS, our joint venture with IBM. We and IBM entered into an
    agreement in August 2007 to sell ALTIS to AES.(2)
    The current main production line began operations in 1991.(3)
    Inotera Memories, Qimondas joint venture with Nanya.(4)
    Qimonda Technologies Suzhou Co. Ltd., Qimondas joint
    venture with CSVC. 72




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##### Table of Contents



Logic
    Manufacturing
  Front-end
      250-nanometers)
    65-nanometer 32-nanometer
  ramp-up
  Back-end
   73




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Qimonda
    Manufacturing
  Front-end
  300-millimeter ramp-up 80-nanometer per-unit
      Back-end
    Qimonda
    Fab Cluster System
   74




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##### Table of Contents



Manufacturing
    joint ventures and partnerships
    Infineon Joint
    Ventures and Partnerships
  ALTIS.
    Qimonda Joint
    Ventures and Partnerships
  CSVC.
  SMIC.
 75




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##### Table of Contents



Winbond.
        Inotera.
  ramp-up
 76




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##### Table of Contents



Research
    and Development
    Research and
    Development Expenditures
  For the years ended September 30,2005

2006

2007( in millions, except percentages)Expenditures (net of subsidies received)


1,293



1,249



1,169As a percentage of net sales


19
%


16
%


15
%   system-on-chip IP-blocks,
  Infineon
    Logic Research and Development
  system-on-chip
         77




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##### Table of Contents



Qimonda
    Research and Development
    ramp-up
   78




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##### Table of Contents



Locations
    Principal
    Research and Development Locations
  Location

Areas of CompetenceInfineon Logic:Bangalore, India

IC, software and system development for wireless, wireline,
    automotive and industrial products, CAD flow and library
    developmentBucharest, Romania

Power mixed signal semiconductors, chip card ICs, RF IC
    development for wireless productsDresden, Germany

Advanced technology developmentDuisburg, Germany

IC and system development for wireless products, RF IC
    development, customer support for wireline productsGraz, Austria

Contactless systems, automotive power systems, sensor productsLinz, Austria

RF IC and software development for wireless and sensor productsMorgan Hill, California, USA

RF IC development for high power applicationsMunich, Germany

Main product development site; Technology integration, CAD flow,
    library development, IC, software and system development for
    wireline products, microcontrollers, ASICs with embedded DRAM,
    chip card ICs, automotive power and industrial products, process
    technology developmentNuremberg, Germany

Software and system development for wireless productsRegensburg, Germany

Package development, process technology developmentShanghai, China

System development for wireless productsSingapore

IC, software and system development for wireline, wireless and
    industrial products, package developmentSophia Antipolis, France

IC development for wireless products, library development, CAD
    flowVillach, Austria

IC development for power semiconductor products, mixed signal IC
    development for automotive and communication productsXian, China

IC development for automotive and communication productsQimonda:Burlington, Vermont, USA

Low power and mobile and consumer DRAMsDresden, Germany

DRAM technology, Flash technology and package technology
    developmentMunich, Germany

Computing and graphic DRAMs, emerging memory research, Flash
    product developmentPadua, Italy

Flash product developmentRaleigh, North Carolina, USA

Product development for standard and specialty DRAMXian, China

Computing and legacy DRAMs    79




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Intellectual
    Property
           80




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##### Table of Contents



Strategic
    Alliances
  Infineon Logic
    Strategic Alliances
                Qimonda
    Strategic Alliances
  start-up
   81




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##### Table of Contents



Acquisitions
    and Dispositions
    Sale of
    Sci-Worx GmbH (Sci-Worx)
    Sale of
    Polymer Optical Fiber (POF) Business
    Acquisition of
    Texas Instruments Inc.s CPE DSL business
    Acquisition of
    Mobility Product Group of LSI
    Planned Sale
    of our interest in ALTIS Semiconductor S.N.C.
  250-nanometer
 82




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##### Table of Contents



Sale of
    40 percent of High Power Bipolar business
    Employees
    Betriebsverfassungsgesetz Sprecherausschuss
      Legal
    Matters
  Allocation of
    Litigation Exposure between Infineon and Qimonda
     83




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##### Table of Contents



Antitrust
    Matters
  U.S. Department of Justice
    Investigation.
  U.S. Civil Litigation.
  Direct Purchaser Litigation.
       84




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##### Table of Contents



Indirect Purchaser
    Litigation.
      State Investigations.
 85




---



##### Table of Contents



European Commission Investigation.
  Canadian Competition Bureau Investigation.
  Canadian Civil Litigation.
  U.S. Securities
    Class Action.
 86




---



##### Table of Contents



Other
    matters
    Wi-LAN
        Accruals and
    the Potential Effect of these Lawsuits on Our
    Business
   87




---



##### Table of Contents



Other
    Environmental
    Protection and Sustainable Management
        2 2
   88




---



##### Table of Contents



89




---



##### Table of Contents



Real
    Estate
     90




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##### Table of Contents



MANAGEMENT
  Supervisory Board
    Members
    Membership of other SupervisoryBoards and comparable governingbodies of domestic and foreignTerm



companies during the fiscal year endedName

Age

expires

Occupation

September 30, 2007Max Dietrich KleyChairman


67



2010


Lawyer

Chairman of the Supervisory Board of 
    SGL Carbon AG, WiesbadenMember of the Supervisory Board of 
    BASF AG, Ludwigshafen 
    HeidelbergCement AG, Heidelberg 
    Schott AG, MainzMember of the Board of Directors of
    UniCredito Italiano S.p.A., Milan, ItalyGerd
    Schmidt(1)Deputy Chairman(since February 15, 2007)


53



2009


Chairman of the Infineon Central Works CouncilChairman of the Infineon
      Works Council, RegensburgWigand
    Cramer(1)


54



2009


Labor union clerk IG Metall, BerlinAlfred
    Eibl(1)


58



2009


Chairman of the Infineon Works Council, Munich-Campeon (since
    November 8, 2006)Prof. Johannes Feldmayer


51



2010


Member of the Corporate Executive Committee of Siemens AG,
    Munich (until September 30, 2007)

Member of the Supervisory Board ofExxon Mobil Central Europe Holding GmbH,  Hamburg
Until May 24, 2007:Chairman of the Board of Administration of
    Siemens A.E., Athens, GreeceChairman of the Supervisory Board of
    Siemens Rt., Budapest, Hungary
    Siemens Sp. zo.o., Warsaw, PolandChairman of shareholders representatives committee of
    Siemens s.r.o., Prague, Czech RepublicDeputy Chairman of the Board of Administration of
    Siemens S.A., Madrid, Spain
    Siemens S.p.A., Milan, Italy
    Siemens Schweiz AG, Zurich, SwitzerlandMember of the Board of Administration of
    Siemens France S.A., Saint-Denis, France
    Siemens A.S., Istanbul, Turkey
    Siemens A.S., Copenhagen, Denmark
    Siemens A.S., Oslo, Norway (from October 1, 2006)Member of the Supervisory Board of
    Siemens Holdings plc, Bracknell, Great Britain
    Siemens AB, Stockholm, Sweden
    Siemens AG, Vienna, Austria
    Siemens Nederland N.V., Den Haag,
      The Netherlands (from October 1, 2006) 91




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Membership of other SupervisoryBoards and comparable governingbodies of domestic and foreignTerm



companies during the fiscal year endedName

Age

expires

Occupation

September 30, 2007Jakob
    Hauser(1)


55



2009


Chairman of the Works Council Qimonda AG, MunichGerhard
    Hobbach(1)(since February 15, 2007)


45



2009


Deputy Chairman of the Infineon Works Council,
    Munich-CampeonProf. Dr. Renate Köcher


55



2010


Managing Director of Institut für
    Demoskopie Allensbach GmbH, Allensbach

Member of the Supervisory Board of 
    Allianz SE, Munich
    BASF AG, Ludwigshafen
    MAN AG, MunichDr. Siegfried Luther


63



2010


Managing Director of Reinhard Mohn 
    Verwaltungs GmbH, Gütersloh

Member of the Supervisory Board of 
    Druck- und Verlagshaus Gruner &
      Jahr AG, Hamburg (until August 28, 2007)
    WestLB AG, Duesseldorf/Muenster
    Wintershall Holding AG, Kassel
       (since November 21, 2006)Chairman of the Board of Administration of
    RTL Group S.A., LuxembourgMember of the Board of Administration of
    Compagnie Nationale à Portefeuille S.A.,
      Loverval, Belgium (since April 19, 2007)Michael
    Ruth(1)Representative of Senior Management


47



2009


Corporate Vice President 
    Reporting, Planning and Controlling, Infineon Technologies AGProf. Dr. rer. nat. Doris
    Schmitt-Landsiedel


54



2010


Professor at the Munich Technical University, MunichKerstin
    Schulzendorf(1)


45



2009


Member of the Works Council Infineon DresdenDr. Eckart Sünner(since August 2, 2007)


63



2010


President Legal, Taxes & Insurance BASF AG,
    Ludwigshafen

Chairman of the Supervisory Board of
    Lucura Rückversicherungs AG, LudwigshafenMember of the Supervisory Board of
    K+S AG, KasselMember of the Board of Directors of
    BASF Corporation, Florham Park, New Jersey, USAAlexander
    Trüby(1)


37



2009


Member of the Works Council Infineon Dresden 92




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Membership of other SupervisoryBoards and comparable governingbodies of domestic and foreignTerm



companies during the fiscal year endedName

Age

expires

Occupation

September 30, 2007Prof. Dr. rer. nat. Martin Winterkorn


60



2010


Chairman of the Management Board of Audi AG, Ingolstadt 
      (until December 31,
      2006)
    Volkswagen AG,
      Wolfsburg (since
      January 1, 2007)

Chairman of the Supervisory Board of
    Audi AG, Ingolstadt (since January 1, 2007)
Member of the Supervisory Board of
    Salzgitter AG, Salzgitter
    FC Bayern München AG, Munich
    TÜV Süddeutschland Holding AG, MunichChairman of the Board of Administration of
    SEAT S.A., Barcelona, Spain (until June 14, 2007)
    Automobili Lamborghini Holding S.p.A.,
      SantAgata Bolognese, Bologna, Italy
      (until February 12, 2007)Member of the Board of Administration of
    SEAT S.A., Barcelona, Spain (since June 14, 2007)Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer


63



2010


Member of the Corporate Executive Committee of Siemens AG, Munich

Member of the Supervisory Board of
    Deutsche Messe AG, Hanover 
    BSH Bosch und Siemens Hausgeräte GmbH,  Munich
    Leoni AG, Nuremberg (since May 3, 2007)
    SAP AG, Walldorf (since May 10, 2007)Chairman of the Board of Administration of
    Siemens Ltd., Beijing, Peoples Republic of China
    Siemens K.K., Tokyo, Japan (until
      February 26, 2007)
    Siemens S.A., Lisbon, Portugal
    Siemens Ltd., Mumbai, IndiaKlaus
    Luschtinetz(1) Deputy Chairman (resigned February 15, 2007)


64



2007


Employee of Infineon Technologies AGDr. Stefan Jentzsch(resigned August 2, 2007)


46



2007


Member of the Management Board of
      Dresdner Bank AG,
      Frankfurt

Member of the Supervisory Board of 
    Premiere AG, Munich   (1)
    Employee representative. 93




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##### Table of Contents



Committee

MembersExecutive Committee

Max Dietrich Kley
    Klaus Luschtinetz (resigned February 15, 2007)
    Gerd Schmidt (since February 15, 2007)
    Prof. Dr. rer. nat. Martin WinterkornInvestment, Finance and Audit Committee

Max Dietrich Kley
    Dr. Siegfried Luther
    Klaus Luschtinetz (resigned February 15, 2007)
    Gerd Schmidt (since February 15, 2007)Mediation Committee

Max Dietrich Kley
    Klaus Luschtinetz (resigned February 15, 2007)
    Gerd Schmidt (since February 15, 2007) 
    Alexander Trüby
    Prof. Dr. rer. nat. Martin WinterkornNomination Committee

Max Dietrich Kley
    Prof. Johannes Feldmayer
    Prof. Dr. Renate Köcher
    Dr. Siegfried Luther
    Prof. Dr. rer. nat. Doris Schmitt-Landsiedel
    Dr. Eckart Sünner
    Prof. Dr. rer. nat. Martin Winterkorn
    Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus WuchererStrategy and Technology Committee

Alfred Eibl
    Jakob Hauser
    Alexander Trüby
    Prof. Dr. rer. nat. Doris Schmitt-Landsiedel
    Prof. Dr. rer. nat. Martin Winterkorn
    Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer  94




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##### Table of Contents



Management Board
    Members
    Memberships of SupervisoryBoards and comparable governingbodies of domestic and foreignTerm



companies during the fiscal yearName

Age

expires

Position

ended September 30, 2007Dr. Wolfgang Ziebart

57

August 31, 2009

Chairman of the
    Management
    Board, President
    and Chief
    Executive
    Officer

Member of the Board of Directors of
    Infineon Technologies China Co., Ltd., Shanghai,
      Peoples Republic of China
    Infineon Technologies Asia Pacific Pte., Ltd.,
      Singapore
    Infineon Technologies Japan K.K., Tokyo, Japan
    Infineon Technologies North America Corp.,
      Wilmington, Delaware, USAPeter Bauer

47

September 30, 2008

Member of the
    Management
    Board and
    Executive Vice
    President

Member of the Supervisory Board of 
    Infineon Technologies Austria AG, Villach, Austria
      (from April 30, 2007 until June 1, 2007, 
      Chairman)Prof. Dr. Hermann Eul

48

August 31, 2012

Member of the
    Management
    Board and
    Executive Vice
    President

Member of the Supervisory Board of 
    7Layers AG, RatingenPeter J. Fischl(resigned April 30, 2007;reappointed as of
    August 7, 2007)

61

March 31, 2008

Member of the
    Management
    Board,
    Executive Vice
    President and
    Chief Financial
    Officer

Chairman of the Supervisory Board of 
    Qimonda AG, Munich
    Infineon Technologies Austria AG, Villach, Austria
      (until April 30, 2007)
    Member of the Board of Directors of
    Infineon Technologies Asia Pacific Pte., Ltd., 
      Singapore (until May 1, 2007;
    reappointed
      September 10, 2007)
    Infineon Technologies China Co., Ltd., Shanghai,
      Peoples Republic of China
    (until May 1, 2007;
      reappointed August 22, 2007)
    Infineon Technologies North America Corp.,
      Wilmington, Delaware, USA
      (until May 1, 2007; reappointed August 6, 2007)
    Infineon Technologies Japan K.K., Tokyo, Japan
      (until May 1, 2007)Dr. Reinhard Ploss (since June 1, 2007)

51

May 31, 2012

Member of the 
    Management
    Board and
    Executive Vice
    President

Chairman of the Supervisory Board of 
    Infineon Technologies Austria AG, Villach, Austria 
      (since June 1, 2007)
    Member of the Board of Directors of 
      Infineon Technologies (Kulim) Sdn. Bhd., Kulim,
         MalaysiaChairman of the Executive Board of 
    Infineon Technologies Austria AG, Villach,
      Austria (until May 31, 2007) 95




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##### Table of Contents



Memberships of SupervisoryBoards and comparable governingbodies of domestic and foreignTerm



companies during the fiscal yearName

Age

expires

Position

ended September 30, 2007Resigned Members of the Management BoardRüdiger Andreas Günther (from April 1, 2007 until August 6, 2007)

49



Member of the
    Management Board, 
    Executive
    Vice President 
    (from May 1, 2007
    until August 6,
    2007, Chief
    Financial Officer)

Member of the Supervisory Board of 
    Infineon Technologies Austria AG, Villach, Austria 
      (from May 16, 2007 until August 22, 2007)
Member of the Board of Directors of
Infineon Technologies Asia Pacific Pte., Ltd.,
  Singapore (from May 22, 2007 until
  August 23, 2007)
Infineon Technologies China Co., Ltd., Shanghai,
  Peoples Republic of China (from May 18, 2007
  until August 22, 2007)
Infineon Technologies North America Corp.,
  Wilmington, Delaware, USA (from May 1, 2007
  until August 6, 2007)
Infineon Technologies Japan K.K., Tokyo, Japan
  (from May 15, 2007 until August 27, 2007)   Dr. Wolfgang Ziebart
  Peter Bauer
  Prof. Dr. Hermann Eul
  Peter J. Fischl
 96




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##### Table of Contents



Dr. Reinhard Ploss
      Overview of
    Corporate Governance Structure
  (Aktiengesetz)
        Supervisory
    Board
  Leitende Angestellte
 97




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##### Table of Contents




    to monitor our management;
    to appoint our Management Board;
    to approve decisions of our Management Board in relation to the
    following:  
    financial and investment planning, including both budgets and
    the establishment of limits for financial indebtedness;
    any investment or disposition that exceeds 10 percent of
    our total investment budget; and
    the taking of any financial risk vis-à-vis third parties in
    an amount exceeding 5 percent of our share capital plus
    capital reserves.  
    to approve matters in areas that the Supervisory Board has made
    generally subject to its approval; and
    to approve matters that the Supervisory Board decides on a
    case-by-case
    basis to make subject to its approval.    
    preparing the decisions of the Supervisory Board regarding
    approval of our companys annual financial statements,
    including review of the financial statements, our annual
    reports, the proposed application of earnings and the reports of
    our auditors;
    reviewing the interim financial statements of our company that
    are made public or otherwise filed with any securities
    regulatory authority;
    issuing to our auditors terms of reference for their audit of
    our annual financial statements; and
    approving decisions of our Management Board or a committee
    thereof regarding increases of our companys capital
    through the issuance of new shares out of authorized or
    conditional capital, to the extent they are not issued to
    employees as part of a share option plan.   98




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##### Table of Contents



Management
    Board
        
    Decisions relating to financial and investment planning,
    including both budgets and the establishment of limits for
    financial indebtedness;
    Decisions relating to any investment or disposition that exceeds
    10 percent of our total investment budget; and
    Decisions relating to the taking of any financial risk
    vis-à-vis third parties in an amount exceeding
    5 percent of our share capital plus capital reserves.  case-by-case
    
    the annual financial statements;
    the calling of the shareholders general meeting;
    matters for which the consent of the shareholders general
    meeting or of the Supervisory Board must be obtained; and
    matters involving basic organizational, business policy and
    investment and financial planning questions for our company.   99




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##### Table of Contents



Significant
    Differences between our Corporate Governance Practices and those
    of U.S. Companies Listed on the New York Stock
    Exchange
    Compensation
    Compensation
    of the Management Board
  Compensation
    structure
      
    Fixed annual base salary.  The
    non-performance-related annual base salary is contractually
    fixed. It is partly paid in 12 equal monthly installments, and
    partly paid as a lump sum at the end of each fiscal year (in the
    following referred to as Annual Lump Sum).
    Performance-related compensation.  The
    annual bonus is dependent on the return on assets, which we
    define as earnings before interest and taxes (EBIT) adjusted for
    exceptional effects, in proportion to capital employed. This
    ensures that a bonus is earned only if the business develops
    positively. The annual bonus is determined by the Executive
    Committee in a two-phase process. In a first step, a target
    bonus amount is determined on the basis on the return on assets.
    The Executive Committee subsequently evaluates the personal
    performance of each individual board member over the past fiscal
    year, and then determines the actual bonus amount. In addition
    to the 100




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##### Table of Contents



bonus dependent on the return on assets, Management Board
    contracts provide for a possible special bonus awarded in
    recognition of special business achievements.  
    Infineon Technologies AG stock
    options.   Management Board members are
    eligible to receive stock options under the 2006 Stock Option
    Plan approved by the Infineon Technologies AG Shareholders
    Annual General Meeting on February 16, 2006, as a variable
    compensation element with a long-term incentive effect and a
    risk character. Each stock option guarantees the right to
    acquire one share at a fixed exercise price. The options are
    valid for six years and may be exercised only after an initial
    waiting period of three years and not during specified black-out
    periods. The exercise price at which a share may be acquired
    upon exercise of an option is equal to 120 percent of the
    average Infineon opening prices on the Frankfurt Stock Exchange
    in the XETRA trading system over the five trading days preceding
    the date that the option is granted. The exercise of the options
    is dependent on the attainment of absolute and relative
    performance targets. The precondition for the exercise of the
    option rights is that the Infineon share price on the Frankfurt
    Stock Exchange in the XETRA trading system equals or exceeds the
    exercise price on at least one trading day during the option
    life. Furthermore, the options can only be exercised if the
    Infineon share price exceeds the performance of the comparative
    index Philadelphia Semiconductor Index for three consecutive
    days on at least one occasion during the life of the option.
    These absolute and relative performance targets serve to ensure
    that the options are only exercised if the value of the company
    significantly increases. The Supervisory Board is responsible
    for all decisions on granting options to members of the
    Management Board. The fair value of the options granted during
    the 2007 fiscal year was 2.03 per option, determined
    according to the Monte Carlo simulation model. The main
    provisions of our 2006 stock option plan are described in
    note 28 to our consolidated financial statements for the
    year ended September 30, 2007, and are available in full
    text on the Internet at www.infineon.com.  Compensation
    of the Management Board in the 2007 fiscal year
  (1) (2)
  (3)
 101




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##### Table of Contents



Overview of
    the total compensation
  Cash

Stock-based

Totalcompensation

compensation

compensationManagement Board

Fiscal year

in 

in 

in
    (4)Dr. Wolfgang Ziebart (Chairman)


2007



1,636,828



406,000



2,042,8282006



1,735,563



510,400



2,245,963Peter Bauer


2007



920,146



203,000



1,123,1462006



916,438



255,200



1,171,638Prof. Dr. Hermann Eul


2007



729,815



203,000



932,8152006



709,058



255,200



964,258Peter J. Fischl


2007



1,027,130



304,500



1,331,6302006



1,030,379



255,200



1,285,579Rüdiger A. Günther


2007



799,628







799,6282006











Dr. Reinhard Ploss


2007



235,659







235,6592006











Total


2007



5,349,206



1,116,500



6,465,7062006



4,391,438



1,276,000



5,667,438   (1)
    This amount includes the Annual Lump Sum for the 2006 fiscal
    year paid in October 2006.(2)
    This amount includes the Annual Lump Sum for the 2006 fiscal
    year paid in October 2006 and the fair value of the stock
    options granted in the 2006 fiscal year.(3)
    Each in accordance with the duration of the respective
    Management Board service contract during the 2007 fiscal year.(4)
    This amount includes the fair value of the stock options granted
    in the respective fiscal year.  Cash
    compensation
    Performance-relatedNon-performance-related compensation


compensationAnnual Base SalaryAmount paid in12 monthly


Annual lump








Total cashManagement Board

Fiscal year


installments


sum(2)


Other(1)


Bonus


compensationDr. Wolfgang Ziebart


2007



800,000



800,000



36,828







1,636,828(Chairman)


2006



800,000



800,000



35,563



100,000



1,735,563Peter Bauer


2007



367,500



532,500



20,146







920,1462006



360,000



540,000



16,438







916,438Prof. Dr. Hermann Eul


2007



358,333



358,333



13,149







729,8152006



350,000



350,000



9,058







709,058Peter J. Fischl


2007



400,000



600,000



27,130







1,027,1302006



400,000



600,000



30,379







1,030,379Rüdiger A. Günther


2007



325,000



425,000
(3)


49,628







799,6282006



















Dr. Reinhard Ploss


2007



116,667



116,667



2,325







235,6592006



















Total


2007



2,367,500



2,832,500



149,206







5,349,2062006



1,910,000



2,290,000



91,438



100,000



4,391,438   (1)
    The compensation included under Other comprises
    primarily the monetary value of the provision of a company car
    and insurance contributions, and, in the case of
    Mr. Günther, the repayment of relocation expenses.(2)
    This amount includes the Annual Lump Sum for the 2006 and 2007
    fiscal years to be paid in the subsequent fiscal year before the
    preparation of the prior year consolidated financial statements.(3)
    This amount comprises the Annual Lump Sum (pro rata) as well as
    a guaranteed bonus in the amount of 100,000. 102




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##### Table of Contents



Stock-based
    compensation
    Stock optionsgranted in the 2007

Fair value at grantManagement Board

Fiscal Year

fiscal
    year(1)

date in Dr. Wolfgang Ziebart (Chairman)


2007



200,000



406,0002006



160,000



510,400Peter Bauer


2007



100,000



203,0002006



80,000



255,200Prof. Dr. Hermann Eul


2007



100,000



203,0002006



80,000



255,200Peter J. Fischl


2007



150,000



304,5002006



80,000



255,200Rüdiger A. Günther


2007







2006







Dr. Reinhard Ploss


2007







2006







Total


2007



550,000



1,116,5002006



400,000



1,276,000   (1)
    For the 2007 grants, the exercise price equals 13.30 per
    share, while the fair value determined in accordance with the
    Monte Carlo simulation model as of the grant date amounts to
    2.03. The fair value underlying the amounts of the
    previous year determined in accordance with the Black-Scholes
    option pricing model was 3.19 per share.  Commitments to
    the Management Board upon termination of
    employment
  Allowances and pension entitlements in the 2007 fiscal
    year
   103




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Pensionentitlements





Transfer to pension(annual) as of





reserves in thebeginning of


Maximum


fiscal year (U.S.Management Board

pension period in 


amount in 


GAAP) in Dr. Wolfgang Ziebart (Chairman)


560,000







2,234,745Peter Bauer


210,000



270,000



240,854Prof. Dr. Hermann Eul


195,000



270,000



186,662Peter J. Fischl


300,000



300,000



484,569Dr. Reinhard Ploss


170,000



210,000



Total


1,435,000







3,146,830     Early termination of employment
  Wertpapiererwerbs-
    und Übernahmegesetz
    Fringe benefits and other awards in the 2007 fiscal
    year
  
    The members of the Management Board received no fringe benefits
    besides the elements listed under Other in the
    compensation table.
    The members of the Management Board do not receive any loans
    from the company. 104




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##### Table of Contents




    The members of the Management Board received no compensation or
    promise of compensation with regard to their activities on the
    board from third parties in the 2007 fiscal year.
    The company maintains a directors and officers group
    liability insurance (D&O insurance). The insurance covers
    the personal liability risk in the event of claims raised
    against members of the Management Board for indemnification of
    losses incurred in the exercise of their duties, if the claimed
    loss exceeds 25 percent of the
    non-performance-related
    annual salary of the board member involved (which constitutes a
    deductible as defined by the German Corporate Governance Code,
    clause 3.8, para. 2).  Payments to
    former members of the Management Board in the 2007 fiscal
    year
      Compensation
    of the Supervisory Board
  Compensation structure
    
    fixed compensationof 25,000 per year and
    a variable elementin the form of 1,500 share
    appreciation rights per annum, which are granted and may be
    exercised on the same terms as provided for by the Infineon
    Stock Option Plan 2006 approved by the Shareholders Annual
    General Meeting, which is valid in the fiscal year in which
    these rights are granted. These share appreciation rights,
    however, do not entitle the holder to purchase shares but only
    to a settlement in cash. The share appreciation rights expire
    six years from the date of grant, and can be exercised only
    following a waiting period of three years. The exercise price
    per share appreciation right amounts to 120 percent of the
    average Infineon opening price on the Frankfurt Stock Exchange
    in the XETRA trading system over the five trading days preceding
    the date the respective share appreciation right is granted. The
    exercise of share appreciation rights is dependent on the
    attainment of absolute and relative performance targets as
    stipulated in the 2006 Stock Option Plan. Basic principles of
    our 2006 Stock Option Plan are described in note 28 to the
    consolidated financial statements for the year ended
    September 30, 2007 and are available in full text on the
    Internet at www.infineon.com. The fair value of the share
    appreciation rights granted in the 2007 fiscal year amounts to
    2.03 per share appreciation right, as determined in
    accordance with the Monte Carlo simulation model.     105




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##### Table of Contents



Compensation of the Supervisory Board in the 2007 fiscal
    year
    Additionalcompensation forBase compensation


special functions


Total paymentSupervisory Board member

in 


in 


in Max Dietrich Kley


29,750



29,750



59,500Wigand Cramer


29,750







29,750Alfred Eibl


29,750



14,875



44,625Prof. Johannes Feldmayer


29,750







29,750Jakob Hauser


29,750



14,875



44,625Gerhard
    Hobbach(1)


19,833







19,833Dr. Stefan
    Jentzsch(2)


24,792







24,792Prof. Dr. Renate Köcher


29,750







29,750Klaus
    Luschtinetz(3)


12,396



6,198



18,594Dr. Siegfried Luther


29,750



14,875



44,625Michael Ruth


29,750







29,750Gerd Schmidt


29,750



9,917



39,667Prof. Dr. Doris
    Schmitt-Landsiedel


29,750



14,875



44,625Kerstin Schulzendorf


29,750







29,750Dr. Eckart
    Sünner(4)


4,958







4,958Alexander Trüby


29,750



14,875



44,625Prof. Dr. Martin Winterkorn


29,750



14,875



44,625Prof. Dr.-Ing. Klaus Wucherer


29,750



14,875



44,625Total


478,479



149,990



628,469   (1)
    Pro rata from appointment (February 15, 2007).(2)
    Pro rata to retirement from office (August 2, 2007).(3)
    Pro rata to retirement from office (February 15, 2007).(4)
    Pro rata from appointment (August 2, 2007).  Other
      Long-Term
    Incentive Plans
  2006 Stock Option Plan.
 106




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2001 International Long-Term Incentive
    Plan.
      1999 Stock Option Plan.
   107




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108




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##### Table of Contents



PRINCIPAL
    SHAREHOLDERS
    Shares ownedNumber


%Brandes Investment Partners,
    L.P.(1)


38,371,696



5.1Dodge & Cox Investment
    Managers(2)


37,927,800



5.1Templeton Global Advisors
    Limited(3)


38,674,360



5.2Members of the Management Board as a
    group(4)


*



*Members of the Supervisory Board as a
    group(4)


*



*   (1)
    The business address of Brandes Investment Partners, L.P. is
    11988 El Camino Real, Suite 500, San Diego, California
    92130, USA. Based solely on a notification to Infineon by the
    shareholder on March 9, 2006 pursuant to the requirements
    of the German Securities Trading Act.(2)
    The business address of Dodge & Cox Investment
    Managers is 555 California Street, 40th Floor,
    San Francisco, California 94104, USA. Based solely on a
    notification to Infineon by the shareholder on February 8,
    2007 pursuant to the requirements of the German Securities
    Trading Act.(3)
    The business address of Templeton Global Advisors Limited is
    Templeton Building, Lyford Cay, PO Box N7759, Nassau,
    Bahamas. Based solely on a notification to Infineon by the
    shareholder on April 24, 2006 pursuant to the requirements
    of the German Securities Trading Act.(4)
    Represents less than 1 percent of our outstanding share
    capital.  (Wertpapierhandelsgesetz)
        109




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RELATED
    PARTY TRANSACTIONS AND RELATIONSHIPS
  Qimonda
  Form 20-F No. 001-32972),
 110




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##### Table of Contents



ARTICLES OF
    ASSOCIATION
    Equity
    
    At our formation, our share capital consisted of
    400,000,000, represented by 200,000,000 shares.
    On January 26, 2000, we increased our share capital from
    400,000,000 to 800,000,000 by issuing
    200,000,000 shares for a 400,000,000 transfer of
    corporate funds to capital. The new shares were issued to
    Siemens and Siemens Nederland N.V. in proportion to their
    respective ownership interests in our company at that time.
    On February 14, 2000, we increased our share capital from
    800,000,000 to 1,200,000,000 by issuing
    200,000,000 shares for a 400,000,000 transfer of
    corporate funds to capital. The new shares were issued to
    Siemens and Siemens Nederland N.V. in proportion to their
    respective ownership interests in our company at that time.
    On March 8, 2000, we increased our share capital by
    33,400,000 to 1,233,400,000 for cash contributions
    by issuing 16,700,000 shares with full dividend entitlement
    for the 2000 fiscal year. The shares were sold in our initial
    public offering.
    On April 28, 2000, we increased our share capital by
    15,184,860 by issuing to Intel Corporation
    7,592,430 shares with full dividend entitlement for the
    2000 fiscal year. After the execution of the capital increase,
    our share capital consisted of 1,248,584,860.
    On June 28, 2000, we increased our share capital by
    2,418,154 against a contribution in kind by issuing
    1,209,077 shares with full dividend entitlement for the
    2000 fiscal year to Savan Communications Ltd. After execution of
    the capital increase our share capital consisted of
    1,251,003,014.
    On March 16, 2001, we increased our share capital by
    886,976 against a contribution in kind by issuing
    443,488 shares with full dividend entitlement for the 2001
    fiscal year in connection with our investment in Ramtron
    International Corporation. After execution of the capital
    increase our share capital consisted of 1,251,889,990.
    On April 11, 2001, we increased our share capital by
    1,413,428 against a contribution in kind by issuing
    706,714 shares with full dividend entitlement for the 2001
    fiscal year in connection with our acquisition of Ardent
    Technologies Incorporated. After the execution of the capital
    increase our share capital consisted of 1,253,303,418.
    In July 2001, we increased our share capital by
    120,000,000 by issuing 60,000,000 shares (with full
    dividend entitlement for the 2001 fiscal year) in our secondary
    public offering. After the execution of the capital increase our
    share capital consisted of 1,373,303,418.
    On July 25, 2001, we increased our share capital by
    12,746,870 against a contribution in kind by issuing
    6,373,435 shares with full dividend entitlement for the
    2001 fiscal year in connection with our acquisition of Catamaran
    Communications Incorporated. After the execution of the capital
    increase, our share capital consisted of 1,386,050,288. 111




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##### Table of Contents




    On November 29, 2001, we increased our share capital by
    24,000 by issuing 12,000 shares with full dividend
    entitlement for the 2002 fiscal year to group employees in
    connection with our 2001 employee share purchase program.
    After the execution of the capital increase, our share capital
    consisted of 1,386,074,288.
    On July 24, 2002, we increased our share capital by
    686,920 by issuing 343,460 shares with full dividend
    entitlement for the 2002 fiscal year to group employees in
    connection with our 2002 employee share purchase program.
    After the execution of the capital increase, our share capital
    consisted of 1,386,761,208.
    On August 30, 2002, we increased our share capital by
    55,000,000 against a contribution in kind by issuing
    27,500,000 shares with full dividend entitlement for the
    2002 fiscal year in connection with our acquisition of Ericsson
    Microelectronics AB, Stockholm, Sweden. After the execution of
    the capital increase, our share capital consisted of
    1,441,761,208.
    On March 23, 2004, we increased our share capital by
    53,358,510 against a contribution in kind by issuing
    26,679,255 shares with full dividend entitlement for the
    2004 fiscal year in connection with the acquisition of the
    remaining interest in Infineon Technologies SC300
    GmbH & Co. KG, Dresden. After the execution of the
    capital increase our share capital consisted of
    1,495,119,718.
    During the 2005 fiscal year, our share capital increased by
    19,000 as a result of the exercise of 9,500 employee
    stock options. After these exercises our share capital consisted
    of 1,495,138,718.
    During the 2006 fiscal year, our share capital increased by
    79,870 as a result of the exercise of 39,935 employee
    stock options. After these exercises our share capital consisted
    of 1,495,218,588.
    During the 2007 fiscal year, our share capital increased by
    4,238,682 as a result of the exercise of
    2,119,341 employee stock options. After these exercises our
    share capital consisted of 1,499,457,270.    Authorized
    Capital
      
    in an aggregate nominal amount of up to 30 million to
    issue shares to employees of the Infineon group companies (in
    which case preemptive rights of the existing shareholders are
    excluded) until January 19, 2009 (Authorized Capital
    II/2004); and
    in an aggregate nominal amount of up to 224 million
    to issue shares for cash (in which case preemptive rights of
    existing shareholders may be excluded under certain
    circumstances by the Management Board with the consent of the
    Supervisory Board) or in exchange for contributions in kind (in
    which case preemptive rights of the existing shareholders may be
    excluded by the Management Board with the consent of the
    Supervisory Board) until February 14, 2012 (Authorized
    Capital 2007). 112




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##### Table of Contents



Conditional
    Capital
    
    Conditional Capital I in an aggregate nominal amount of
    91.7 million that may be used to issue up to
    45.8 million new registered shares in connection with our
    1999 and our 2001 long-term incentive plans;
    Conditional Capital III in an aggregate nominal amount of
    29 million that may be used to issue up to
    14.5 million new registered shares in connection with our
    2001 and 2006 long-term incentive plan;
    Conditional Capital IV/2006 in an aggregate nominal amount of
    24.5 million that may be used to issue up to
    12.25 million new registered shares in connection with our
    2006 long-term incentive plan;
    Conditional Capital 2002 in an aggregate nominal amount of
    152 million that may be used to issue up to
    76 million new registered shares upon conversion of debt
    securities issued in June 2003; and
    Conditional Capital 2007 in an aggregate nominal amount of
    248 million that may be used to issue up to
    124 million new registered shares upon conversion of debt
    securities, which we may issue at any time prior to
    February 14, 2012.    Preemptive
    Rights
      Shareholders
    Meetings and Voting Rights
    (elektronischer Bundesanzeiger)
   113




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##### Table of Contents




    the exclusion of preemptive rights in a capital increase;
    capital decreases;
    a creation of authorized capital or conditional capital;
    a dissolution;
    a merger or a consolidation with another stock corporation or
    another corporate transformation;
    a transfer of all or virtually all of the assets of our
    company; and
    the conclusion of any direct control, profit and loss pooling or
    similar inter-company agreements.  Dividend
    Rights
         114




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##### Table of Contents



Liquidation
    Rights
    Shareholders
    Other Rights and Obligations
    Disclosure
    Requirement
    Repurchase of
    Our Own Shares
    Corporate
    Purpose of Our Company
    Registration
    of our company with the Commercial Register
   115




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##### Table of Contents



ADDITIONAL
    INFORMATION
  Organizational
    Structure
    Principal
    Subsidiaries as of September 30, 2007
  Corporate name

Registered office

Principal activityInfineon Group:ALTIS Semiconductor
    S.N.C(1)

Essonnes, France

ProductionInfineon Technologies Asia Pacific Pte. Ltd.

Singapore

Production, distributionInfineon Technologies Austria AG

Villach, Austria

ProductionInfineon Technologies Bipolar GmbH & Co. KG

Warstein, Germany

Production and developmentInfineon Technologies China Co. Ltd.

Shanghai, China

HoldingInfineon Technologies Dresden GmbH & Co. OHG

Dresden, Germany

ProductionInfineon Technologies Finance GmbH

Neubiberg, Germany

Financial servicesInfineon Technologies France S.A.S.

Saint Denis, France

DistributionInfineon Technologies Holding B.V.

Rotterdam, The Netherlands

HoldingInfineon Technologies Investment B.V.

Rotterdam, The Netherlands

HoldingInfineon Technologies Japan K.K.

Tokyo, Japan

DistributionInfineon Technologies North America Corp.

Delaware, USA

Research, development and distributionInfineon Technologies SensoNor AS

Horten, Norway

ProductionInfineon Technologies (Advanced Logic) Sdn. Bhd.

Malacca, Malaysia

ProductionInfineon Technologies (Kulim) Sdn. Bhd.

Kulim, Malaysia

ProductionInfineon Technologies (Malaysia) Sdn. Bhd.

Malacca, Malaysia

ProductionQimonda Group:Inotera Memories
    Inc.(2)

Taoyuan, Taiwan

ProductionQimonda
    AG(3)

Munich, Germany

Research, development, production and distribution of
    semiconductor memory products and related servicesQimonda Asia Pacific Pte. Ltd.

Singapore

DistributionQimonda Dresden GmbH & Co. OHG

Dresden, Germany

ProductionQimonda Europe GmbH

Munich, Germany

Distribution, sales and marketingQimonda Holding B.V.

Rotterdam, The Netherlands

HoldingQimonda Japan K.K.

Tokyo, Japan

Sales and marketingQimonda Investment B.V.

Rotterdam, The Netherlands

HoldingQimonda Malaysia Sdn. Bhd.

Malacca, Malaysia

ProductionQimonda Module (Suzhou) Co. Ltd.

Suzhou, China

ProductionQimonda North America Corp.

Delaware, USA

Distribution, sales and marketing, research and developmentQimonda Portugal S.A.

Vila do Conde, Portugal

ProductionQimonda Richmond, LLC

Delaware, USA

ProductionQimonda Technologies (Suzhou) Co.
    Ltd.(4)

Suzhou, China

Production   (1)
    50 percent interest plus one share held by Infineon. In
    August 2007, Infineon, IBM and Advanced Electronic Systems AG
    (AES) entered into an agreement, under which AES is
    to acquire the interests in ALTIS from Infineon and IBM.(2)
    35.4 percent ownership interest held by Qimonda.(3)
    77.5 percent beneficially owned by Infineon.(4)
    62.8 percent interest held by Qimonda. 116




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##### Table of Contents



Dividend
    Policy
  Aktiengesetz Bilanzgewinn Bilanzverlust
  Significant
    Changes
    Market
    Information
  General
    Trading on the
    Frankfurt Stock Exchange
    Price per share in EuroHigh


LowFiscal year ended September 30, 2003


13.79



5.34Fiscal year ended September 30, 2004


13.65



7.80Fiscal year ended September 30, 2005


9.00



6.43Fiscal year ended September 30, 2006


9.95



7.60Fiscal year ended September 30, 2007


13.44



9.25October 2005 through December 2005


8.51



7.60January 2006 through March 2006


8.93



7.62April 2006 through June 2006


9.95



8.22July 2006 through September 30, 2006


9.76



8.21October 2006 through December 2006


10.68



9.25January 2007 through March 2007


12.27



10.66April 2007 through June 2007


12.81



10.88July 2007 through September 30, 2007


13.44



10.70June 2007


12.81



11.34July 2007


13.44



12.15August 2007


11.87



10.70September 2007


12.12



11.54October 2007


11.95



10.13November 2007


9.82



7.62December
    2007(1)


8.75



8.07   (1)
    Up to and including December 6,
    2007. 117




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##### Table of Contents



Trading on the
    New York Stock Exchange
    Price per ADS inU.S. dollarsHigh


LowFiscal year ended September 30, 2003


15.35



5.25Fiscal year ended September 30, 2004


15.87



9.39Fiscal year ended September 30, 2005


11.74



8.40Fiscal year ended September 30, 2006


12.68



8.95Fiscal year ended September 30, 2007


18.68



11.77October 2005 through December 2005


10.03



8.95January 2006 through March 2006


10.28



9.18April 2006 through June 2006


12.68



10.24July 2006 through September 30, 2006


12.49



10.37October 2006 through December 2006


14.03



11.77January 2007 through March 2007


16.26



13.94April 2007 through June 2007


17.28



14.75July 2007 through September 30, 2007


18.68



14.36June 2007


17.28



15.14July 2007


18.68



16.37August 2007


16.37



14.36September 2007


17.18



15.81October 2007


17.13



14.52November 2007


14.27



11.29December
    2007(1)


12.77



11.86   (1)
    Up to and including
    December 6,
    2007.   118




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##### Table of Contents



Exchange
    Rates
    Annual average
    exchange rates of the U.S. dollar per Euro
  Fiscal year ended September 30,

Average2003


1.09192004


1.21992005


1.27272006


1.23642007


1.3415     Recent high and
    low exchange rates of the U.S. dollar per Euro
  High


LowApril 2007


1.3660



1.3363May 2007


1.3616



1.3419June 2007


1.3526



1.3295July 2007


1.3831



1.3592August 2007


1.3808



1.3402September 2007


1.4219



1.3606     Taxation
  German
    Taxation
    Taxation of
    the Company
   119




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##### Table of Contents



Inter alia
  Taxation of
    Dividends
    Bundeszentralamt für Steuern,
  Withholding
    Tax Refund for U.S. Shareholders
     120




---



##### Table of Contents



Bundeszentralamt für Steuern 20007-1998. 19114-0447.
  Taxation of
    Capital Gains
        Inheritance
    and Gift Tax
    (a)
    the donor or transferor or the heir, donee or other beneficiary
    is resident in Germany at the time of the transfer, or, if a
    German citizen, was not continuously outside of Germany and
    without German residence for more than five years; or(b)
    at the time of the transfer, the shares or ADSs are held by the
    decedent or donor as assets of a business for which a permanent
    establishment is maintained or a permanent representative is
    appointed in Germany; or 121




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##### Table of Contents



(c)
    the decedent or donor has held, alone or together with related
    persons, directly or indirectly, 10 percent or more of a
    companys registered share capital at the time of the
    transfer.    Other
    Taxes
    United States
    Taxation
      
    an individual who is a citizen or resident of the United States;
    a corporation, or other entity taxable as a corporation, formed
    under the laws of the United States or any state thereof or the
    District of Columbia; or
    an estate or trust, the income of which is subject to United
    States federal income taxation regardless of its source.         122




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##### Table of Contents



Taxation of
    Dividends
  non-United non-United non-United non-United
      Taxation of
    Sales or Other Taxable Dispositions
   123




---



##### Table of Contents



Information
    Reporting and Backup Withholding
  U.S.-related non-U.S. status U.S.-related Form W-8BEN).
  United States
    Gift and Estate Taxes
    Exchange
    Controls and Limitations Affecting Shareholders
    http://www.bundesbank.de/finanzsanktionen/finanzsanktionen
      Change of Control
    Provisions
   124




---



##### Table of Contents



cross-license
  Documents
    on Display
  1-800-SEC-0330. http://www.sec.gov
  Controls
    and Procedures
  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Managements
    Annual Report on Internal Control over Financial
    Reporting
  Rule 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of our company; 125




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##### Table of Contents




    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of our company are being made
    only in accordance with authorizations of management and board
    of our company; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of our
    companys assets that could have a material effect on our
    financial statements.      Changes in
    Internal Controls Over Financial Reporting
    Limitations
    Audit
    Committee Financial Expert
  Rule 10A-3
  Code
    of Ethics
  Form 20-F.
  Principal
    Accountant Fees and Services
  Audit Fees.
 126




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##### Table of Contents



Audit-Related Fees.
  Tax Fees.
  All Other Fees.
    Exemptions
    from the Listing Standards for Audit Committees
    Material
    Contracts
  Form 20-F. Form 20-F
  Commercial
    Agreements
    Related Party
    Transactions
   127




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##### Table of Contents



GLOSSARY
  200-millimeter manufacturing,
    300-millimeter
    manufacturing
    
    The size refers to the diameter of the wafers being processed in
    a front-end fab.75-nanometer technology,
    80-nanometer
    technology
    
    The size refers to the feature size of the manufacturing process
    used in a front-end fab.A-GPS
    
    Assisted Global Positioning System. GPS uses a network of
    satellites to triangulate a receivers position and provide
    latitude and longitude coordinates. Assisted GPS, or A-GPS, is a
    technology that uses an assistance server to cut down the time
    needed to find the location.ADSL
    
    Asymmetric Digital Subscriber Line. A form of Digital Subscriber
    Line (see xDSL) in which the bandwidth available for
    downloading data is significantly larger than for uploading
    data. This technology is well suited for web browsing and client
    server applications as well as for emerging applications such as
    video on demand.AMB
    
    Advanced Memory Buffer. This is a dedicated logic chip used on
    FB-DIMMs (see FB-DIMM). The AMB operates as the
    interface between the system bus and the memory chips.analog
    
    A continuous representation of phenomena in terms of points
    along a scale, each point merging imperceptibly into the next.
    Analog signals vary continuously over a range of values. Real
    world phenomena, such as heat and pressure, are analog. See also
    digital.ASIC
    
    Application Specific Integrated Circuit. A logic or mixed-signal
    circuit designed for a specific use and for a specific customer.ASSP
    
    Application Specific Standard Product. A logic or mixed-signal
    circuit designed for a specific application market, and sold to
    more than one customer, and thus, standard.Back-end
    
    The packaging, assembly and testing stages of the semiconductor
    manufacturing process, which take place after electronic
    circuits are imprinted on silicon wafers in the front-end
    process.Baseband IC
    
    The baseband IC is an essential part of a cell phone. It
    includes a digital signal processor, a microcontroller, some
    on-chip memory, interfaces to several external devices, and
    mixed-signal functionality like coder/decoder for speaker and
    microphone.Bit
    
    A unit of information; a computational quantity (binary pulse)
    that can take one of two values, such as true and false or 0 and
    1; also the smallest unit of storage sufficient to hold one bit.Broadband
    
    Any network technology that combines and sorts multiple,
    independent network frequencies onto a single cable. Commonly
    used to refer to high-bandwidth copper or fiber cables with a
    bandwidth of 1 Mbit per second and above.Byte
    
    A unit of storage measurement equal to eight bits.Chip cards
    
    Cards that contain an IC. Frequently used for telephone cards,
    debit cards, SIM cards, social cards, identification cards and
    PayTV cards. 128




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##### Table of Contents



CMOS
    
    Complementary Metal Oxide Substrate technology. A process
    technology that uses complementary MOS transistors (NMOS and
    PMOS) to make a chip that will consume relatively low power and
    permit a high level of integration.CO
    
    Central Office. A common carrier switching office in which
    users lines terminate. The nerve center of a telephone
    system.Contactless chip card
    
    In contrast to contact-based chip cards, contactless chip cards
    communicate with the card reader through induction technology.
    Contactless cards require only close proximity to an antenna to
    complete transaction.CODEC
    
    Coder/Decoder. Hardware used to code and decode digital signals.CPE
    
    Customer Premises Equipment. CPE is telephone or other service
    provider equipment, that is located on the customers
    premises (physical location) rather than on the providers
    premises or in between.DDR SDRAM
    
    Double data rate Synchronous Dynamically RAM. It activates
    output on both the rising and falling edge of the system clock
    rather than on just the rising edge, potentially doubling
    output. See also RAM and SDRAM.DDR2 800
    
    A memory device with a DDR2 interface and clocked with a
    400 MHz clock.DECT
    
    Digital Enhanced Cordless Telecommunications. A standard used
    for pan-European digital cordless telephones.Digital
    
    The representation of data by a series of bits or discrete
    values such as 0 and 1. See also analog.DIMM
    
    Dual In-line Memory Module. A memory module with contact rows on
    both sides and more bandwidth than a SIMM (single in-line memory
    module).Discrete semiconductors
    
    Semiconductor devices that involve only a single device like a
    transistor or a diode.DLC
    
    Digital Loop Carriers. A technology that makes use of digital
    techniques to bring a wide range of services to users via
    twisted-pair copper phone lines.DRAM
    
    Dynamic Random Access Memory. The most common type of solid
    state memory. Each bit of information is stored as an amount of
    electrical charge in a storage cell consisting of a capacitor
    and a transistor. The capacitor discharges gradually due to
    leakage and the memory cell loses the information stored. To
    preserve the information, the memory has to be refreshed
    periodically and is therefore referred to as
    dynamic. DRAM is a widespread memory technology
    because of its high packing density and consequently low price.DSL
    
    See xDSL.DSLAM
    
    Digital Subscriber Line Access Multiplexers. A network device,
    usually located in a telephone company central office, that
    receives signals from multiple customers digital
    subscriber line connections (see xDSL) and puts the
    signals on a high-speed backbone line using multiplexing
    technologies (see multiplexing). 129




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##### Table of Contents



DVB-C
    
    Digital Video Broadcasting  Cable.DVB-H
    
    Digital Video Broadcasting  Handheld.DVB-S
    
    Digital Video Broadcasting  Satellite.DVB-T
    
    Digital Video Broadcasting  Terrestrial.EDGE
    
    Enhanced Data rate for GSM Evolution. Also referred to as 2.75G,
    where GSM is 2G, GPRS is 2.5G and UMTS is 3G.Embedded DRAM,
    Embedded flash
    
    A process technology that combines DRAM or flash, respectively,
    and logic functions on a single chip.Ethernet
    
    A protocol for high speed communications, principally used for
    LAN networks.Fab
    
    A semiconductor fabrication facility, in which the front-end
    manufacturing process takes place. (see also
    Front-end.)FB-DIMM
    
    Fully Buffered Dual In-line Memory Module. A variant of standard
    DDR2 memory designed for server applications where both large
    amounts of memory and memory coordination and accuracy at high
    speeds are essential.Flash memory
    
    A type of non-volatile memory that can be erased and
    reprogrammed. See NAND.FlexRay
    
    FlexRay is a new automotive network communications protocol. It
    is positioned above CAN (controller area network) and MOST
    (media oriented systems transport) in terms of both performance
    and price.Front-end
    
    The wafer processing stage of the semiconductor manufacturing
    process, in which electronic circuits are imprinted onto raw
    silicon wafers. This is followed by the packaging, assembly and
    testing stages, which comprise the back-end process.Foundry
    
    A semiconductor manufacture that makes chips for third parties.GDDR3, GDDR5
    
    Graphic Double Data Rate. Third or fifth generation,
    respectively. See GraphicsRAM.Gigabit (Gbit)
    
    Approximately one billion bits; precisely 2 to the power of 30
    bits.Gigabyte
    
    Approximately one billion bytes; precisely 2 to the power of 30
    bytes.GPRS
    
    General Packet Radio Services. A packet based wireless
    communication service that promises data rates from 56 up to
    114 Kbps and continuous connection to the Internet for
    mobile phone and computer users. GPRS is based on GSM
    communication.GraphicsRAM
    
    High-performance
    DRAM chip, especially designed for graphics applications like
    3D graphics boards and game consoles. See GDDR3,
    GDDR5.GSM
    
    Global System for Mobile communication. A digital mobile
    telephone system that is the de facto wireless telephone
    standard in Europe and widely used in other parts of the world.
    GSM digitizes and compresses data, then sends it down a channel
    with two other streams of user data, each in its own time slot.
    It operates at either the 900 MHz or 1800 MHz
    frequency band. 130




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##### Table of Contents



IC
    
    Integrated Circuit. A semiconductor device consisting of many
    interconnected transistors and other components like resistors,
    capacitors and diodes.ISDN
    
    Integrated Services Digital Network. A type of online connection
    that speeds up data transmission by handling information in a
    digital form. Traditional modem communications translate a
    computers digital data into an analog wave form and send
    the signal, which then must be converted back to an analog
    signal. ISDN can be thought of as a direct digital connection.ISO
    
    International Standards Organization. The international
    organization responsible for developing and maintaining
    worldwide standards for manufacturing, environmental protection,
    computers, data communications, and many other fields.ITU
    
    International Telecommunication Union. The ITU is an
    international organization established to standardize and
    regulate international radio and telecommunications.Mask
    
    A transparent glass or quartz plate covered with an array of
    patterns used in the IC manufacturing process to create
    circuitry patterns on a wafer. Each pattern consists of opaque
    and transparent areas that define the size and shape of all
    circuit and device elements. The mask is used to expose selected
    areas, and defines the areas to be processed. Masks may use
    emulsion, chrome, iron oxide, silicon or other material to
    produce the opaque areas.Megabit (Mbit)
    
    Approximately one million bits; precisely 2 to the power of 20
    bits.Megabyte (MB)
    
    Approximately one million bytes; precisely 2 to the power of
    20 bytes.Memory
    
    Any device that can store data in machine-readable format.Microcontroller
    
    A microprocessor combined with memory and interfaces integrated
    on a single circuit and intended to operate as an embedded
    system.Micron ( μm)
    
    A metric unit of linear measure which equals one millionth of a
    meter. A human hair is about 100 microns in diameter. There are
    1000 microns in 1 millimeter.Micro DIMM
    
    Dual in-line memory module. A small-factor memory module
    specifically used in notebooks.Mixed-signal IC
    
    An integrated circuit that includes both analog and digital
    signal processing circuitry on a single semiconductor die.
    Typically, mixed-signal chips perform some whole function of
    sub-function in a larger assembly such as the radio subsystem of
    a cell phone. They often contain an entire
    system-on-a-chip.NAND
    
    NAND flash architecture is one of two flash technologies (the
    other being NOR) used in memory cards. It is also used in USB
    flash drives, MP3 players, and provides the image storage for
    digital cameras. NAND is best suited to flash devices requiring
    high capacity data storage.Nanometer (nm)
    
    A metric unit of linear measure which equals one billionth of a
    meter. There are 1000 nanometers in 1 micron. 131




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##### Table of Contents



Non-volatile memory
    
    A memory storage device whose contents are preserved when its
    power is off. See also volatile memory.ODM
    
    Original Device Manufacturer. A company which manufactures a
    product which ultimately will be branded by another firm for
    sale.OHSAS
    
    Occupational Health and Safety Assessment Series. The discipline
    concerned with protecting the safety, health and welfare of
    employees, organizations, and others affected by the work they
    undertake (such as customers, suppliers, and members of the
    public).PBX
    
    Private Branch eXchange. A telephone exchange that is owned by a
    private business, as opposed to one owned by a common carrier or
    by a telephone company.PDA
    
    Personal Digital Assistant. A term used to refer to any small
    mobile hand-held device that provides computing and information
    storage and retrieval capabilities for personal or business use,
    often for keeping schedule calendars and address book
    information handy.PFC
    
    Perfluorinated Compounds. Compounds derived from hydrocarbons by
    replacement of hydrogen atoms by fluorine atoms.PHY
    
    Physical Layer. A part of the electrical or mechanical interface
    to the physical medium. For example, the PHY determines how to
    put a stream of bits from the upper (data link) layer on to the
    pins for a parallel printer interface or network line card.POF
    
    Polymer Optical Fiber.RAM
    
    Random access memory. A type of data storage device for which
    the order of access to different locations does not affect the
    speed of access. This is in contrast to, for example, a magnetic
    disk or magnetic tape where it is much quicker to access data
    sequentially because accessing a non sequential location
    requires physical movement of the storage medium rather than
    electronic switching.REACH
    
    Registration, Evaluation and Authorization of Chemicals. A
    framework for regulation of chemicals in the European Union.RF transceiver
    
    Radio-frequency transceiver. A high-frequency used in mobile
    telecommunications. The term radio frequency refers to
    electromagnetic waves having characteristics such that, if the
    current is input to an antenna, an electromagnetic field is
    generated suitable for wireless broadcasting and/or
    communications.RFID
    
    Radio frequency identification. Systems that read or write data
    to RF tags that are present in a radio frequency field projected
    from RF reading/writing equipment. Data may be contained in one
    or more bits for the purpose of providing identification and
    other information relevant to the object to which the tag is
    attached. It incorporates the use of electromagnetic, or
    electrostatic coupling in the radio frequency portion of the
    spectrum to communicate to or from a tag through a variety of
    modulation schemes.SDRAM
    
    Synchronous DRAM. The most common type of DRAM memory today.
    Data are transferred synchronously to a clock signal. See also
    DRAM. 132




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##### Table of Contents



Semiconductor
    
    Generic name for devices, such as transistors and integrated
    circuits, that control the flow of electrical signals. More
    generally a material, typically crystalline, that can be altered
    to allow electrical current to flow or not flow in a pattern.
    The most common semiconductor material for use in integrated
    circuits is silicon.Server
    
    A computer that provides some service for other computers
    connected to it via a network. The most common example is a file
    server which has a local disk and services requests from remote
    clients to read and write files on that disk.Silicon
    
    A type of semiconducting material used to make a wafer. Silicon
    is the most widely used semiconductor material in the
    semiconductor industry (other than Germanium) as a base material.SIM card
    
    Subscriber identification module card. Used in mobile handsets
    for subscriber authentication.SLIC
    
    Subscriber line interface circuit. A circuit in a telephone
    company switch to which a customers telephone line is
    connected.SMARTi 3GE
    
    Infineons product name for a CMOS RF transceiver with
    worldwide compatibility.SO-DIMM
    
    Small-Outline Dual In-line Memory Module.SoC
    
    System-on-a-chip.
    The packaging of all the necessary electronic circuit and parts
    for a system (such as a cell phone or digital
    camera) on a single IC.SRAM
    
    Static RAM. A type of memory that is more expensive and much
    faster than DRAM but has much lower power consumption than DRAM.
    SRAM are used in cell phones because of low power consumption
    and in PCs as a fast first-level memory buffer.Structure size
    
    A measurement (generally in micron or nanometer) of the width of
    the smallest patterned feature on a semiconductor chip.T/E
    
    T1/E1, T3/E3. A data transmission technology based on copper
    wires. Various speed classes are available: T1: 1,544 Mbit/s;
    E1: 2,048 Mbit/s; T3: 44,736 Mbit/s; E3: 34,368 Mbit/s. The T
    standards are prevalent in NAFTA. The E standards are European
    standards.T-DMB
    
    Terrestrial Digital Multimedia Broadcasting. A system for
    broadcasting a variety of digital content to mobile devices,
    such as cellular phones.Telematics
    
    The combination of telecommunications and data processing.UMTS
    
    Universal Mobile Telecommunications Service. A so-called
    third-generation (3G), broadband, packet based
    transmission of text, digitized voice, video, and multimedia at
    data rates up to two megabits per second (Mbps), that is based
    on the GSM communication standard. UMTS aims to offer a
    consistent set of services to mobile computer and phone users no
    matter where they are located in the world.VDSL
    
    Very high bit-rate Digital Subscriber Line. A form of digital
    subscriber line similar to ADSL but providing higher speeds at
    reduced distances. See also xDSL. 133




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##### Table of Contents



VoIP
    
    Voice Over Internet Protocol. The routing of voice conversations
    over the Internet or any other
    IP-based
    network.Volatile memory
    
    A memory storage device whose contents are not preserved when
    its power is off. Most common types are DRAM and SRAM. See also
    non-volatile memory.Wafer
    
    A disk made of a semiconducting material such as silicon,
    currently usually either
    150-millimeters
    or
    200-millimeters
    or
    300-millimeters
    in diameter, used to form the substrate of a chip. A finished
    wafer may contain several thousand chips.WDCT
    
    Worldwide Digital Cordless Telecommunications.WLAN
    
    Wireless LAN. A wireless data communications network covering a
    small area, usually within the confines of a building or floors
    within a building.xDSL
    
    Digital Subscriber Line (where x represents the type
    of technology, e.g. ADSL, VDSL, SHDSL). A family of digital
    telecommunications protocols designed to allow high speed data
    communication over existing copper telephone lines between
    end-users and the telephone company. See also VDSL.Yield
    
    When used in connection with manufacturing, the ratio of the
    number of usable products to the total number of produced
    products. 134




---



##### 



INFINEON
    TECHNOLOGIES AG AND SUBSIDIARIES
    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
  
  PageReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Statements of Operations for the
    years ended
    September 30, 2005, 2006 and 2007


F-4Consolidated Balance Sheets as of
    September 30, 2006 and 2007


F-5Consolidated Statements of Shareholders
    Equity for the years ended 
    September 30, 2005, 2006 and 2007


F-6Consolidated Statements of Cash Flows for the
    years ended
    September 30, 2005, 2006 and 2007


F-7Notes to the Consolidated Financial Statements


F-8   F-1




---



##### Table of Contents



REPORT
    OF INDEPENDENT REGISTERED PUBLIC
    ACCOUNTING FIRM
     Internal Control 
    Integrated Framework
       F-2




---



##### Table of Contents



Internal
    Control  Integrated Framework Internal Control  Integrated Framework
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans  an amendment of FASB
    Statements No. 87, 88, 106, and 132(R)
   
  KPMG Deutsche
    Treuhand-Gesellschaft
 Aktiengesellschaft
 Wirtschaftsprüfungsgesellschaft
 F-3




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
    Consolidated Statements of Operations
    For the years ended September 30, 2005, 2006 and 2007
    (in millions, except for share data)
  Notes


2005


2006


2007


2007( millions)


( millions)


( millions)


($ millions)Net sales:Third parties






5,843



7,546



7,625



10,842Related parties


31



916



383



57



81Total net sales






6,759



7,929



7,682



10,923Cost of goods sold


8



4,909



5,854



6,092



8,662Gross profit






1,850



2,075



1,590



2,261Research and development expenses






1,293



1,249



1,169



1,662Selling, general and administrative expenses






655



751



700



995Restructuring charges


9



78



23



45



64Other operating expense, net


8



92



108



46



66Operating loss






(268
)


(56
)


(370
)


(526
)Interest expense, net






(9
)


(92
)


(33
)


(46
)Equity in earnings of associated companies, net


17



57



78



117



166Gain on subsidiaries and associated company share issuance, net


17







19







Other non-operating income (expense), net






26



(33
)


13



18Minority interests


26



2



(23
)


19



27Loss before income taxes






(192
)


(107
)


(254
)


(361
)Income tax expense


10



(120
)


(161
)


(79
)


(112
)Loss before extraordinary loss






(312
)


(268
)


(333
)


(473
)Extraordinary loss, net of tax


4











(35
)


(50
)Net loss






(312
)


(268
)


(368
)


(523
)Basic and diluted loss per share before extraordinary loss






(0.42
)


(0.36
)


(0.45
)


(0.64
)Basic and diluted loss per share


11



(0.42
)


(0.36
)


(0.49
)


(0.70
)    F-4




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
    Consolidated Balance Sheets
    September 30, 2006 and 2007
  Notes


2006


2007


2007( millions)


( millions)


($ millions)Assets:Current assets:Cash and cash equivalents






2,040



1,819



2,586Marketable securities


12



615



475



675Trade accounts receivable, net


13



1,245



894



1,271Inventories


14



1,202



1,217



1,731Deferred income taxes


10



97



66



94Other current assets


15



482



807



1,148Total current assets






5,681



5,278



7,505Property, plant and equipment, net


16



3,764



3,647



5,186Intangible assets, net


19



230



232



330Long-term investments


17



659



652



927Restricted cash






78



77



109Deferred income taxes


10



627



593



843Pension assets


32







60



85Other assets


18



146



140



199Total assets






11,185



10,679



15,184Liabilities and shareholders equity:Current liabilities:Short-term debt and current maturities


23



797



336



478Trade accounts payable


20



1,245



1,285



1,827Accrued liabilities


21



525



526



748Deferred income taxes


10



26



15



21Short-term pension liabilities


32







5



7Other current liabilities


22



712



680



967Total current liabilities






3,305



2,847



4,048Long-term debt


23



1,208



1,376



1,957Pension liabilities


32



134



111



158Deferred income taxes


10



60



46



65Long-term accrued liabilities


24



46



36



51Other liabilities


25



277



316



449Total liabilities






5,030



4,732



6,728Minority interests


26



840



1,033



1,469Shareholders equity:Ordinary share capital


27



1,495



1,499



2,131Additional paid-in capital






5,828



5,864



8,338Accumulated deficit






(1,780
)


(2,148
)


(3,054
)Accumulated other comprehensive loss


29



(228
)


(301
)


(428
)Total shareholders equity






5,315



4,914



6,987Total liabilities and shareholders equity






11,185



10,679



15,184    F-5




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
    Consolidated Statements of Shareholders Equity
    For the years ended September 30, 2005, 2006 and 2007
    (in millions of Euro, except for share data)
  AdditionalminimumpensionForeign


liability/


Unrealized


UnrealizedIssued


Additional





currency


Defined


gain (loss)


gain (loss) onOrdinary shares


paid-in


Accumulated


translation


benefit


on


cash flowNotes


Shares


Amount


capital


deficit


adjustment


plans


securities


hedge


TotalBalance as of October 1, 2004






747,559,859



1,495



5,800



(1,200
)


(122
)






4



1



5,978Net loss


















(312
)


















(312
)Other comprehensive income (loss)


29



















64



(84
)


8



(25
)


(37
)Total comprehensive loss






































(349
)Issuance of ordinary shares:Exercise of stock options


27



9,500































Balance as of September 30, 2005






747,569,359



1,495



5,800



(1,512
)


(58
)


(84
)


12



(24
)


5,629Net loss


















(268
)


















(268
)Other comprehensive income (loss)


29



















(69
)


(3
)


(7
)


5



(74
)Total comprehensive loss






































(342
)Issuance of ordinary shares:Exercise of stock options


27



39,935































Stock-based compensation


28











28























28Balance as of September 30, 2006






747,609,294



1,495



5,828



(1,780
)


(127
)


(87
)


5



(19
)


5,315Net loss


















(368
)


















(368
)Other comprehensive (loss) income


29



















(105
)


90



(12
)


2



(25
)Total comprehensive loss






































(393
)Issuance of ordinary shares:Exercise of stock options


27



2,119,341



4



15























19Stock-based compensation


28











17























17Deferred compensation, net














4























4Adjustment to initially apply SFAS No. 158, net of tax


32























(48
)










(48
)Balance as of September 30, 2007






749,728,635



1,499



5,864



(2,148
)


(232
)


(45
)


(7
)


(17
)


4,914    F-6




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
    Consolidated Statements of Cash Flows
    For the years ended September 30, 2005, 2006 and
    2007
  2005


2006


2007


2007( millions)


( millions)


( millions)


($ millions)Net loss


(312
)


(268
)


(368
)


(523
)Adjustments to reconcile net loss to cash provided by operating
    activities:Depreciation and amortization


1,316



1,405



1,276



1,814Provision for (recovery of) doubtful accounts


3



23



(19
)


(27
)Gains on sales of marketable securities


(8
)


(3
)


(8
)


(11
)Losses (gains) on sales of businesses and interests in
    subsidiaries


(39
)


10



63



90Gains on disposals of property, plant, and equipment


(8
)


(9
)


(13
)


(18
)Equity in earnings of associated companies, net


(57
)


(78
)


(117
)


(166
)Dividends received from associated companies


51



29



61



87Gain on subsidiaries and associated company share issuance, net






(19
)


Minority interests


(2
)


23



(19
)


(27
)Impairment charges


134



57



40



57Stock-based compensation






28



17



24Deferred income taxes


88



(6
)


58



82Changes in operating assets and liabilities:














Trade accounts receivable, net


119



(334
)


331



471Inventories


(25
)


(145
)


(76
)


(108
)Other current assets


(2
)


31



55



78Trade accounts payable


(52
)


222



29



41Accrued liabilities


(115
)


85



4



6Other current liabilities


1



52



(109
)


(157
)Other assets and liabilities


(2
)


(100
)


2



3Net cash provided by operating activities


1,090



1,003



1,207



1,716Cash flows from investing activities:Purchases of marketable securities available for sale


(2,228
)


(492
)


(224
)


(319
)Proceeds from sales of marketable securities available for sale


3,310



730



357



508Proceeds from sales of businesses and interests in subsidiaries


101



72



273



388Business acquisitions, net of cash acquired










(45
)


(64
)Investment in associated and related companies


(135
)


(6
)


(2
)


(3
)Cash increase from initial consolidation of ALTIS






119







Purchases of intangible assets


(27
)


(44
)


(39
)


(55
)Purchases of property, plant and equipment


(1,368
)


(1,253
)


(1,375
)


(1,955
)Proceeds from sales of property, plant and equipment


58



21



188



267Net cash used in investing activities


(289
)


(853
)


(867
)


(1,233
)Cash flows from financing activities:Net change in short-term debt


(20
)






30



43Net change in related party financial receivables and payables


18



7



(3
)


(4
)Proceeds from issuance of long-term debt


192



400



245



348Principal repayments of long-term debt


(500
)


(56
)


(744
)


(1,058
)Change in restricted cash


21



10



1



1Proceeds from issuance of ordinary shares










23



33Proceeds from issuance of shares to minority interest


23







4



6Proceeds from issuance of shares of Qimonda






406







Dividend payments to minority interests






(5
)


(77
)


(110
)Net cash (used in) provided by financing activities


(266
)


762



(521
)


(741
)Effect of foreign exchange rate changes on cash and cash
    equivalents


5



(20
)


(40
)


(57
)Net increase (decrease) in cash and cash equivalents


540



892



(221
)


(315
)Cash and cash equivalents at beginning of year


608



1,148



2,040



2,901Cash and cash equivalents at end of year


1,148



2,040



1,819



2,586    F-7




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
 
  1.
    Description of
    Business and Basis of Presentation  Description of
    Business
    Basis of
    Presentation
  Handelsgesetzbuch Einführungsgesetz zum HGB-EGHGB
      2.
    Summary of
    Significant Accounting Policies    Basis of
    Consolidation
   F-8




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         Consolidated


Associatedsubsidiaries


companies


TotalSeptember 30, 2006


66



7



73Additions


8







8Disposals


(5
)


(2
)


(7
)September 30, 2007


69



5



74   Reporting and
    Foreign Currency
        Exchange Rate

Annual averageSeptember 29,

September 28,

exchange rateCurrency:



2006

2007

2006

2007U.S. dollar

1$  =


0.7899


0.7052


0.8117


0.7497Japanese yen

100 JPY  =


0.6696


0.6124


0.6978


0.6297Great Britain pound

1 GBP  =


1.4756


1.4300


1.4595


1.4806Singapore dollar

1 SGD  =


0.4981


0.4728


0.5016


0.4904   Revenue
    Recognition
  Sales
  Revenue Recognition
 F-9




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   case-by-case
  License
    Income
  No. 00-21, Revenue Arrangements with Multiple
    Deliverables
  Grants
  Investitionszulage Investitionszuschüsse
  Product-related
    Expenses
    Income
    Taxes
  Accounting
    for Income Taxes
 F-10




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Stock-based
    Compensation
  Share-Based Payment Accounting for Stock Issued to
    Employees Accounting for Stock-Based
    Compensation Accounting for Stock-Based Compensation 
    Transition and Disclosure, an Amendment of FASB Statement
    No. 123
    Issuance of
    shares by Subsidiaries or Associated Companies
  Accounting for Sales of Stock by a
    Subsidiary
  Cash and Cash
    Equivalents
    Restricted
    Cash
    Marketable
    Securities and Investments
     F-11




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Inventories
    Property,
    Plant and Equipment
    YearsBuildings


10-25Technical equipment and machinery


3-10Other plant and office equipment


1-10   Leases
  Accounting for Leases
  Goodwill and
    Other Intangible Assets
  Business
    Combinations
  Goodwill and Other Intangible Assets
  Impairment of
    Long-lived Assets
   F-12




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Financial
    Instruments
  Accounting for Derivative
    Instruments and Hedging Activities
  Pension
    Plans
  projected-unit-credit Employers Accounting for Pensions Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans  an amendment of FASB Statements No. 87,
    88, 106, and 132(R)
  Recent Accounting
    Pronouncements
   F-13




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Use of
    Estimates
    Recent
    Accounting Pronouncements
  Accounting Changes and Error Corrections Accounting Changes Reporting Accounting Changes in Interim Financial
    Statements
  Accounting for Uncertainty in Income Taxes 
    an Interpretation of FASB Statement 109 more-likely-than-not
  Fair Value Measurements
  Employers Accounting for Defined Benefit Pension
    and Other Postretirement Plans  an amendment of FASB
    Statements No. 87, 88, 106, and 132(R)
 F-14




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Considering the Effects of Prior Year Misstatements
    when Quantifying Misstatements in Current Year Financial
    Statements
  The Fair Value Option for Financial Assets and
    Financial Liabilities  including an amendment of FASB
    Statement No. 115 instrument-by-instrument
  3.
    Separation of
    Memory Products Business   F-15




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
            F-16




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
           4.
    Acquisitions  ®
   F-17




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Consolidation of Variable Interest
    Entities  an interpretation of ARB
    No. 51
 F-18




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2005


2007Flash


CPEAcquisition Date

January 2005


July 2007CommunicationSegment

Qimonda


Solutions( in millions)Cash


1



Other current assets


16



6Property, plant and equipment


4



1Intangible assetsCore technology


58



Other






7Goodwill


7



31Other non-current assets


3



Total assets acquired


89



45Current liabilities


(45)



Non-current liabilities


(2)



Total liabilities assumed


(47)



Net assets acquired


42



45Cash paid (Purchase Consideration)






45       5.
    Divestitures       F-19




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
               Accounting for Impairment or Disposal of Long-lived
    Assets
 F-20




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     September 30,2007( in millions)Current assets


103Non-current assets


169Total assets held for sale (note 15)


272Current liabilities


110Non-current liabilities


7Total liabilities related to assets held for sale (note 22)


117     2005


2006


2007( in millions)Sales:Fiber Optics


23







BIDI


6







POF


28



26



14Total


57



26



14EBIT:Infineon Ventures GmbH


(3
)






Fiber Optics


(27
)






BIDI


(20
)






POF


(7
)


(1
)


(6
)Total


(57
)


(1
)


(6
)Gain (loss) on sale before tax:Infineon Ventures GmbH


13







Fiber Optics


21







BIDI


2







POF










17Other


3







3Total


39







20    F-21




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   6.
    Licenses           F-22




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     ® ®
     F-23




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   7.
    Grants    2005

2006

2007( in millions)Included in the consolidated statements of operations:Research and development


50


67


115Cost of sales


121


86


133171


153


248Construction grants deducted from the cost of fixed assets
    (note 30)





49


1     8.
    Supplemental
    Operating Cost Information    2005

2006

2007( in millions)Raw materials, supplies and purchased goods


1,867


2,244


2,382Purchased services


1,166


1,330


1,352Total


3,033


3,574


3,734     2005

2006

2007( in millions)Wages and salaries


1,664


1,827


1,880Social levies


285


319


341Pension expense (note 32)


28


37


41Total


1,977


2,183


2,262  F-24




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2005


2006


2007( in millions)Gains (losses) from sales of businesses and interests in
    subsidiaries


39



(10
)


(63
)Goodwill and intangible assets impairment charges (note 19)


(57
)


(38
)


(2
)Long-lived asset impairment charges


(39
)


(6
)


(4
)Litigation settlement charges, net of recoveries (note 35)


(20
)


(60
)


9Other


(15
)


6



14Other operating expense, net


(92
)


(108
)


(46
)         2005

2006

2007Germany


16,334


15,822


15,449Other Europe


5,606


7,455


7,479North America


3,108


3,283


3,433Asia/Pacific


10,919


14,285


15,964Japan


147


180


202Other


44


41


22Total


36,158


41,066


42,549     9.
    Restructuring       F-25




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         September 30,






September 30,2006

Restructuring




2007Liabilities

Charges

Payments


Liabilities( in millions)Employee terminations


57


39


(58
)


38Other exit costs


6


6


(6
)


6Total


63


45


(64
)


44   10.
    Income
    Taxes    2005


2006


2007( in millions)Germany


(298
)


(378
)


(453
)Foreign


104



294



180Total


(194
)


(84
)


(273
)     2005

2006


2007( in millions)Current taxes:Germany


31


126



14Foreign


1


41



732


167



21Deferred taxes:Germany


66


(21
)


88Foreign


22


15



(30
)88


(6
)


58Income tax expense


120


161



79  F-26




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2005


2006

2007( in millions)Income tax expense


120



161


79Goodwill and intangible assets, for initial recognition of
    acquired tax benefits that were previously included in the
    valuation allowance


(30
)





Shareholders equity, for other comprehensive income (loss)









590



161


84         2005


2006


2007( in millions)Expected expense (benefit) for income taxes


(76
)


(31
)


(101
)Increase in available tax credits


(5
)


(36
)


(35
)Non-taxable investment (income) loss


(26
)


(31
)


4Tax rate differential


(18
)


(50
)


(107
)Non deductible expenses


29



13



28Change in German tax rate






3



53Increase in valuation allowance


192



292



226Other


24



1



11Actual provision for income taxes


120



161



79      F-27




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2006


2007( in millions)Deferred tax assets:Intangible assets


95



62Property, plant and equipment


264



197Deferred income


94



57Net operating loss and tax credit carry-forwards


1,350



1,319Other items


179



272Gross deferred tax assets


1,982



1,907Valuation allowance


(1,091
)


(1,050
)Deferred tax assets


891



857Deferred tax liabilities:Intangible assets


4



Property, plant and equipment


103



75Accounts receivable


17



43Accrued liabilities and pensions


118



113Other items


11



28Deferred tax liabilities


253



259Deferred tax assets, net


638



598     2006


2007( in millions)Deferred tax assets:Current


97



66Non-current


627



593Deferred tax liabilities:Current


(26
)


(15
)Non-current


(60
)


(46
)Deferred tax assets, net


638



598      F-28




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
       2005


2006

2007( in millions)Balance, beginning of the year


567



740


1,091Applicable to continuing operations


192



292


226Purchase accounting adjustments


(30
)





Change in tax rate









(298
)Adjustment in corresponding net operating loss carry-forward


11



59


31Balance, end of the year


740



1,091


1,050         11.
    Earnings (Loss)
    Per Share   F-29




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2005


2006


2007Numerator ( in millions):Net loss before extraordinary loss


(312
)


(268
)


(333
)Extraordinary loss, net of tax










(35
)Net loss


(312
)


(268
)


(368
)Denominator (shares in millions):Weighted-average shares outstanding  basic


747.6



747.6



748.6Effect of dilutive instruments










Weighted-average shares outstanding  diluted


747.6



747.6



748.6Basic and diluted loss per share (in ):Net loss before extraordinary loss


(0.42
)


(0.36
)


(0.45
)Extraordinary loss, net of tax










(0.04
)Net loss


(0.42
)


(0.36
)


(0.49
)    F-30




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   12.
    Marketable
    Securities    2006

2007Fair

Unrealized

Unrealized



Fair

Unrealized

UnrealizedCost

Value

Gains

Losses

Cost

Value

Gains

Losses( in millions)Foreign government securities


9


11


2





9


11


2


Floating rate notes


156


162


6














Fixed term securities


460


453





(7)


491


477


1


(15)Other debt securities


14


18


4





18


22


4


Total debt securities


639


644


12


(7)


518


510


7


(15)Equity securities


4


5


1





5


6


1


Total marketable securities


643


649


13


(7)


523


516


8


(15)Reflected as follows:Current assets


616


615


6


(7)


490


475





(15)Non-current assets (note 18)


27


34


7





33


41


8


Total marketable securities


643


649


13


(7)


523


516


8


(15)       2005

2006

2007( in millions)Realized gains


8


3


7Realized losses








Realized gains, net


8


3


7       Cost

Fair Value( in millions)Less than 1 year


160


152Between 1 and 5 years


133


130More than 5 years


225


228Total debt securities


518


510    F-31




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   13.
    Trade Accounts
    Receivable, net    2006


2007( in millions)Third party  trade


1,304



916Associated and Related Companies  trade (note 31)


8



16Trade accounts receivable, gross


1,312



932Allowance for doubtful accounts


(67
)


(38
)Trade accounts receivable, net


1,245



894     2006

2007( in millions)Allowance for doubtful accounts at beginning of year


44


67Provision for (recovery of) bad debt, net


23


(29
)Allowance for doubtful accounts at end of year


67


38   14.
    Inventories    2006

2007( in millions)Raw materials and supplies


125


123Work-in-process


777


665Finished goods


300


429Total Inventories


1,202


1,217  F-32




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   15.
    Other Current
    Assets    2006

2007( in millions)Assets held for sale (note 5)





272VAT and other tax receivables


189


174Grants receivable (note 7)


125


104Associated and Related Companies  financial and other
    receivables (note 31)


1


59Third party  financial and other receivables


61


57Financial instruments (note 33)


22


49Prepaid expenses


36


42License fees receivable


14


13Employee receivables (note 31)


7


8Intangible pension asset (note 32)


13


Other


14


29Total other current assets


482


807   16.
    Property, Plant
    and Equipment, net    Technicalequipment


Other plantLand and


and


and office


Constructionbuildings


machinery


equipment


in progress


Total( in millions)CostSeptember 30, 2006


1,554



9,173



2,309



218



13,254Additions


61



618



105



646



1,430Impairments






(3
)










(3
)Disposals


(15
)


(162
)


(180
)


(4
)


(361
)Reclassifications


13



424



25



(462
)


Transfers


(101
)


(971
)


(24
)


(7
)


(1,103
)Foreign currency effects


(56
)


(224
)


(20
)


(9
)


(309
)September 30, 2007


1,456



8,855



2,215



382



12,908Accumulated depreciationSeptember 30, 2006


(732
)


(6,749
)


(2,009
)






(9,490
)Depreciation


(103
)


(933
)


(187
)






(1,223
)Disposals


9



155



175







339Reclassifications






(5
)


5







Transfers


41



880



18







939Foreign currency effects


18



139



17







174September 30, 2007


(767
)


(6,513
)


(1,981
)






(9,261
)Book value September 30, 2006


822



2,424



300



218



3,764Book value September 30, 2007


689



2,342



234



382



3,647  F-33




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     17.
    Long-term
    Investments    Investment inAssociated


Investment inCompanies


Related Companies


Total( in millions)Balance at September 30, 2005


758



21



779Additions


5



1



6Disposals






(3
)


(3
)Dividend payments


(29
)






(29
)Capitalized interest


(1
)






(1
)Impairments


(13
)






(13
)Equity in earnings


78







78Consolidation of ALTIS


(202
)


4



(198
)Gain on share issuance


72







72Reclassifications


10



1



11Foreign currency effects


(43
)






(43
)Balance at September 30, 2006


635



24



659Additions






2



2Disposals


(25
)


(3
)


(28
)Dividend payments


(61
)






(61
)Capitalized interest


(1
)






(1
)Impairments






(2
)


(2
)Equity in earnings


117







117Reclassifications


(12
)


4



(8
)Foreign currency effects


(26
)






(26
)Balance at September 30, 2007


627



25



652       Direct andindirectName of the Associated Company

ownership(1)Advanced Mask Technology Center GmbH & Co. KG,
    Dresden, Germany (AMTC)


25.8%Inotera Memories Inc., Taoyuan, Taiwan (Inotera)


27.6%   (1)
    Direct and indirect ownership percentages are net of
    Qimondas minority interest. F-34




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
              (lock-up) lock-up. lock-up
   F-35




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
           ALTISConsolidation Date

December 2005CommunicationSegment

Solutions( in millions)Cash


119Inventories


45Other current assets


10Property, plant and equipment


212Long-term investment


(202
)Other non-current assets


(47
)Total assets consolidated


137Current liabilities


(79
)Non-current liabilities (including debt)


6Deferred tax liabilities


3Minority Interests


207Total liabilities consolidated


137Net assets consolidated


Cash paid


    F-36




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
               2005

2006

2007( in millions)Sales


439


894


1,122Gross profit


137


312


381Net income (loss)


72


208


277   2005


2006


2007( in millions)Current assets


520



1,084



714Non-current assets


1,883



1,811



2,810Current liabilities


(334
)


(524
)


(661
)Non-current liabilities


(891
)


(637
)


(1,133
)Shareholders equity


1,178



1,734



1,730  F-37




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   18.
    Other
    Assets    2006

2007( in millions)Deferred tax charges (note 10)


56


50Marketable securities (note 12)


34


41Long-term receivables


20


27Employee receivables (note 31)


2


1Grants receivable (note 7)


13


Other


21


21Total


146


140   19.
    Intangible
    Assets    OtherGoodwill


Intangibles


Total( in millions)CostSeptember 30, 2005


125



448



573Additions






56



56Impairment charges (note 8)


(7
)


(31
)


(38
)Disposals


(11
)


(26
)


(37
)Foreign currency effects


(6
)


(1
)


(7
)September 30, 2006


101



446



547Additions


31



45



76Impairment charges (note 8)






(2
)


(2
)Disposals


(6
)


(46
)


(52
)Foreign currency effects


(9
)


(4
)


(13
)September 30, 2007


117



439



556Accumulated amortizationSeptember 30, 2005






(258
)


(258
)Amortization






(67
)


(67
)Disposals






5



5Foreign currency effects






3



3September 30, 2006






(317
)


(317
)Amortization






(52
)


(52
)Disposals






42



42Foreign currency effects






3



3September 30, 2007






(324
)


(324
)Carrying value September 30, 2005


125



190



315Carrying value September 30, 2006


101



129



230Carrying value September 30, 2007


117



115



232  F-38




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     ® ®
             F-39




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   20.
    Trade Accounts
    Payable    2006

2007( in millions)Third party  trade


1,165


1,128Associated and Related Companies  trade (note 31)


80


157Total


1,245


1,285   21.
    Accrued
    Liabilities    2006

2007( in millions)Personnel costs


353


381Warranties and licenses


54


44Settlement for antitrust related matters (note 35)


53


38Other


65


63Total


525


526       2007( in millions)Balance as of September 30, 2006


51Accrued during the year, net


29Settled during the year


(36
)Balance as of September 30, 2007


44  F-40




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   22.
    Other Current
    Liabilities    2006

2007( in millions)Deferred income


62


124VAT and other taxes payable


212


109Liabilities related to asset held for sale (note 5)





117Payroll obligations to employees


128


88Deferred government grants (note 7)


95


69Restructuring (note 9)


63


44Financial instruments (note 33)


11


38Interest


37


20Settlement for anti-trust related matters (note 35)


24


20Associated and Related Companies  financial and other
    payables (note 31)


9


12Other


71


39Total


712


680     23.
    Debt    2006

2007( in millions)Short-term debt:Loans payable to banks, weighted average rate 4.55%


51


155Convertible subordinated notes, 4.25%, due 2007


638


Current portion of long-term debt


108


153Capital lease obligation





28Total short-term debt and current maturities


797


336Long-term debt:Exchangeable subordinated notes, 1.375%, due 2010





215Convertible subordinated notes, 5.0%, due 2010


692


695Loans payable to banks:Unsecured term loans, weighted average rate 4.82%,
    due 2009  2013


458


318Secured term loans, weighted average rate 1.99%, due 2013


7


4Other loans payable, weighted average rate 4.35%, due 2011


3


Notes payable to governmental entity, rate 2.02%, due 2010
     2027


48


44Capital lease obligation





100Total long-term debt


1,208


1,376    F-41




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
          F-42




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         Nature of financial



As of September 30, 2007Institution

Purpose/intended

AggregateTerm

Commitment

use

facility

Drawn

Available( in millions)Short-term

firm commitment

working capital, 
    guarantees


164


127


37Short-term

no firm commitment

working capital, cash management


336


28


308Long-term(1)

firm commitment

general corporate purposes


766


165


601Long-term(1)

firm commitment

project finance


354


354


Total


1,620


674


946   (1)
    Including current maturities.        Fiscal year ending September 30,

Amount( in millions)2008


3362009


2072010


1,0022011


952012


26Thereafter


46Total


1,712  F-43




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   24.
    Long-term Accrued
    Liabilities    2006


2007( in millions)Asset retirement obligations


33



24Post-retirement benefits


4



3Personnel costs


6



6Other


3



3Total


46



36   25.
    Other
    Liabilities    2006


2007( in millions)Deferred income


40



114Deferred government grants (note 7)


117



113Settlement for antitrust related matters (note 35)


62



37License fees payable


41



27Deferred Compensation






13Other


17



12Total


277



316   26.
    Minority
    Interest       F-44




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   27.
    Ordinary Share
    Capital    Authorized and
    Conditional Share Capital
    
    Through January 19, 2009, Authorized Share Capital
    II/2004  in an aggregate nominal amount of up to
    30 million to issue shares to employees (in which
    case the pre-emptive rights of existing shareholders are
    excluded).
    Through February 14, 2012, Authorized Share Capital
    2007  in an aggregate nominal amount of up to
    224 million to issue shares for cash, where the
    pre-emptive rights of shareholders may be partially excluded, or
    in connection with business combinations (contributions in
    kind), where the pre-emptive rights of shareholders may be
    excluded for all shares.        Dividends
  Aktiengesetz Bilanzgewinn
  Bilanzverlust
 F-45




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   28.
    Stock-based
    Compensation    Infineon Stock
    Option Plan
           F-46




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Weighted-


Weighted-average


average


AggregatedNumber of


exercise


remaining life


Intrinsicoptions


price


(in years)


ValueOutstanding at September 30, 2006


44.8



18.12



3.54



14Granted


2.3



13.30Exercised


(2.1
)


8.91Forfeited and expired


(5.6
)


33.58Outstanding at September 30, 2007


39.4



16.17



2.99



66Vested and expected to vest, netof estimated forfeitures atSeptember 30, 2007


39.1



16.20



2.97



66Exercisable at September 30, 2007


25.8



19.52



2.06



31       Weighted-


Weighted-average


average


AggregatedNumber of


grant date


remaining life


Intrinsicoptions


fair value


(in years)


ValueUnvested at September 30, 2006


19.2



4.11



5.11



11Granted


2.3



2.03Vested


(7.0
)


4.63Forfeited


(0.9
)


3.91Unvested at September 30, 2007


13.6



3.50



4.77



35Unvested options expected to vest


13.2



3.53



4.81



34      F-47




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         2005


2006


2007Weighted-average assumptions:Risk-free interest rate


3.02%



3.08%



3.91%Expected volatility, underlying shares


58%



43%



40%Expected volatility, SOX index










36%Forfeiture rate, per year










3.40%Dividend yield


0%



0%



0%Expected life in years


4.50



5.07



3.09Weighted-average fair value per option at grant date in 


4.03



3.19



2.03     Qimondas
    Stock Option Plan
   F-48




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Weighted-


Weighted-average


average


AggregatedNumber of

exercise


remaining life


Intrinsicoptions

price


(in years)


ValueOutstanding at September 30, 2006













Granted


1.9


15.97



6.00



Exercised













Forfeited and expired













Outstanding at September 30, 2007


1.9


15.97



5.16



Expected to vest, net of estimated forfeitures, at
    September 30, 2007


1.7


15.97



5.16



Exercisable at September 30, 2007













     Weighted-


Weighted-average


average


AggregatedNumber of

grant date


remaining life


Intrinsicoptions

fair value


(in years)


ValueUnvested at September 30, 2006













Granted


1.9


3.23



6.00



Vested













Forfeited













Unvested at September 30, 2007


1.9


3.23



5.16



Unvested options expected to vest


1.7


3.23



5.16



    F-49




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2007Weighted-average assumptions:Risk-free interest rate


4.62%Expected volatility, underlying ADS


45%Expected volatility, SOX


29%Forfeiture rate, per year


3.40%Dividend yield


0%Expected life in years


4.62Weighted-average fair value per option at grant date in 


3.23     Stock-Based
    Compensation Expense
    2006


2007( in millions)Compensation expense recognized:Cost of goods sold


7



4Selling, general and administrative expenses


12



7Research and development expenses


9



6Total stock-based compensation expense


28



17Stock-based compensation effect on basic and diluted loss per
    share in 


(0.04
)


(0.02
)        F-50




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   pro forma
  2005( in millions)Net loss:As reported


(312)Deduct: Stock-based employee compensation expense included in
    reported net loss, net of related tax effects


Add: Total stock-based employee compensation expense determined
    under fair value based method for all awards, net of related tax
    effects


(39)Pro forma


(351)Basic and diluted loss per share in :As reported


(0.42)Pro forma


(0.47)   29.
    Other
    Comprehensive Loss    2005


2006


2007Tax








Tax








TaxPretax


effect


Net


Pretax


effect


Net


Pretax


effect


Net( in millions)Unrealized (losses) gains on securities:Unrealized holding (losses) gains


13



(1
)


12



6



(1
)


5



(7
)






(7
)Reclassification adjustment for losses (gains) included in net
    income or loss


(4
)






(4
)


(13
)


1



(12
)


(6
)


1



(5
)Net unrealized (losses) gains, net


9



(1
)


8



(7
)






(7
)


(13
)


1



(12
)Unrealized gains (losses) on cash flow hedges


(25
)






(25
)


5







5



2







2Additional minimum pension liability/Defined benefit plans


(85
)


1



(84
)


(3
)






(3
)


95



(5
)


90Foreign currency translation adjustment


64







64



(69
)






(69
)


(105
)






(105
)Other comprehensive loss


(37
)






(37
)


(74
)






(74
)


(21
)


(4
)


(25
)  F-51




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   30.
    Supplemental Cash
    Flow Information  2005

2006

2007( in millions)Cash paid for:Interest


91


116


100Income taxes


79


117


134Non-cash investing activities:Construction grants deducted from cost of fixed assets
    (note 7)





49


1Molstanda (note 4)








(41
)Non-cash financing activities:Molstanda (note 4)








76   31.
    Related
    Parties  mark-up.
        2006

2007( in millions)Current:Associated and Related Companies  trade (note 13)


8


16Associated and Related Companies  financial and other
    receivables (note 15)


1


59Employee receivables (note 15)


7


816


83Non-current:Employee receivables (note 18)


2


1Total Related Party receivables


18


84     2006

2007( in millions)Associated and Related Companies  trade (note 20)


80


157Associated and Related Companies  financial and other
    payables (note 22)


9


12Total Related Party payables


89


169  F-52




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         2005

2006

2007( in millions)Sales to Related Parties:Siemens group companies


861


322


Associated and Related Companies


55


61


57Total sales to Related Parties


916


383


57Purchases from Related Parties:Siemens group companies


226


73


Associated and Related
    Companies(1)


615


575


593Total purchases from Related Parties


841


648


593   (1)
    The decrease during the fiscal year ended September 30,
    2006 is primarily related to the initial consolidation of ALTIS.      32.
    Pension
    Plans       F-53




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
       Adjustments toBefore adoption of


initially apply


After adoption ofSFAS No. 158


SFAS No. 158


SFAS No. 158( in millions)Prepaid pension costs


108



(108
)


Current deferred income taxes


2



(5
)


(3
)Intangible asset


4



(4
)


Non-current pension asset






60



60Short-term pension liability






(5
)


(5
)Pension liabilities


(125
)


14



(111
)Accumulated other comprehensive loss, net of tax


(3
)


48



45  F-54




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2005


2006


2007Domestic


Foreign


Domestic


Foreign


Domestic


Foreignplans


plans


plans


plans


plans


plans( in millions)Accumulated benefit obligations end of year


(337
)


(64
)


(378
)


(61
)


(372
)


(60
)Change in projected benefit obligations:Projected benefit obligations beginning of year


(271
)


(78
)


(392
)


(85
)


(443
)


(75
)Service cost


(16
)


(7
)


(24
)


(5
)


(26
)


(3
)Interest cost


(15
)


(4
)


(17
)


(4
)


(21
)


(4
)Actuarial gains (losses)


(89
)


(2
)


(13
)


8



94



(1
)Divestitures


1



4











2



Plan amendments


(8
)














(4
)


Benefits paid


2



2



3



2



5



3Curtailment gain


4



1







7







1Foreign currency effects






(1
)






2







3Projected benefit obligations end of year


(392
)


(85
)


(443
)


(75
)


(393
)


(76
)Change in fair value of plan assets:Fair value at beginning of year


174



30



208



35



282



38Contributions and transfers


17



4



63



4



65



5Actual return on plan assets


19



2



14



2



27



4Benefits paid


(2
)


(2
)


(3
)


(2
)


(5
)


(3
)Foreign currency effects






1







(1
)






(1
)Fair value at end of year


208



35



282



38



369



43Funded status


(184
)


(50
)


(161
)


(37
)


(24
)


(33
)Unrecognized actuarial (gains) losses


138



4



144



(8
)


33



(7
)Unrecognized prior service cost (benefit)


14



(2
)


13







16



Post measurement date contributions


16



1



16



1



1



Net asset (liability) recognized


(16
)


(47
)


12



(44
)


26



(40
)     2005


2006


2007Domestic


Foreign


Domestic


Foreign


Domestic


Foreignplans


plans


plans


plans


plans


plans( in millions)Prepaid pension cost














1







Intangible asset (note 15)


14







13











Non-current pension asset


















57



3Current pension liability


















(5
)


Pension liabilities


(115
)


(47
)


(89
)


(45
)


(75
)


(36
)Accumulated other comprehensive income


85







88







49



(7
)Net asset (liability) recognized


(16
)


(47
)


12



(44
)


26



(40
)  F-55




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
       2005

2006

2007Domestic

Foreign

Domestic

Foreign

Domestic

Foreignplans

plans

plans

plans

plans

plans( in millions)Projected benefit obligation


392


85


443


64


108


63Fair value of plan assets


208


35


282


26


27


26Accumulated benefit obligations


337


57


378


54


99


47Fair value of plan assets


208


26


282


26


27


19     2005

2006

2007Domestic

Foreign

Domestic

Foreign

Domestic

Foreignplans

plans

plans

plans

plans

plansDiscount rate


4.5%


4.8%


4.8%


5.3%


5.5%


5.6%Rate of compensation increase


2.5%


3.1%


2.5%


1.8%


2.5%


2.2%Projected future pension increases


1.3%


2.2%


1.8%


2.2%


1.8%


2.7%Expected return on plan assets


7.3%


6.9%


6.5%


6.9%


6.1%


6.9%     Investment
    strategies
    Expected
    long-term rate of return on plan assets
   F-56




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Plan asset
    allocation
    2006

2007

Targeted AllocationDomestic

Foreign

Domestic

Foreign

Domestic

Foreignplans

plans

plans

plans

plans

plansEquity securities


33%


59%


38%


58%


52%


57%Debt securities


33%


26%


35%


24%


21%


22%Other


34%


15%


27%


18%


27%


21%Total


100%


100%


100%


100%


100%


100%       2005


2006


2007Domestic


Foreign


Domestic


Foreign


Domestic


Foreignplans


plans


plans


plans


plans


plans( in millions)Service cost


(16
)


(7
)


(24
)


(5
)


(26
)


(3
)Interest cost


(15
)


(4
)


(17
)


(4
)


(21
)


(4
)Expected return on plan assets


13



2



13



3



17



3Amortization of unrecognized prior service (cost) benefits










(1
)


2



(1
)


Amortization of unrecognized actuarial gains (losses)


(3
)






(7
)






(8
)


1Curtailment gain recognized


1



1







3







1Net periodic pension cost (note 8)


(20
)


(8
)


(36
)


(1
)


(39
)


(2
)        F-57




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         Employers Accounting for Settlements and Curtailments
    of Defined Benefit Pension Plans and for Termination
    Benefits
    Domestic

ForeignYears ending September 30,

plans

plans( in millions)2008


19


12009


17


22010


23


22011


26


22012


20


22013 - 2017


135


18    F-58




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   33.
    Financial
    Instruments      2006


2007Notional

Fair


Notional

Fairamount

value


amount

value( in millions)Forward contracts sold:U.S. dollar


682


1



735


25Japanese yen


30






17


Great Britain pound


1









Malaysian ringgit


6






3


Norwegian krone









2


Forward contracts purchased:U.S. dollar


209


(1
)


356


(20
)Japanese yen


24






73


(2
)Singapore dollar


27






24


Great Britain pound


7






6


Malaysian ringgit


35






83


(2
)Norwegian krone









7


Other currencies









1


Currency Options sold:U.S. dollar


259


(5
)





Currency Options purchased:U.S. dollar


252


2






Interest rate swaps


1,200


5



700


(10
)Other


218


9



231


20Fair value, net





11






11      F-59




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     34.
    Risks              35.
    Commitments and
    Contingencies  Litigation and
    Investigations
   F-60




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
              F-61




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
              F-62




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
            F-63




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         Accruals and
    the Potential Effect of these Lawsuits
         F-64




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Contractual
    Commitments
  (1)(2) :
  Payments Due by PeriodLessthan

1-2

2-3

3-4

4-5

AfterTotal

1 year

years

years

years

years

5 years( in millions)Contractual commitments:Operating lease payments


870


90


78


65


62


57


518Unconditional purchase commitments


1,212


1,161


29


11


6


1


4Other long-term commitments


77


71


2


2


1


1


Total Commitments


2,159


1,322


109


78


69


59


522   (1)
    Certain payments of obligations or expirations of commitments
    that are based on the achievement of milestones or other events
    that are not date-certain are included for purposes of this
    table based on estimates of the reasonably likely timing of
    payments or expirations in the particular case. Actual outcomes
    could differ from those estimates.(2)
    Product purchase commitments associated with continuing capacity
    reservation agreements are not included in this table, since the
    purchase prices are based, in part, on future market prices, and
    are accordingly not accurately quantifiable at
    September 30, 2007. Purchases under such arrangements
    aggregated 1,165 million for the year ended
    September 30, 2007.      Other
    Contingencies
  (1)
  Expirations by PeriodLessthan

1-2

2-3

3-4

4-5

AfterTotal

1 year

years

years

years

years

5 years( in millions)Maximum potential future payments:Guarantees(2)


209


25


22


1


14


30


117Contingent government
    grants(3)


462


125


40


56


171


30


40Total contingencies


671


150


62


57


185


60


157   (1)
    Certain expirations of contingencies that are based on the
    achievement of milestones or other events that are not
    date-certain are included for purposes of this table based on
    estimates of the reasonably likely timing of expirations in the
    particular case. Actual outcomes could differ from those
    estimates.(2)
    Guarantees are mainly issued for the payment of import duties,
    rentals of buildings, and contingent obligations related to
    government grants received.(3)
    Contingent government grants refer to amounts previously
    received, related to the construction and financing of certain
    production facilities, which are not otherwise guaranteed and
    could be refundable if the total project requirements are not
    met. F-65




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
          36.
    Operating Segment
    and Geographic Information  Disclosure about Segments of an Enterprise and Related
    Information
     F-66




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
       Automotive,
    Industrial & Multimarket
    Communication
    Solutions
    Qimonda
    Other Operating
    Segments
      2005


2006


2007( in millions)Net sales:Automotive, Industrial & Multimarket


2,516



2,839



3,017Communication
    Solutions(1)


1,391



1,205



1,051Other Operating
    Segments(2)


285



310



219Corporate and
    Eliminations(3)


(258
)


(240
)


(213
)Subtotal


3,934



4,114



4,074Qimonda


2,825



3,815



3,608Infineon Group


6,759



7,929



7,682   (1)
    Includes inter-segment sales of 30 million for fiscal
    year ended September 30, 2007, none in fiscal years 2005
    and 2006, respectively, from sales of wireless communication
    applications to Qimonda. F-67




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
    (2)
    Includes inter-segment sales of 273 million,
    256 million and 189 million for fiscal
    years ended September 30, 2005, 2006 and 2007,
    respectively, from sales of wafers from Infineons
    200-millimeter facility in Dresden to Qimonda under foundry
    agreements.(3)
    Includes the elimination of inter-segment sales of
    273 million, 256 million and
    219 million for fiscal years ended September 30,
    2005, 2006 and 2007, respectively.  2005


2006


2007( in millions)EBIT:Automotive, Industrial & Multimarket


134



246



300Communication Solutions


(295
)


(231
)


(160
)Other Operating Segments


4



4



(12
)Corporate and Eliminations


(137
)


(236
)


(177
)Subtotal


(294
)


(217
)


(49
)Qimonda(1)


111



202



(207
)Infineon Group


(183
)


(15
)


(256
)   (1)
    EBIT results of Qimonda for the period following its IPO are
    reported net of minority interest results.  2005

2006

2007( in millions)Depreciation and Amortization:Automotive, Industrial & Multimarket


431


411


401Communication Solutions


309


246


186Other Operating Segments


48


45


22Corporate and Eliminations








Subtotal


788


702


609Qimonda


528


703


667Infineon Group


1,316


1,405


1,276   2005


2006


2007( in millions)Equity in earnings (losses) of Associated Companies:Automotive, Industrial & Multimarket










Communication Solutions


4



(2
)


Other Operating Segments


(2
)






Corporate and Eliminations


10







Subtotal


12



(2
)


Qimonda


45



80



117Infineon Group


57



78



117   F-68




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   2005

2006

2007( in millions)Inventories:Automotive, Industrial & Multimarket


336


365


402Communication Solutions


201


214


243Other Operating Segments


1


1


(47)Corporate and Eliminations








Subtotal


538


580


598Qimonda


484


622


619Infineon Group


1,022


1,202


1,217     2006

2007( in millions)Goodwill:Automotive, Industrial & Multimarket





Communication Solutions


22


52Other Operating Segments


6


Corporate and Eliminations


1


1Subtotal


29


53Qimonda


72


64Infineon Group


101


117     2005


2006


2007( in millions)Corporate and Eliminations:Unabsorbed excess capacity costs


(12
)


(33
)


(7
)Restructuring charges (note 9)


(78
)


(23
)


(45
)Stock-based compensation expense






(25
)


(12
)Other,
    net(1)


(47
)


(155
)


(113
)Total


(137
)


(236
)


(177
)   (1)
    Includes aggregate charges of approximately
    80 million and 84 million in the 2006 and
    2007 fiscal years, respectively, incurred primarily in
    connection with the issuance and/or sale of Qimonda ADSs. F-69




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
      2005

2006

2007( in millions)Net sales:Germany


1,354


1,327


1,164Other Europe


1,210


1,360


1,218North America


1,504


2,126


1,887Asia/Pacific


2,223


2,498


2,632Japan


332


461


661Other


136


157


120Total


6,759


7,929


7,682   2005

2006

2007( in millions)Property, plant and equipment:Germany


1,625


1,279


1,067Other Europe


516


638


639North America


1,093


1,105


1,100Asia/Pacific


515


737


838Japan


2


4


3Other





1


Total


3,751


3,764


3,647        F-70




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2005


2006


2007( in millions)Net loss


(312
)


(268
)


(368
)Adjust: Income tax expense


120



161



79Interest expense, net


9



92



33EBIT


(183
)


(15
)


(256
)   37.
    Subsequent
    Events            Wi-LAN
     F-71




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##### Table of Contents



SIGNATURES
  Form 20-F
     Infineon Technologies AG
  /s/  Wolfgang
    Ziebart      Peter
    J. Fischl




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##### Table of Contents



Exhibit Index
  Exhibit





Exhibit

Filing Date

SEC FileNumber

Description of Exhibit

Form

Number

with SEC

Number1.1

Articles of Association (as of November 2007) (English
    translation)

Filed herewith.1.2

Rules of Procedure for the Management Board (as of November
    2007) (English translation)

Filed herewith1.3

Rules of Procedure for the Supervisory Board (as of November
    2007) (English translation)

Filed herewith1.4

Rules of Procedure for the Investment Finance and Audit
    Committee of the Supervisory Board (as of November 2007)
    (English translation)

Filed herewith2

The total amount of long-term debt securities of Infineon
    Technologies AG authorized under any instrument does not exceed
    10% of the total assets of the group on a consolidated basis.
    Infineon Technologies AG hereby agrees to furnish to the SEC,
    upon its request, a copy of any instrument defining the rights
    of holders of long-term debt of Infineon Technologies AG or of
    its subsidiaries for which consolidated or unconsolidated
    financial statements are required to be filed.4.3

Patent Cross License Agreement between Infineon and Siemens AG,
    dated as of February 11, 2000

F-1

10.7

February 18, 2000

333-115084.9

Shareholder Agreement of ALTIS Semiconductor between Infineon
    Technologies Holding France and Compagnie IBM France, dated as
    of June 24, 1999

F-1

10.15

February 18, 2000

333-115084.18

Joint Venture Agreement between Infineon and Nanya Technology
    Corporation, executed on November 13, 2002

20-F

4.38

December 4, 2002

1-150004.19

Amendments No 1, 2 and 3 to the Joint Venture Agreement between
    Infineon and Nanya Technology Corporation, executed on
    November 13, 2002

20-F

4.19

November 23, 2005

1-150004.19.1

Amendment No. 4 to the Joint Venture Agreement between
    Infineon and Nanya Technology Corporation, executed on
    November 13, 2002Filed as exhibit 10(i)(I) to the registration statement on
    form F-1
    of Qimonda AG dated August 8, 2006 (file
    333-135913)
    and incorporated herein by reference4.20

Terms and Conditions of 5% Guaranteed Subordinated Convertible
    Notes due 2010 in the aggregate nominal amount of EUR
    700,000,000 (the 2010 Notes) issued on June 5,
    2003 by Infineon Technologies Holding B.V.

20-F

4.30

November 21, 2003

1-150004.21

Undertaking for Granting of Conversion Rights from Infineon to
    JPMorgan Chase Bank for the benefit of the holders of the 2010
    Notes, dated June 2, 2003

20-F

4.31

November 21, 2003

1-150004.22

Subordinated Guarantee of Infineon, as Guarantor, in favor of
    the holders of 2010 Notes, dated June 2, 2002

20-F

4.32

November 21, 2003

1-150004.23

Loan Agreement dated June 2, 2003, between Infineon
    Technologies Holding B.V., as Issuer, and Infineon

20-F

4.33

November 21, 2003

1-150004.24

Assignment Agreement dated June 2, 2003, among Infineon
    Technologies Holding B.V., Infineon and JPMorgan Chase Bank for
    the benefit of the holders of the 2010 Notes

20-F

4.34

November 21, 2003

1-150004.25

Amendment 1, dated June 26, 2003, to Shareholder Agreement
    of ALTIS Semiconductor between Infineon Technologies Holding
    France and Compagnie IBM France, dated as of June 24, 1999

20-F

4.35

November 21, 2003

1-150004.25.1

Amendment 2 effective as of December 31, 2005 to
    Shareholder Agreement of ALTIS Semiconductor between Infineon
    Technologies Holding France and IBM XXI SAS dated as of
    June 24, 1999.

20-F

4.25.1

November 30, 2006

1-150004.25.2

Framework Agreement dated as of August 8, 2007 among
    GlobalInformService, International Business Machines Corporation
    and Infineon Technologies AG, related to ALTIS Semiconductor

Filed herewith




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##### Table of Contents



Exhibit





Exhibit

Filing Date

SEC FileNumber

Description of Exhibit

Form

Number

with SEC

Number4.26

Real Estate Leasing Contract between MoTo Object CAMPEON
    GmbH & Co. KG and Infineon dated as of
    December 23, 2003, with Supplementary Agreements No 1 and 2
    (English translation)

20-F

4.28

November 26, 2004

1-150004.27.1

Contribution Agreement (Einbringungsvertrag) between
    Infineon Technologies AG and Qimonda AG, dated as of
    April 25, 2006, and addendum thereto, dated as of
    June 2, 2006 (English translation).Filed as exhibit 10(i)(A) to the registration statement on
    form F-1
    of Qimonda AG dated August 8, 2006 (file
    333-135913)
    and incorporated herein by reference4.27.2

Contribution Agreement (Einbringungsvertrag) between
    Infineon Holding B.V. and Qimonda AG, dated as of May 4,
    2006 (English translation).Filed as exhibit 10(i)(B) to the registration statement on
    form F-1
    of Qimonda AG dated August 8, 2006 (file
    333-135913)
    and incorporated herein by reference4.27.3

Addenda No. 2 and 3 to Contribution Agreement
    (Einbringungsvertrag)between Infineon Technologies AG
    and Qimonda AG, dated as of April 25, 2006 (English
    translation).Filed as exhibit 4(i)(W) to the annual report on
    form 20-F
    of Qimonda AG dated November 21, 2006 (file 1-32972) and
    incorporated herein by reference4.27.5

Master Loan Agreement between Qimonda AG and Infineon
    Technologies Holding B.V., dated April 28, 2006.Filed as exhibit 10(i)(D) to the registration statement on
    form F-1
    of Qimonda AG dated August 8, 2006 (file
    333-135913)
    and incorporated herein by reference4.27.6

Global Services Agreement between Infineon Technologies AG and
    Qimonda AG, effective May 1, 2006.Filed as exhibit 10(i)(E) to the registration statement on
    form F-1
    of Qimonda AG dated August 8, 2006 (file
    333-135913)
    and incorporated herein by reference4.27.7

Master IT Cost Sharing Agreement by and between Infineon
    Technologies AG and Qimonda AG, effective May 1, 2006Filed as exhibit 10(i)(Q) to the registration statement on
    form F-1
    of Qimonda AG dated August 8, 2006 (file
    333-135913)
    and incorporated herein by reference4.28.1

Terms and Conditions of the 1.375% Guaranteed Subordinated Notes
    due 2010 in the aggregate nominal amount of EUR 215,000,000 (the
    2007/2010 Notes) issued by Infineon Technologies
    Investment B.V., on September 26, 2007

Filed herewith.4.28.2

Subordinated Guarantee by Infineon Technologies AG in Favor of
    the Holders of the 2007/2010 Notes

Filed herewith.4.29

Asset Purchase Agreement by and between LSI Corporation and
    Infineon Technologies AG dated as of August 20, 2007Filed as exhibit 2.1 to the current report on
    form 8-K
    of LSI Corporation dated October 24, 2007 (file 1-10317)
    and incorporated herein by reference. Infineon Technologies AG
    agrees to furnish supplementally a copy of any omitted schedule
    to the Securities and Exchange Commission upon request.8

List of Significant Subsidiaries and Associated Companies of
    InfineonSee Additional Information  Organizational
    Structure12.1

Certification of chief executive officer pursuant to Exchange
    Act
    Rule 13a-14(a)

Filed herewith.12.2

Certification of chief financial officer pursuant to Exchange
    Act
    Rule 13a-14(a)

Filed herewith.13

Certificate pursuant to 18 U.S.C. section 1350, as
    adopted pursuant to section 906 of the Sarbanes-Oxley Act
    of 2002

Filed herewith.14.1

Consent of KPMG Deutsche Treuhand-Gesellschaft AG

Filed herewith     
    
    Confidential treatment requested as
    to certain portions, which portions have been filed separately
    with the Securities and Exchange Commission