##### 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, 2009
 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)
   (Name, Telephone, E-mail and/or
    Facsimile number and Address of Company Contact Person)
  Securities registered or to be
    registered pursuant to Section 12(b) of the Act: None
  Securities registered or to be
    registered pursuant to Section 12(g) of the Act:
  Title of each class
   American Depositary Shares, each
    representing one ordinary share, notional value 2.00 per
    share
  Ordinary shares, notional value
    2.00 per share*
  *
    Registered, 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
  Regulation S-T
  x o
  Rule 12b-2
  Large
    accelerated filer
    x
    Accelerated
    filer
    o
    Non-accelerated
    filer
    o    o x o
    o x
  Rule 12b-2
  o x
      o o




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INFINEON
    TECHNOLOGIES AG
  ANNUAL REPORT ON
    FORM 20-F
 FOR THE FISCAL YEAR
    ENDED
 SEPTEMBER 30, 2009




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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


115Risk Factors


51Item 4:

Information on the Company:History and Development of the Company


65Business Overview


65Organizational Structure


112Property, Plant and Equipment


79,90Item 4A:

Unresolved Staff Comments


noneItem 5:

Operating and Financial Review and Prospects


2Operating Results


12Liquidity and Capital Resources


31Research and Development; Patents and Licenses


81Trend Information


46Off-Balance Sheet Arrangements


35Contractual Obligations


35Item 6:

Directors, Senior Management and Employees:Directors and Senior Management


91,94Compensation


99Board Practices


95Employees


38Share Ownership


95Item 7:

Major Shareholders and Related Party Transactions:Principal Shareholders


105Related Party Transactions


106Item 8:

Financial Information


F-1Litigation


88Dividend Policy


112Significant Changes


113Item 9:

The Offer and Listing:Price History of the Stock


114Markets


113Item 10:

Additional Information:Articles of Association


107Material Contracts


123Exchange Controls


120Taxation


115Documents on Display


121Subsidiary Information


112Item 11:

Quantitative and Qualitative Disclosure About
    Market Risks


44Item 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


121Item 16A:

Audit Committee Financial Expert


122Item 16B:

Code of Ethics


122Item 16C:

Principal Accountant Fees and Services


122Item 16D:

Exemption from the Listing Standards for Audit
    Committees


123Item 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 2009 Fiscal Year


2Our Business


7The Semiconductor Industry and Factors that
    Impact Our Business


8Results of Operations


12Financial Condition


28Financial Ratios


29Liquidity


31Capital Requirements


34Overall Statement of the Management Board with
    respect to Our Financial Condition as of the Date of this
    Report


37Employees


38Critical Accounting Policies


38Quantitative and Qualitative Disclosure About
    Market Risks


44Outlook


46Recent Developments Related to Qimonda


50Subsequent Events


50Risk Factors


51Business


65Overview


65Industry Background


67Strategy


68Products and Applications


70Customers, Sales and Marketing


74Backlog


76Competition


77Manufacturing


78Research and Development


81Intellectual Property


83Strategic Alliances and Other Collaborations


84Acquisitions, Dispositions and Discontinued
    Operations


86Employees


87Legal Matters


88Environmental Protection and Sustainable
    Management


88Real Estate


90Management


91Principal Shareholders


105Related Party Transactions


106Articles of Association


107Additional Information


112Organizational Structure


112Dividend Policy


112Significant Changes


113Market Information


113Exchange Rates


115Taxation


115Exchange Controls and Limitations Affecting
    Shareholders


120Change of Control Provisions


120Documents on Display


121Controls and Procedures


121Audit Committee Financial Expert


122Code of Ethics


122Principal Accountant Fees and Services


122Exemptions from the Listing Standards for Audit
    Committees


123Material Contracts


123Glossary


125Index to Consolidated Financial Statements


F-1Exhibit 1.3Exhibit 1.4Exhibit 4.25.3Exhibit 4.25.4Exhibit 4.31.1Exhibit 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 its
    subsidiaries; and
    we, us or Infineon are to
    Infineon Technologies AG and its subsidiaries, other than
    Qimonda, unless the context otherwise indicates; and
    Qimonda are to Qimonda AG and its subsidiaries.        Forward-Looking
    Statements
    Use of
    Non-GAAP Financial Measures
    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 endedSeptember 30,(1)2007


2008


2009


2009(2)Selected Consolidated Statement of Operations DataRevenue


3,660



3,903



3,027


$
4,428Income (loss) from continuing operations before income taxes


(33
)


(165
)


(268
)


(392
)Income (loss) from continuing operations


(31
)


(204
)


(273
)


(399
)Income (loss) from discontinued operations, net of income taxes


(339
)


(3,543
)


(398
)


(583
)Net income (loss)


(370
)


(3,747
)


(671
)


(982
)Net income (loss) attributable to:Minority interests


(23
)


(812
)


(48
)


(70
)Shareholders of Infineon Technologies AG


(347
)


(2,935
)


(623
)


(912
)Basic and diluted earnings (loss) per share attributable to
    shareholders of Infineon Technologies AG (in Euro):Basic and diluted earnings (losses) per share from continuing
    operations


(0.06
)


(0.23
)


(0.32
)

$
(0.47
)Basic and diluted earnings (losses) per share from discontinued
    operations


(0.37
)


(3.38
)


(0.41
)

$
(0.60
)Basic and diluted earnings (losses) per share


(0.43
)


(3.61
)


(0.73
)

$
(1.07
)Selected Consolidated Balance Sheet DataCash and cash equivalents


1,809



749



1,414


$
2,069Available-for-sale
    financial assets


417



134



93



136Working capital
    (deficit)(3)


293



293



(3
)


(4
)Assets classified as held for disposal


303



2,129



112



163Total assets


10,599



6,982



4,606



6,739Short-term debt and current maturities of long-term debt


336



207



521



762Liabilities associated with assets held for disposal


129



2,123



9



14Long-term debt


1,227



963



329



481Total equity


6,004



2,161



2,333



3,413Selected Consolidated Statements of Cash Flow DataNet cash provided by operating activities from continuing
    operations


241



540



268



392Net cash provided by (used in) operating activities


1,251



(84
)


(112
)


(164
)Net cash provided by (used in) investing activities from
    continuing operations


8



(652
)


(14
)


(20
)Net cash provided by (used in) investing activities


(917
)


(662
)


13



19Net cash provided by (used in) financing activities from
    continuing operations


(214
)


(230
)


391



572Net cash provided by (used in) financing activities


(525
)


113



351



514Net increase (decrease) in cash and cash equivalents from
    discontinued operations


(226
)


(291
)


(393
)


(575
)Net increase (decrease) in cash and cash equivalents


(191
)


(633
)


252



369   Notes
  (1)
    
    During the 2008 fiscal year, we
    committed to a plan to dispose of Qimonda. As a consequence, the
    results of Qimonda are reported as discontinued operations in
    the Selected Consolidated Statements of Operations data for the
    fiscal years ended September 30, 2007, 2008 and 2009. The
    assets and liabilities of Qimonda have been classified as held
    for disposal in the Selected Consolidated Balance Sheet as of
    September 30, 2008. On January 23, 2009, Qimonda and
    its wholly owned subsidiary Qimonda Dresden GmbH & Co.
    oHG filed an application at the Munich Local Court to commence
    insolvency proceedings. As a result of this application, we
    deconsolidated Qimonda during the second quarter of the 2009
    fiscal year. On April 1, 2009, the insolvency proceedings
    formally opened. In July 2009, we committed to a plan to sell
    our Wireline Communications business. As a consequence, the
    results of the Wireline Communications business are reported as
    discontinued operations in the Selected Consolidated Statements
    of Operations data for the fiscal years ended September 30,
    2007, 2008 and 2009. Assets and liabilities of the Wireline
    Communications business have been classified as held for
    disposal in the Selected Consolidated Balance Sheet as of
    September 30, 2009. The sale of the Wireline Communications
    business closed on November 6, 2009.(2)
    
    Converted from Euro into U.S.
    dollars at an exchange rate of 1 = $1.4630, which was the
    noon buying rate on September 30, 2009.(3)
    
    Working capital consists of current
    assets less cash and cash equivalents,
    available-for-sale
    financial assets and assets held for disposal less short-term
    liabilities excluding short-term debt and current maturities of
    long-term debt and liabilities associated with assets classified
    as held for disposal. 1




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OPERATING AND
    FINANCIAL REVIEW FOR THE 2009 FISCAL YEAR  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 policies and
    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.
  Effective October 1, 2008, to better align our business
    with its target markets, we reorganized our core business into
    five operating segments: Automotive, Industrial &
    Multimarket, Chip Card & Security, Wireless Solutions,
    and Wireline Communications. Furthermore, our Management Board
    changed the measure it uses to assess the operating performance
    of our operating segments to Segment
    Result(1)
    . In July 2009, we entered into an asset purchase agreement to
    sell our Wireline Communications business, which closed on
    November 6, 2009. As a result of the planned sale, the
    Management Board determined that Wireline Communications ceased
    to be an operating segment in September 2009. All periods
    presented have been recast to reflect the new segment
    presentation (see note 39 to our consolidated financial
    statements). All assets and liabilities of the Wireline
    Communications business to be sold are presented as Assets
    classified as held for disposal and Liabilities
    associated with assets classified as held for disposal in
    our consolidated balance sheet as of September 30, 2009,
    and the results of the Wireline Communications business to be
    sold are presented as Discontinued operations, net of
    income taxes in our consolidated statements of operations
    for all periods presented.
 Overview of the
    2009 Fiscal Year      Financial
    Results
  
    Our 2009 fiscal year was significantly impacted by the overall
    economic slowdown, resulting in an overall 22 percent
    decrease in our revenues from 3,903 million in the
    2008 fiscal year to 3,027 million in the 2009 fiscal
    year. In particular, during the first half of the 2009 fiscal
    year we experienced a sharp decline in revenues, while in the
    second half and particularly in the fourth quarter, we
    experienced a partial recovery of our revenues. All our
    operating segments faced revenue decreases in the 2009 fiscal
    year compared to the 2008 fiscal year. Revenues of our operating
    segments in the 2009 fiscal year were as follows: Automotive
    revenues were 839 million (2008 fiscal year:
    1,257 million), Industrial & Multimarket
    revenues were 905 million (2008 fiscal year:
    1,171 million), Chip Card & Security
    revenues were 341 million (2008 fiscal year:
    465 million), and Wireless Solutions revenues were
    917 million (2008 fiscal year:
    941 million). With a revenue decline of
    33 percent, our Automotive segment was affected most by the
    worldwide recession, while the revenue decline in our Wireless
    Solutions segment was only 3 percent, which, among others,
    reflects the successful
    ramp-up of
    our 3G-mobilephone-platform.  
    The Segment Result of our operating segments in the 2009 fiscal
    year was as follows: Automotive was negative
    117 million (2008 fiscal year:
    105 million), Industrial & Multimarket was
    35 million (2008 fiscal year:
    134 million), Chip Card & Security was
    negative 4 million (2008 fiscal year:
    52 million), and Wireless Solutions was negative
    36 million (2008 fiscal year: negative
    18 million). Thus, the Segment Results for all our
    operating segments decreased in the 2009 fiscal year    (1) We
    define Segment Result as operating income (loss) excluding asset
    impairments, net, restructuring charges and other related
    closure costs, net,share-based compensation expense,
    acquisition-related amortization and gains (losses), gains
    (losses) on sales of assets, businesses, or interests in
    subsidiaries, and other income (expense), including litigation
    settlement costs.
 2




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compared to the 2008 fiscal year, primarily reflecting the
    decrease in revenues and resulting increased idle capacity cost,
    which could only be partially offset by cost savings realized
    through the 2009 fiscal year. With a decrease in Segment Result
    of 222 million, our Automotive segment was impacted
    the most by the economic slowdown compared to our other
    segments. We experienced a partial recovery in the Segment
    Results during the second half of the 2009 fiscal year compared
    to the first half of the 2009 fiscal year as a result of higher
    revenues, which also led to lower idle capacity cost, and the
    positive impact of cost savings realized under our IFX10+
    cost-reduction program and from short-time work and unpaid
    leave. In particular, our Wireless Solutions segment improved
    its Segment Result during the second half of the 2009 fiscal
    year compared to the first half of the fiscal year and the
    second half of the 2008 fiscal year. For all other operating
    segments, their respective Segment Results in the second half of
    the 2009 fiscal year were lower than their respective Segment
    Results in the second half of the 2008 fiscal year. Segment
    Result of Other Operating Segments was negative
    13 million (2008 fiscal year: negative
    12 million) and Corporate and Elimination Segment
    Result was negative 32 million (2008 fiscal year:
    negative 24 million).  
    Our loss from continuing operations before income taxes
    increased by 103 million from negative
    165 million in the 2008 fiscal year to negative
    268 million in the 2009 fiscal year. This increase
    primarily reflected decreased gross profit due to decreased
    revenues and corresponding higher idle capacity cost, which was
    only partly offset by decreases in research and development
    expenses as well as selling, general and administrative expenses
    and other operating expenses. Furthermore, the increase of
    financial income by 43 million and the decrease of
    financial expense by 25 million in the 2009 fiscal
    year compared to the 2008 fiscal year positively impacted our
    results from continuing operations before income taxes for the
    2009 fiscal year.
    Loss from discontinued operations, net of income taxes, in the
    2009 fiscal year was 398 million compared to
    3,543 million for the prior fiscal year. Loss from
    discontinued operations, net of income taxes, attributable to
    Qimonda was 420 million. This amount primarily
    reflected the realization of accumulated currency translation
    losses totaling 188 million and charges for
    provisions and allowances of 227 million, in
    connection with Qimondas insolvency proceedings. The
    results attributable to the Wireline Communications business in
    the 2009 fiscal year which are presented in loss from
    discontinued operations, net of income taxes, of positive
    22 million only partially offset the negative impact
    of Qimonda. In the 2008 fiscal year, loss from discontinued
    operations, net of income taxes, was 3,543 million,
    including Qimondas negative results of
    2,084 million and an after tax write-down of
    1,475 million in order to remeasure Qimonda to its
    estimated fair value less costs to sell as of September 30,
    2008. Also included in loss from discontinued operations, net of
    income taxes, for the 2008 fiscal year is positive
    16 million from the Wireline Communications business.
    As a result of the developments described above, our net loss
    decreased from 3,747 million in the 2008 fiscal year
    to 671 million in the 2009 fiscal year. In
    particular, we incurred significant net losses during the first
    half of the 2009 fiscal year resulting from the deconsolidation
    of Qimonda and the impact of Qimondas insolvency and the
    effects of the economic slowdown on our business. As a result of
    the partial recovery of our revenues during the second half of
    the 2009 fiscal year together with our cost savings efforts and
    lower charges in connection with Qimondas insolvency, our
    net loss in the second half of the 2009 fiscal year
    significantly decreased and we reached break even for the fourth
    quarter of the 2009 fiscal year.
    Our cash flow provided by operating activities from continuing
    operations decreased from 540 million in the 2008
    fiscal year to 268 million in our 2009 fiscal year.
    Cash flow used in operating activities from discontinued
    operations was 380 million in the 2009 fiscal year,
    compared to 624 million in the prior year. The
    operating cash flow used in discontinued operations primarily
    reflects the losses incurred by Qimonda in the 2008 and 2009
    fiscal years. The sum of our cash flows used in operating
    activities (continuing and discontinued operations combined)
    increased from 84 million during the 2008 fiscal year
    to 112 million during the 2009 fiscal year. 3




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Corporate
    Activities
  
    In addition to dealing with the impact of the economic slowdown,
    our 2009 fiscal year was characterized by several measures to
    improve our financial condition:  
    During the 2009 fiscal year, we repurchased and redeemed
    notional amounts of 215 million of our exchangeable
    subordinated notes due 2010 and 152 million of our
    convertible subordinated notes due 2010. The repurchases were
    made out of available cash. We realized pre tax-gains of
    61 million net of transaction costs, which were
    recognized in financial income for the 2009 fiscal year for
    repurchases totaling 167 million of our exchangeable
    subordinated notes due 2010 and 78 million of our
    convertible subordinated notes due 2010. For repurchases and
    redemptions totaling 48 million of our exchangeable
    subordinated notes due 2010 and 74 million of our
    convertible subordinated notes due 2010, we realized pre-tax
    losses of 6 million, which were recognized in
    financial expense during the 2009 fiscal year. As of
    September 30, 2009, the outstanding notional amount of our
    convertible subordinated notes due 2010 was
    448 million. Our exchangeable subordinated notes due
    2010 were fully redeemed as of September 30, 2009.
    On May 26, 2009, through our subsidiary Infineon
    Technologies Holding B.V., Rotterdam, the Netherlands, we issued
    new convertible subordinated notes due 2014 in the notional
    amount of 196 million at a discount of
    7.2 percent. The subordinated notes due 2014 bear interest
    of 7.5 percent and were originally convertible, at the
    option of the holders, into a maximum of 74.9 million
    ordinary shares of Infineon, at a conversion price of 2.61
    per share through maturity. As a result of our share capital
    increase described below, the conversion price has been adjusted
    to 2.33 in accordance with an antidilution provision
    contained in the notes. The subordinated notes due 2014 are
    listed on the Open Market (Freiverkehr ) of the
    Frankfurt Stock Exchange.
    On July 7, 2009, we entered into an asset purchase
    agreement to sell our Wireline Communications business to
    Lantiq, affiliates of Golden Gate Private Equity Inc.
    (Lantiq). The majority of the purchase price was
    paid at closing on November 6, 2009, in the amount of
    223 million, with up to an additional
    20 million of the purchase price being payable nine
    months after the closing date. The sale of the Wireline
    Communications business allows us to concentrate on our four
    remaining operating segments, while at the same time further
    improving our balance sheet and strengthening our liquidity
    position.
    On July 16, 2009, we announced the launch of a rights issue
    for up to 337 million shares, with a subscription price of
    2.15 per share and a subscription period from
    July 20, 2009 through August 3, 2009. The new shares
    were offered to our existing shareholders for subscription at a
    ratio of four new shares for every nine outstanding shares held.
    Settlement for the new shares subscribed for under the rights
    offering occurred August 5, 2009, resulting in the issuance
    of 323 million new shares. In connection with the rights
    issue, we entered into a backstop arrangement with a financial
    investor to purchase any unsubscribed shares, subject to certain
    conditions. In the second step of the rights issue, on
    August 11, 2009, 14 million shares were issued to
    Admiral Participations (Luxembourg) S.a.r.l., a subsidiary of a
    fund managed by Apollo Global Management LLC. After the
    execution of the capital increase, our share capital consisted
    of 2,173 million. The capital increase resulted in
    gross proceeds to us of 725 million. Costs incurred
    in connection with the capital increase amounted to
    45 million.  
    To address rising risks in the market environment, adverse
    currency trends and partially below benchmark margins, we
    implemented our cost-reduction program IFX10+ in the
    third quarter of the 2008 fiscal year. Subsequent to the end of
    the 2008 fiscal year, and in light of continuing adverse
    developments in general economic conditions and in particular in
    our industry, we identified significant further costs savings in
    addition to those originally anticipated. In response to the
    continued and increasingly severe deterioration in the general
    market environment, additional substantial cost reductions and
    cash savings were achieved. Among others, we implemented reduced
    working hours and unpaid leave during the 2009 fiscal year. In
    addition, we changed our bonus schemes for the 2009 fiscal year,
    issued a tightened travel policy, and terminated a service 4




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##### Table of Contents



anniversary bonus payment scheme. Our operating expenses
    (including research and development cost as well as selling,
    general and administrative expense) for the 2009 fiscal year
    decreased by 263 million compared to the 2008 fiscal
    year. Our management believes that these savings are primarily
    due to our IFX 10+ cost-reduction program. This figure includes
    cost savings resulting from reduced working hours and unpaid
    leave, but excludes the cost savings realized in our Wireline
    Communications business, which are included in results from
    discontinued operations, net of income taxes.    
    On March 4, 2009, we sold the business of our wholly-owned
    subsidiary Infineon Technologies SensoNor AS
    (SensoNor), including property, plant and equipment,
    inventories, and pension liabilities, and transferred employees
    of this subsidiary to a newly formed company called SensoNor
    Technologies AS, for cash consideration of 4 million
    and one share in the capital of the new company. In addition, we
    granted licenses for intellectual property and entered into a
    supply agreement through December 2011 with the new company. As
    a result of this transaction, we realized pre-tax losses of
    17 million, which were recorded in other operating
    expense in the 2009 fiscal year. We have entered into business
    agreements with the new company to ensure a continued supply of
    the components for our tire pressure monitoring systems until we
    ramp up production at our Villach site.
    On June 9, 2009, we signed an agreement with LS Industrial
    Systems Co., Ltd., South Korea, to establish the joint venture
    LS Power Semitech Co., Ltd., to jointly develop, produce and
    market molded power modules for low power applications. We
    intend to license to the joint venture intellectual property
    (IP), technology and process know-how for our power
    module family
    CIPOStm

    (Control Integrated Power System), and intend to transfer
    existing CIPOS backend manufacturing equipment from Regensburg,
    Germany to the joint venture. We will hold 46 percent of
    the joint venture, which will be headquartered in South Korea.
    As part of our ongoing efforts to improve our production
    processes and improve our cost position, we:  
    are currently ramping up production of products using
    65-nanometer technology at several manufacturing partners and
    have begun to develop products based on 40-nanometer technology,
    which we currently plan to have manufactured by one of our
    manufacturing partners; and
    are proceeding with our development agreements with
    International Business Machines Corporation (IBM)
    and its development and manufacturing partners to develop
    32-nanometer technology. This agreement builds on the success of
    earlier joint development and manufacturing agreements.  Product and
    Technology Developments
  
    We continue to invest in research and development and achieved a
    number of significant milestones and product developments during
    the 2009 fiscal year:  Energy Efficiency
  
    Further expanding our leading role in fluorescent,
    high-intensity discharge (HID) and solid-state
    lighting applications, we launched our next-generation smart
    ballast controller for use in compact fluorescent lamps, linear
    fluorescent T5 and T8 lamps, dimmable fluorescent lamps and
    emergency lighting. Today, around one third of all energy
    consumption is electrical energy of which around 15 percent
    is consumed by lighting, creating a growing demand for efficient
    lighting systems. The new lamp ballast controller has been
    selected by a number of the worlds leading lighting
    manufacturers. 5




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
    We and Robert Bosch GmbH (Bosch) are widening our
    cooperation to include power semiconductors. The collaboration
    between the companies has two key aspects. First, Bosch licenses
    from us certain manufacturing processes for power
    semiconductors  specifically, for low-voltage power
    MOSFETs (metal oxide semiconductor field-effect
    transistors)  along with the requisite manufacturing
    technologies. Second, the collaboration includes a second-source
    agreement. Parallel to Boschs own semiconductor
    manufacturing in Reutlingen, Germany, we will produce components
    developed on the basis of these processes and will supply Bosch
    with these components. We and Bosch are also working jointly on
    the development of enabling technologies for the production of
    power semiconductors.
    With the 600V
    CoolMOStm

    C6 series, our latest high-performance power MOSFETs, we enable
    energy conversion applications such as PFC (Power Factor
    Correction) or PWM (Pulse Width Modulation) stages to be made
    significantly more energy efficient.
    CoolMOStm

    C6 devices target various energy efficient applications such as
    power supplies or adapters for PCs, notebooks or mobile phones,
    lighting (HID) products, as well as displays (LCD or Plasma TV)
    and consumer applications like gaming consoles. Our latest power
    semiconductor generation allows for highly reliable end products
    compliant with todays high efficiency requirements and
    government regulations.  Security
  
    We have maintained our strong position in the chip card and
    security IC market. U.S. market research company
    Frost & Sullivan named us, for the twelfth consecutive
    year, as the top supplier of chip card semiconductors. In 2008,
    our market share was 26 percent of the overall chip card IC
    (integrated circuit) market, which totals about 2.4 billion
    U.S. dollar according to Frost & Sullivan. Our
    strong market position is particularly driven by our leadership
    in the Government Identification (ID) and payment
    market segments.    
    Our position as key innovator in the chip card industry was
    again recognized when we were awarded the 2008 Sesame Award in
    the category of Best Hardware for our latest 16-bit
    security microcontroller family, SLE 78. We received the award
    because the new chips integrate a highly innovative
    self-checking security mechanism  called
    Integrity Guard  which we specifically
    developed for chip card and security applications. This is the
    fifth time we have received this prestigious award.  Communications
  
    In January 2009, we won the Innovation Award of German Industry
    for the best technological innovation in the category of
    large-scale enterprises for our
    X-GOLDtm

    101 mobile phone chip. This chip enables the production of a
    simple mobile phone from a single-chip, cutting the
    manufacturing cost of mobile phones by over 30 percent. It
    is the second time we have received this prestigious award.
    We announced our third-generation ultra-low-cost
    (ULC) mobile phone chips. The
    X-GOLDtm

    110 is the industrys most integrated and cost-effective
    one-chip solution for GSM/GPRS ultra low-cost phones. The bill
    of material for mobile phone manufacturers is approximately
    20 percent 6




---



##### Table of Contents



lower compared to existing GSM/GPRS solutions. The new platform
    supports color display, MP3 playback, FM radio, and USB
    charging, and can be used in Dual-SIM and camera solutions.  
    In our RF business, we announced the sampling of the second
    generation of our Long-Term-Evolution (LTE) RF transceiver. The
    SMARTitm

    LU is a single-chip-65-nanometer CMOS RF transceiver providing
    LTE/3G/2G functionality with digital baseband interface in LTE
    networks for data rates up to 150 megabit per second. The latest
    revision of
    SMARTitm

    LU adds LTE FDD/TDD mode and new frequency bands supporting
    leading operators in North America and China.
    SMARTitm

    LU will ship in volume in the second half of the 2010 calendar
    year. In addition, we announced the third generation of our 3G
    RF transceiver family
    SMARTitm

    UE. The
    SMARTitm

    UEmicro is optimized for lowest cost 3G designs and enables a
    40 percent lower bill of material than available solutions
    on the market.
    SMARTitm

    UEmicro meets the feature requirements and cost targets of
    emerging 3G mass markets in China and India. Volume shipments
    are expected to start in the first half of the 2010 calendar
    year. Our
    Business      
    The Automotive segment designs, develops, manufactures and
    markets semiconductors for use in automotive applications.
    Together with its product portfolio, we offer corresponding
    system know-how and support to our customers.
    The Industrial & Multimarket segment designs,
    develops, manufactures and markets semiconductors and complete
    system solutions primarily for use in industrial applications
    and in applications with customer-specific product requirements.
    The Chip Card & Security segment designs, develops,
    manufactures and markets a wide range of security controllers
    and security memories for chip card and security applications.
    The Wireless Solutions segment designs, develops, manufactures
    and markets a wide range of ICs, other semiconductors and
    complete system solutions for wireless communication
    applications.     7




---



##### Table of Contents



The Semiconductor
    Industry and Factors that Impact Our Business    Cyclicality
        Substantial
    Capital and Research & Development
    Expenditures
   8




---



##### Table of Contents



per-unit
          Technological
    Development and Competition
    per-unit
 9




---



##### Table of Contents



Seasonality
    Product
    Development Cycles
    Acquisition
    and Divestiture Strategy
    Intellectual
    Property
       10




---



##### Table of Contents



Challenges
    that Lie Ahead
    Semiconductor
    Market Conditions in the 2009 Fiscal Year
   11




---



##### Table of Contents



Results of
    Operations  Results of
    Operations as a Percentage of Revenue
    For the years ended September
    30,(1)2007



2008



2009Revenue


100.0

%


100.0

%


100.0

%Cost of goods sold


(67.5
)



(66.1
)



(78.2
)Gross profit


32.5




33.9




21.8Research and development expenses


(17.0
)



(15.5
)



(15.5
)Selling, general and administrative expenses


(12.3
)



(13.3
)



(13.0
)Other operating income


1.0




3.1




1.0Other operating expenses


(1.5
)



(9.4
)



(1.6
)Operating income (loss)


2.7




(1.2
)



(7.3
)Financial income


3.0




1.5




3.3Financial expense


(6.6
)



(4.6
)



(5.1
)Income from investments accounted for using the equity method







0.1




0.2Loss from continuing operations before income taxes


(0.9
)



(4.2
)



(8.9
)Income tax benefit (expense)


0.1




(1.0
)



(0.1
)Loss from continuing operations


(0.8
)



(5.2
)



(9.0
)Loss from discontinued operations, net of income taxes


(9.3
)



(90.8
)



(13.2
)Net loss


(10.1
)
%


(96.0
)
%


(22.2
)
%Attributable to:Minority interests


(0.6
)
%


(20.8
)
%


(1.6
)
%Shareholders of Infineon Technologies AG


(9.5
)
%


(75.2
)
%


(20.6
)
%   (1)

    Columns may not add up due to rounding.  Reorganization
       12




---



##### Table of Contents



Revenue
          
    the market prices for our products, including fluctuations in
    currency exchange rates that affect our prices;
    our overall product mix and sales volumes;
    the stage of our products in their respective life cycles;
    the effects of competition and competitive pricing strategies;
    governmental regulations influencing our markets (e.g., energy
    efficiency regulations); and
    the global and regional economic cycles.  For the years ended September 30,2007



2008



2009( in millions, except percentages)Revenue


3,660




3,903




3,027Changes
    year-on-year







7

%


(22
)
%Of which:License income


19




53




18Percentage of revenue


1

%


1

%


1

%Effect of foreign exchange over prior year


(154
)



(239
)



169Percentage of revenue


(4
)
%


(6
)
%


6

%Impact of acquisitions over prior year







133




Percentage of revenue




%


3

%




%    13




---



##### Table of Contents



Actual
    Revenues in the 2009 Fiscal Year Compared to Previously Reported
    Outlook
      Revenue by
    Segment
  For the years ended September 30,2007



2008



2009( in millions, except percentages)Automotive


1,267




35

%


1,257




32

%


839




28

%Industrial & Multimarket


1,188




33

%


1,171




30

%


905




30

%Chip Card & Security


438




12

%


465




12

%


341




11

%Wireless
Solutions(1)


637




17

%


941




24

%


917




30

%Other
Operating
Segments(2)


343




9

%


171




4

%


17




1

%Corporate and
Eliminations(3)


(213
)



(6
)
%


(102
)



(2
)
%


8




0

%Total


3,660




100

%


3,903




100

%


3,027




100

%   (1)
    Includes revenues of 30 million,
    10 million and 1 million for the fiscal
    years ended September 30, 2007, 2008 and 2009,
    respectively, from sales of wireless communication applications
    to Qimonda.(2)
    Includes revenues of 189 million and
    79 million for fiscal years ended September 30,
    2007, and 2008, respectively, from sales of wafers from
    Infineons 200-millimeter facility in Dresden to Qimonda
    under a foundry agreement.(3)
    Includes the elimination of revenues of 219 million,
    89 million and 1 million for the fiscal
    years ended September 30, 2007, 2008 and 2009,
    respectively, since these sales were not part of the Qimonda
    disposal plan.  
    Automotive  In the 2008 fiscal year, revenues
    were 1,257 million, and remained broadly unchanged
    compared to 1,267 million in the 2007 fiscal year.
    Higher sales volumes partially offset the continued pricing
    pressures caused by technological developments and competition.
    In the 2009 fiscal year, revenues were 839 million, a
    decrease of 33 percent compared to the 2008 14




---



##### Table of Contents



fiscal year. The revenue decline was in line with the volume
    reduction in the automobile market driven by the economic
    downturn. In addition, we saw a market shift to smaller-sized
    cars with lower semiconductor content triggered by national
    car-scrap bonus programs and an economic stimulus program in
    China. During the second half of the 2009 fiscal year, revenues
    of the Automotive segment partially recovered compared to the
    first half of the 2009 fiscal year, however revenues in the
    second half of the 2009 fiscal year were still significantly
    lower compared to revenues in the second half of the 2008 fiscal
    year.  
    Industrial & Multimarket In the
    2008 fiscal year, revenues slightly decreased due to the sale of
    an interest in Infineon Technologies Bipolar GmbH &
    Co. KG (Bipolar) to Siemens AG, which is being
    consolidated under the equity method of accounting effective
    October 1, 2007. Revenues of the remaining businesses
    increased as higher sales volumes more than offset the continued
    pricing pressures caused by technological developments and
    competition. Growth in revenues was driven primarily by
    continued strong demand for industrial high power applications,
    and increases in sales of multimarket applications. In the 2009
    fiscal year, revenues amounted to 905 million and
    were 23 percent below revenues for the 2008 fiscal year.
    Against the background of the global economic crisis,
    particularly in consumer oriented markets like computing,
    communication and automotive, sales declined. The primary causes
    for the decline were a significant slump in demand by
    end-consumers as well as stock clearance within the value chain.
    The industrial business showed a comparatively slight decline in
    sales compared to the 2008 fiscal year. Economic stimulus plans
    throughout the world helped to partially counterbalance the
    impact of the economic crisis in the industrial segment.
    Revenues increased in the second half of the 2009 fiscal year
    compared to the first half. In the fourth quarter of our 2009
    fiscal year, revenues increased significantly compared to the
    third quarter of the 2009 fiscal year. This increase primarily
    reflected the seasonality typical in consumer oriented markets
    and was comparable to the growth rate in the fourth quarter of
    the 2008 fiscal year compared to the third quarter of the 2008
    fiscal year.
    Chip Card & Security In the 2008
    fiscal year, revenues were 465 million, an increase
    of 6 percent compared to 438 million in the 2007
    fiscal year. This increase primarily reflected growing demand
    for government ID applications, especially the introduction of
    electronic passports, as well as market share gains in
    Pay-TV and
    payment applications. In the 2009 fiscal year, revenues were
    341 million, a decrease of 27 percent compared
    to the 2008 fiscal year. This decrease was driven by weaker
    demand for government ID as well as for platform security,
    Pay-TV,
    mobile communication and payment applications, caused primarily
    by the economic and financial crisis. Investments in
    infrastructure improvements were particularly delayed due to the
    crisis, which resulted in a slow down, for example, in the
    migration towards high-end products in payment applications.
    Additionally, the economic crisis negatively impacted worldwide
    travel activities, leading to significantly lower end-customer
    demand for electronic passports. In the fourth quarter of the
    2009 fiscal year, revenue increased compared to the third
    quarter of the 2009 fiscal year. This increase was significantly
    higher than the increase in the fourth quarter of the 2008
    fiscal year compared to the third quarter of the 2008 fiscal
    year. This was mainly driven by stronger demand for
    communication chips as well as a recovery of market demand for
    platform security chips in laptops and PCs.
    Wireless Solutions In the 2008 fiscal year,
    revenues were 941 million, an increase of
    48 percent compared to 637 million in the 2007
    fiscal year, primarily resulting from a strong increase in
    mobile phone platform shipments and the consolidation of the
    mobility products business acquired from LSI. In the 2009 fiscal
    year, revenues were 917 million, a slight decrease of
    3 percent compared to the 2008 fiscal year. Despite the
    turbulent market environment, particularly in the first half of
    the 2009 fiscal year, the segment succeeded in stabilizing
    revenues at the previous fiscal years level. Our
    innovative ULC-, Entry Phone-, UMTS- and HSPA solutions were
    positively received and had strong market momentum.
    Other Operating Segments In the 2007 and 2008
    fiscal years, revenues comprised mainly inter-segment revenues
    of wafers from our 200-millimeter facility in Dresden to Qimonda
    under a foundry agreement, which are eliminated in the Corporate
    and Eliminations segment. Effective 15




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##### Table of Contents



November 30, 2007, Qimonda canceled the foundry agreement
    with us, resulting in a significant decline in revenue during
    the 2008 and 2009 fiscal years. The last wafers were delivered
    to Qimonda in May 2008. The majority of the revenues in the 2009
    fiscal year were derived from our HDD business which we sold to
    LSI in April 2008, and which were also included in the revenues
    of other operating segments in the 2007 and 2008 fiscal years.  Revenue by
    Region and Customer
  For the years ended September 30,2007



2008



2009( in millions, except percentages)Germany


794




22

%


820




21

%


545




18

%Other Europe


807




22

%


754




19

%


543




18

%North America


530




14

%


483




12

%


409




13

%Asia/Pacific


1,289




35

%


1,597




41

%


1,358




45

%Japan


203




6

%


191




5

%


143




5

%Other


37




1

%


58




2

%


29




1

%Total


3,660




100

%


3,903




100

%


3,027




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, including amortization of
    capitalized development cost;
    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 and capitalized
    development costs; 16




---



##### Table of Contents




    product warranty costs;
    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 30,2007



2008



2009( in millions, except percentages)Cost of goods sold


2,469




2,581




2,368Changes
    year-on-year







5

%


(8
)
%Percentage of revenue


68

%


66

%


78

%Gross profit


1,191




1,322




659Percentage of revenue (gross margin)


32

%


34

%


22

%       
    Automotive  In the 2008 fiscal year, gross
    profit of the segment remained broadly unchanged compared to the
    2007 fiscal year due to measures to increase productivity and
    despite an increase in idle capacity cost. Compared to the 2008
    fiscal year, gross profit in the 2009 fiscal year decreased due
    to volume decline and further increasing costs for idle capacity.
    Industrial & Multimarket  In the
    2008 fiscal year, gross profit of the segment remained broadly
    unchanged compared to the 2007 fiscal year due to measures to
    increase productivity and despite an increase in idle capacity
    cost. Due to significantly lower revenues and higher idle
    capacity cost in the 2009 fiscal year, gross profit declined in
    the 2009 fiscal year compared to the 2008 fiscal year. The
    decrease in gross profit was limited by structural improvements
    in our product portfolio and cost and process enhancements as
    well as by our significant savings measures. Price erosion
    affecting our products in the 2009 fiscal year remained on the
    same level as in the 2008 fiscal year.
    Chip Card & Security  In the 2008
    fiscal year, gross profit of the segment increased significantly
    primarily due to the increase in revenue as well as changes in
    product mix, driven by our differentiation strategy in the
    product portfolio. In the 2009 fiscal year, gross profit
    decreased in line with revenues and due to higher idle capacity
    cost, reflecting reduced loading of the manufacturing facilities.
    Wireless Solutions  In the 2008 fiscal year,
    gross profit of the segment increased compared to that of the
    2007 fiscal year, primarily due to the revenue increases, cost
    savings and productivity measures, despite the negative impact
    of currency fluctuations between the U.S. dollar and the
    Euro. In the 2009 fiscal year gross profit of the segment
    decreased compared to the 2008 fiscal year, reflecting higher
    idle capacity cost resulting from lower factory loading.  Research and
    Development Expenses
   17




---



##### Table of Contents



For the years ended September 30,2007



2008



2009( in millions, except percentages)Research and development expenses


621




606




468Changes
    year-on-year







(2
)
%


(23
)
%Percentage of revenue


17

%


16

%


15

%Government subsidies


87




59




50Percentage of revenue


2

%


2

%


2

%Capitalized development costs


22




38




43Percentage of research and development expenses


4

%


6

%


9

%         
    Automotive In the 2008 fiscal year, R&D
    expenses remained stable as a percentage of revenues and
    decreased in absolute terms. In the 2009 fiscal year, R&D
    cost was reduced in absolute terms; however R&D expense
    slightly increased as a percentage of revenue due to the
    significant reduction in revenue.
    Industrial & Multimarket In the
    2008 fiscal year, R&D expenses remained stable as a
    percentage of revenues and decreased in absolute terms. R&D
    expenses in the 2009 fiscal year declined in absolute terms, but
    increased as a percentage of revenues due to the significant
    reduction in revenue.
    Chip Card & Security In the 2008
    fiscal year, R&D expenses increased both as a percentage of
    revenues and in absolute terms. In the 2009 fiscal year,
    R&D expenses decreased strongly. As a percentage of
    revenues, R&D expenses of the segment increased slightly
    due to the reduction in revenues.
    Wireless Solutions  In the 2008 fiscal year,
    despite the acquisition of the mobility products business from
    LSI, R&D expenses decreased as efficiency gains and cost
    reduction measures initiated during the 2007 fiscal year for the
    first time were taking effect for a full fiscal year. As a 18




---



##### Table of Contents



percentage of revenue, R&D expenses declined sharply,
    mainly driven by the revenue increase. In the 2009 fiscal year,
    R&D expenses significantly decreased in both relative and
    absolute terms.  Selling,
    General and Administrative Expenses
      For the years ended September 30,2007



2008



2009( in millions, except percentages)Selling, general and administrative expenses


449




517




392Changes
    year-on-year







15

%


(24
)
%Percentage of revenue


12

%


13

%


13

%   year-on-year
  Other
    Operating Income and Other Operating Expense
  For the years ended September 30,2007



2008



2009( in millions, except percentages)Other operating income


37




120




29Percentage of revenue


1

%


3

%


1

%Other operating expense


(57
)



(365
)



(48
)Percentage of revenue


(2
)
%


(9
)
%


(2
)
%   Other Operating Income.
  Other Operating Expense.
 19




---



##### Table of Contents



Operating
    Income (Loss)
    Segment
    Result
    For the years ended September 30,2007



2008



2009( in millions)Automotive


122




105




(117
)Industrial & Multimarket


127




134




35Chip Card & Security


20




52




(4
)Wireless Solutions


(126
)



(18
)



(36
)Other Operating Segments


(6
)



(12
)



(13
)Corporate and Eliminations


7




(24
)



(32
)Total


144




237




(167
)     
    Automotive In the 2008 fiscal year, Segment
    Result was 105 million, a decline of 14 percent
    compared to 122 million in the 2007 fiscal year,
    primarily as a result of ongoing pricing pressure and higher
    idle capacity costs. In the 2009 fiscal year, Segment Result was
    negative 117 million compared to positive
    105 million in the previous fiscal year. Despite
    ongoing price pressure, the negative result was primarily caused
    by the steep volume decline and higher cost for idle capacity,
    particularly in the first half of the 2009 fiscal year. Cost
    saving measures under our IFX10+ cost-reduction program partly
    compensated for the negative impact from the economic downturn.
    Higher sales volume and lower idle capacity cost in the second
    half of the 2009 fiscal year compared to the first half of the
    fiscal year, together with cost savings achieved under our
    IFX10+ cost-reduction 20




---



##### Table of Contents



program as well as short-time work and unpaid leave in all
    areas, resulted in a partial recovery of Segment Result in the
    second half of the 2009 fiscal year. For the fourth quarter of
    the 2009 fiscal year, Segment Result of the Automotive segment
    was positive.  
    Industrial & Multimarket In the
    2008 fiscal year, Segment Result was 134 million, an
    increase of 6 percent compared to 127 million in
    the 2007 fiscal year, primarily reflecting the increase in gross
    profit as a result of changes in the product mix, despite
    ongoing pricing pressure. In the 2009 fiscal year, Segment
    Result was 35 million, a decrease of 74 percent
    compared to the 2008 fiscal year. This decline reflects
    significantly lower revenues and higher idle capacity cost, and
    therefore lower gross profit, which was partially offset by cost
    reductions in R&D and in selling, general and
    administrative expenses. These savings primarily resulted from
    short-time work and from our IFX10+ cost-reduction program.
    During the second half of the 2009 fiscal year, Segment Result
    significantly improved compared to the first half of the fiscal
    year but was still below the Segment Result for the second half
    of the 2008 fiscal year.
    Chip Card & Security In the 2008
    fiscal year, Segment Result was 52 million, which was
    an increase of 32 million from Segment Result of
    20 million in the 2007 fiscal year. This increase
    primarily reflected the increase in revenues and productivity as
    well as effects from changes in product mix. Segment Result in
    the 2009 fiscal year was negative 4 million, a
    decrease of 56 million compared to the 2008 fiscal
    year. This decrease was primarily caused by reduced gross profit
    in line with the revenue decline and accompanied by increased
    idle capacity costs, in particular in the first half of the 2009
    fiscal year. Substantial savings under the IFX 10+ cost
    reduction program, short time work and unpaid leave measures
    only partially offset these effects. During the second half of
    the 2009 fiscal year, Segment Result significantly improved
    compared to the first half of the 2009 fiscal year and was
    positive, as idle capacity cost decreased significantly in the
    second half of the 2009 fiscal year due to increasing production
    volumes. Segment Result for the second half of the 2009 fiscal
    year was still below the Segment Result for the second half of
    the 2008 fiscal year, however.
    Wireless Solutions  In the 2008 fiscal year,
    Segment Result was negative 18 million, which was an
    improvement of 86 percent from Segment Result of negative
    126 million in the 2007 fiscal year. Despite the
    negative impact of currency fluctuations between the
    U.S. dollar and the Euro, this increase was primarily
    driven by a strong increase in revenues and efficiency gains and
    cost reduction measures initiated during the 2007 fiscal year
    that were taking effect for a full fiscal year. In the 2009
    fiscal year, Segment Result was negative 36 million,
    compared to negative 18 million in the 2008 fiscal
    year. This decrease was primarily due to the sales decline and
    high idle capacity costs in the first half of the 2009 fiscal
    year. These effects could be partially offset by the positive
    development of Segment Result in the second half of the 2009
    fiscal year, primarily resulting from increasing revenues and
    lower idle capacity cost. Cost saving measures implemented under
    the IFX10+ cost-reduction program and savings from short-time
    work and unpaid leave also contributed to the increase in
    Segment Result in the second half of the 2009 fiscal year.
    Other Operating Segments In the 2008 fiscal
    year, Segment Result was negative 12 million, which
    reflected a decline of 6 million compared with
    Segment Result of negative 6 million in the 2007
    fiscal year. This decline resulted primarily from a decrease in
    revenues. In the 2009 fiscal year, Segment Result decreased
    further by 1 million to negative
    13 million. Included in the Segment Result of Other
    Operating Segments for the 2007, 2008 and 2009 fiscal years are
    overhead costs of 9 million, 10 million
    and 7 million, respectively, which remain with us
    after the sale of the Wireline Communications business and which
    were previously allocated to the Wireline Communications
    business.
    Corporate and Eliminations In the 2008 fiscal
    year, Segment Result was negative 24 million, which
    reflected a decline of 31 million against Segment
    Result of positive 7 million in the 2007 fiscal year.
    This decline resulted primarily from increased unabsorbed excess
    capacity cost. In the 2009 fiscal year, Segment Result further
    decreased by 8 million to negative
    32 million, primarily 21




---



##### Table of Contents



due to a further increase in unabsorbed idle capacity cost of
    20 million to 41 million, compared with
    21 million in the 2008 fiscal year. This increase in
    unabsorbed idle capacity cost was partly offset by a reduction
    of provisions for staff anniversary bonus payments as we
    terminated the anniversary bonus payment scheme in the 2009
    fiscal year.    For the years ended September 30,2007


2008


2009( in millions)Total Segment Result


144



237



(167
)Adjusted:Asset impairments, net


(5
)


(132
)


Restructuring charges and other related closure costs, net


(45
)


(188
)


20Share-based compensation expense


(12
)


(5
)


(2
)Acquisition-related amortization and losses


(3
)


(25
)


(23
)Gains (losses) on sales of assets, businesses, or interests in
    subsidiaries


28



70



(18
)Other expense, net


(6
)


(3
)


(30
)Operating income (loss)


101



(46
)


(220
)   Financial
    Income and Expense
  For the years ended September 30,2007



2008



2009( in millions, except percentages)Financial Income


107




58




101Percentage of revenue


3

%


2

%


3

%Financial Expense


(242
)



(181
)



(156
)Percentage of revenue


(7
)
%


(5
)
%


(5
)
%   Financial Income.
  Financial Expense. Consolidation  Special Purpose
    Entities
 22




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##### Table of Contents



Income from
    Investments Accounted for Using the Equity Method
    Income Tax
    Benefit (Expense)
  For the years ended September 30,2007



2008



2009( in millions, except percentages)Income tax benefit (expense)


2




(39
)



(5
)Percentage of revenue


0

%


(1
)
%


0

%Effective tax rate


6

%


(24
)
%


(2
)
%    23




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##### Table of Contents



Loss from
    Discontinued Operations, Net of Income Taxes
    For the years ended September 30,2007



2008



2009( in millions)Qimonda(1)Revenue


3,608




1,785




314Costs and expenses


(3,956
)



(3,773
)



(779
)Reversal (write-down) of measurement to fair value less costs to
    sell







(1,475
)



460Expenses resulting from Qimondas application to open
    insolvency proceedings












(227
)Losses resulting from the realization from accumulated losses
    related to unrecognized currency translation effects primarily
    upon deconsolidation and from Qimondas sale of Inotera












(188
)Loss before tax


(348
)



(3,463
)



(420
)Income tax benefits (expense)


21




(96
)



Qimondas share of discontinued operations, net of income
    taxes


(327
)



(3,559
)



(420
)Wireline Communications BusinessRevenue


414




418




333Costs and expenses


(424
)



(400
)



(309
)Profit (loss) before tax


(10
)



18




24Income tax expense


(2
)



(2
)



(2
)Wireline Communications share of discontinued operations,
    net of tax


(12
)



16




22Loss from discontinued operations, net of income taxes


(339
)



(3,543
)



(398
)   (1)

    No further information concerning Qimondas condensed
    consolidated statements of operations is available for the
    period from January 1, 2009, to January 23, 2009, the
    date of the application by Qimonda to commence insolvency
    proceedings. As disclosed below, due to the write-down of
    Qimondas net assets to zero as of September 30, 2008,
    the operating losses of Qimonda for the period from
    October 1, 2008 to January 23, 2009 did not affect our
    consolidated net income, but instead were eliminated via an
    offsetting partial reversal of previously recorded impairments.
    Therefore, while the amount of revenue and costs and expenses in
    the table above exclude amounts for the period from
    January 1, 2009 to January 23, 2009, Qimondas
    share of loss from discontinued operations, net of income taxes
    of 420 million is unaffected.  Qimonda
    46-nanometers.
 24




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##### Table of Contents




    the realization of accumulated foreign currency translation
    losses of 88 million which were directly recorded in
    equity, and not included in assets and liabilities held for
    disposal as of September 30, 2008, mainly from
    Qimondas sale of its interest in Inotera to Micron,
    the realization of accumulated foreign currency translation
    losses which were directly recorded in equity related to the
    deconsolidation of Qimonda totaling
    100 million, and
    charges for provisions and allowances of 227 million
    in connection with Qimondas insolvency (see below).    
    We are a named defendant in certain pending antitrust and
    securities law claims. Qimonda is required to indemnify us, in
    whole or in part, for such claims, including any related
    expenses. As a result of Qimondas insolvency, however, we
    expect that Qimonda will not be able to indemnify us for these
    claims. For more information on these pending antitrust and
    securities law claims and their potential impact on us, see
    note 38 to our consolidated financial statements
    (Commitments and Contingencies  Litigation
    and Government Inquiries  Antitrust Litigation,
     Other Government Inquiries, and 
    Securities Litigation).
    We are the named defendant in a lawsuit in Delaware in which the
    plaintiffs are seeking to hold us liable for the payment of
    severance and other benefits allegedly due by Qimondas
    North American 25




---



##### Table of Contents



subsidiaries in connection with the termination of employment
    related to Qimondas insolvency. For more information on
    this suit, see note 38 to our consolidated financial
    statements (Commitments and Contingencies 
    Litigation and Government Inquiries  Employment
    Litigation).  
    We face potential liabilities arising from our former interest
    in Qimonda Dresden. Before the carve-out of the Qimonda
    business, we were a general partner of Qimonda Dresden, and as
    such may in certain circumstances, as a matter of law, be held
    liable for certain liabilities of Qimonda Dresden that
    originated prior to the carve-out. These include, among others,
    the potential repayment of governmental subsidies as well as
    employee-related claims, including salaries and social security
    contributions. We are in negotiations with the Free State of
    Saxony and the Qimonda insolvency administrator regarding these
    matters. We recorded provisions in connection with these
    matters, but disclosure of the amount of the provision could
    seriously prejudice our negotiations regarding these matters.
    We and our subsidiary Infineon Technologies Dresden GmbH
    (Infineon Dresden) are subject to lawsuits by
    approximately 70 former employees who were transferred to
    Qimonda or Qimonda Dresden as part of the carve-out and who seek
    to be re-employed by us. No reasonable estimated amount can be
    attributed at this time to the potential outcome of any such
    claims.      Wireline
    Communications Business
   26




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##### Table of Contents



Net
    Loss
       27




---



##### Table of Contents



Financial
    Condition  As of September 30,Change2008



2009



year-on-year( in millions)



(in %)Current assets


4,648




2,744




(41
)
%thereof: assets classified as held for disposal


2,129




112




(95
)
%Non-current assets


2,334




1,862




(20
)
%Total assets


6,982




4,606




(34
)
%Current liabilities


3,673




1,658




(55
)
%thereof: liabilities associated with assets classified as held
    for disposal


2,123




9




(99
)
%Non-current liabilities


1,148




615




(46
)
%Total liabilities


4,821




2,273




(53
)
%Minority Interests


70




60




(14
)
%Total equity attributable to shareholders of Infineon
    Technologies AG


2,091




2,273




9

%Total equity


2,161




2,333




8

%          28




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##### Table of Contents



Financial
    Ratios  As of September 30,2007



2008



2009Non-current
asset
intensity(1)


51

%


33

%


40

%Current asset
intensity(2)


49

%


67

%


60

%Degree of
wear of fixed
assets(3)


72

%


81

%


86

%Depreciation
rate of fixed
assets(4)


10

%


7

%


7

%Inventory
intensity(5)


11

%


10

%


10

%Inventory
turnover(6)


2.0




2.8




4.2Inventory
reach in
days(7)


119




86




67Days sales
outstanding(8)


117




89




78Equity
ratio(9)


57

%


31

%


51

%Return on
equity(10)


(6
)
%


(92
)
%


(30
)
%Return on
assets(11)


(3
)
%


(43
)
%


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


165

%


165

%


251

%Debt-to-equity
ratio(13)


26

%


54

%


36

%     (1)
    
    Non-current asset intensity =
    non-current assets/total assets(2)
    
    Current asset intensity = current
    assets/total assets(3)
    
    Degree of wear of property, plant
    and equipment = accumulated depreciation on property, plant and
    equipment /historical costs of property, plant and equipment at
    the end of the fiscal year(4)
    
    Depreciation rate of property,
    plant and equipment = annual depreciation of property, plant and
    equipment /historical costs of property, plant and equipment at
    the end of the fiscal year 29




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##### Table of Contents



(5)
    
    Inventory intensity =
    inventory/total assets(6)
    
    Inventory turnover = Cost of goods
    sold/average inventory(7)
    
    Inventory reach in days = average
    inventory x 360 days/annual revenues(8)
    
    Days sales outstanding = average
    trade and other receivables x 360 days/annual revenues(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.         30




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##### Table of Contents



Liquidity  Cash
    Flow
      For the years ended September 30,2008



2009( in millions)Net cash provided by operating activities from continuing
    operations


540




268Net cash used in investing activities from continuing operations


(652
)



(14
)Net cash (used in)/provided by financing activities from
    continuing operations


(230
)



391Net decrease in cash and cash equivalents from discontinued
    operations


(291
)



(393
)Net (decrease)/increase in cash and cash equivalents


(633
)



252   Cash flow from
    operating activities
    Cash flow from
    investing activities
    Cash flow from
    financing activities
  paid-in-capital.
 31




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##### Table of Contents



Change in cash
    and cash equivalents from discontinued operations
      Free Cash
    Flow
    For the years endedSeptember 30,2008



2009( in millions)Net cash provided by operating activities from continuing
    operations


540




268Net cash used in investing activities from continuing operations


(652
)



(14
)Sales of securities available-for-sale, net


(27
)



(33
)Free cash flow


(139
)



221    32




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##### Table of Contents



Net
    Cash/(Debt) Position
    Payments due by periodLess than


1-2


2-3


3-4


4-5


AfterAs of September 30, 2009

Total


1 year


years


years


years


years


5 years( in millions)Cash and cash equivalents


1,414



1,414



















Available-for-sale financial assets


93



93



















Gross cash position


1,507



1,507



















Less:Long-term debt


329







78



66



40



145



Short-term debt and current maturities of long-term debt


521



521



















Total financial debt


850



521



78



66



40



145



Net cash/(debt) position


657



986



(78
)


(66
)


(40
)


(145
)


          33




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##### 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.   34




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##### Table of Contents



Contractual
    Obligations, Commitments and Contingencies  Payments Due/Expirations by PeriodAfterLess than


1-2


2-3


3-4


4-5


5As of September 30,
    2009(1)

Total


1 year


years


years


years


years


years( in millions)Contractual obligations and commitments:Long-term debt and short-term debt obligations


850



521



78



66



40



145



Operating lease payments


740



69



65



60



57



56



433Unconditional purchase commitments


567



440



85



28



12



2



Future interest payments


110



43



19



17



15



15



1Other long-term liabilities


31







31















Total commitments


2,298



1,073



278



171



124



218



434Other contingencies:Guarantees(2)


81



10



8







5



2



56Contingent
government
grants(3)


37



8



14



4



5



6



Total contingencies


118



18



22



4



10



8



56   (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)
    
    Guarantees are primarily 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
    guaranteed otherwise and could be refundable if the total
    project requirements are not met. They do not include any
    potentially contingent government grants in relation to Qimonda.   Off-Balance
    Sheet Arrangements    Capital
    Expenditures
  For the years endedSeptember 30,2008



2009( in millions)Property, plant and equipment


308




103Intangible assets  internally developed


38




43Intangible assets  purchased


11




8Total


357




154    35




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##### Table of Contents



Credit
    Facilities
    Nature of financial



As of September 30, 2009institution



AggregateTerm

commitment

Purpose/intended use

facility



Drawn



Available( in millions)Short-term

firm commitment

general corporate purposes, working capital, guarantees


108




51




57Short-term

no firm commitment

working capital, cash management


114









114Long-term(1)

firm commitment

project finance


269




229




40Total






491




280




211   (1)
    
    Including current maturities.           36




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##### Table of Contents



Pension Plan
    Funding
            Financial
    Instruments
    Overall statement
    of the Management Board with respect to Our Financial Condition
    as of the Date of this Report     37




---



##### Table of Contents



Employees  (1)
  As of September 30,2007



2008



2009Function:Production


20,376




19,358




17,338Research & Development


5,833




6,273




5,971Sales & Marketing


1,832




1,905




1,681Administrative


1,557




1,583




1,474Infineon


29,598




29,119




26,464Qimonda


13,481




12,224




Total


43,079




41,343




26,464Region:Germany


10,151




10,053




9,160Europe


5,564




5,192




4,676North America


581




821




687Asia/Pacific


13,145




12,897




11,803Japan


157




156




138Infineon


29,598




29,119




26,464Qimonda


13,481




12,224




Total


43,079




41,343




26,464   (1)
    
    Approximately 860 employees are to
    be transferred to Lantiq upon closing of the sale of the
    Wireline Communications business.       Critical
    Accounting Policies    Revenue
    Recognition
   38




---



##### Table of Contents



case-by-case
        Recoverability
    of Non-Financial Assets
     39




---



##### Table of Contents



Valuation of
    Inventory
   40




---



##### Table of Contents



Pension Plan
    Accounting
              Consolidated Balance Sheets.
 41




---



##### Table of Contents



Consolidated Statements of
    Operations.
        As of September 30,2008


2009( in millions)Non-current pension assets


1



Current pension liabilities


(1
)


Non-current pension liabilities


(43
)


(94
)   Consolidated Statements of Cash
    Flows.
   42




---



##### Table of Contents



Pension benefits  Sensitivity
    Analysis.
  Effect on net periodic pension costsOne percentage


One percentageincrease


decrease( in millions)Discount rate


(1
)


1Rate of compensation increase


1



(1
)Rate of projected future pension increases


1



(1
)Expected return on plan assets


(1
)


5       Realization of
    Deferred Tax Assets
         43




---



##### Table of Contents



Provisions
     Quantitative and
    Qualitative Disclosures about Market Risks      Commodity
    Price Risk
    Foreign
    Exchange and Interest Risk
     44




---



##### Table of Contents



Derivative
    Financial Instruments
  Averagecontractual


Fair valueContract amount


forward


September 30,buy/(sell)


exchange rate


2009Foreign currency forward contracts:U.S. dollar


78



1.36090



(5
)U.S. dollar


(390
)


1.42415



8Japanese yen


5



133.07333



Japanese yen


(4
)


134.06714



Singapore dollar


16



2.05716



Singapore dollar


(2
)


2.05438



Great Britain pound


4



0.87702



Malaysian ringgit


41



4.85275



(2
)Interest rate swaps


500



n/a



16Other


13



n/a



(6
)Fair value, net










11   Financial Instruments: Presentation Financial Instruments: Recognition and
    Measurement
 45




---



##### Table of Contents



Interest Rate
    Risk
       Outlook  Industry
    Environment and Outlook
      Outlook
  Significant planning assumptions:
     46




---



##### Table of Contents



Revenues
  year-over-year
   47




---



##### Table of Contents



tm
    ramp-up
    Combined Segment
    Result
   48




---



##### Table of Contents



Research and
    Development Expenses
          system-on-a-chip
  Fixed assets
    investment and depreciation
     49




---



##### Table of Contents



Major financing
    measures
       Recent
    Developments Related to Qimonda  Risk Factors  We may face significant
    liabilities as a result of the insolvency of Qimonda
 Subsequent
    Events   50




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##### Table of Contents



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 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
    us and our market
  Ongoing financial market volatility and adverse
    developments in the global economic environment have had and
    could continue to have a significant adverse impact on our
    business, financial condition and operating results.
    
    significant declines in revenue;
    significant reductions in selling prices;
    increased volatility
    and/or
    declines in our share price;
    increased volatility or adverse movements in foreign currency
    exchange rates;
    delays in, or curtailment of, purchasing decisions by our
    customers or potential customers either as a result of overall
    economic uncertainty or as a result of their inability to access
    the liquidity necessary to engage in purchasing initiatives or
    new product development;
    increased credit risk associated with our customers or potential
    customers, particularly those that may operate in industries
    most affected by the economic downturn, such as automotives;
    unprofitable operations;
    impairment of goodwill or other long-lived assets; and
    negative cash flows.    If we are
    unsuccessful in implementing our operational restructuring
    plans, our revenues and profitability may be adversely
    affected.
    
    product portfolio management to eliminate unprofitable or
    insufficiently profitable product families and to increase
    efficiency in R&D;
    reduction of manufacturing costs and optimization of the value
    chain;
    improved efficiency of processes and tasks in the fields of
    general and administrative expenses, R&D, and marketing and
    sales; and 51




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##### Table of Contents




    re-organization of our structure along our target
    markets; and
    reductions in workforce.    The
    semiconductor industry is characterized by intense competition,
    which could reduce our revenues or put continued pressure on our
    sales prices.
    We operate in
    a highly cyclical industry and our business has in the past
    suffered, is currently suffering and could again suffer from
    periodic downturns.
      We may not be
    able to match our production capacity to demand.
       52




---



##### Table of Contents



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, pandemic 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.    In difficult
    market conditions, our high fixed costs adversely affect our
    results.
    The
    competitive environment of the semiconductor industry has led to
    industry consolidation, and we may face even more intense
    competition from newly merged competitors.
    We intend to
    continue to engage in acquisitions, joint ventures and other
    transactions that may complement or expand our business. We may
    not be able to complete these transactions, and even if
    executed, these transactions pose significant risks and could
    have a negative effect on our operations.
   53




---



##### Table of Contents




    the diversion of our managements attention from our
    existing business to integrate the operations and personnel of
    the acquired or combined business or joint venture;
    possible negative impacts on our operating results during the
    integration process; and
    our possible inability to achieve the intended objectives of the
    transaction.  We may be
    unable to successfully integrate businesses we acquire and may
    be required to record charges related to the goodwill or other
    long-lived assets associated with the acquired
    businesses.
      We may not be
    able to protect our proprietary intellectual property and may be
    accused of infringing the intellectual property rights of
    others.
      Our business
    could suffer due to decreases in customer demand.
   54




---



##### Table of Contents



The loss of
    one or more of our key customers may adversely affect our
    business.
    Fluctuations
    in the mix of products sold may adversely affect our financial
    results.
    If we fail to
    successfully implement an optimum make-or-buy strategy, our
    business could suffer from higher costs.
    Our business
    could suffer from problems with manufacturing.
      If our outside
    foundry suppliers fail to meet our expectations, our results of
    operations and our ability to exploit growth opportunities could
    be adversely affected.
   55




---



##### Table of Contents



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.
    We may be
    adversely affected by property loss and business
    interruption.
    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 competitors.
    We rely on
    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.
   56




---



##### Table of Contents



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.    New business
    is often subject to a competitive selection process that can be
    lengthy and uncertain and that requires us to incur significant
    expenses in advance. Even if we win and begin a product design,
    a customer may decide to cancel or change our product plans,
    which could cause us to generate no sales from a product and
    adversely affect our results of operations.
      We rely on a
    limited number of suppliers of manufacturing equipment and
    materials and could suffer shortages if these suppliers were to
    interrupt supply or increase their prices.
  just-in-time
 57




---



##### Table of Contents



We may be
    adversely affected by rising raw material prices.
    Our business
    could suffer if we are unable to secure dependable power
    supplies at reasonable cost.
    Our operations
    rely on complex information technology systems and networks, and
    any disruptions in such systems or networks could have a
    material adverse impact on our business and results of
    operations.
    We have
    recorded significant reorganization and impairment charges in
    the past and may do so again in the future, which could
    materially adversely affect our business.
        Our business
    could suffer if third-party service providers fail to perform as
    expected.
   58




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##### Table of Contents



Our success
    depends on our ability to recruit and retain sufficient
    qualified key personnel.
  and/or
  Reductions in
    government subsidies or demands for repayment of such subsidies
    could increase our reported expenses or limit our ability to
    fund capital expenditures.
          Our operating
    results 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 in 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; 59




---



##### Table of Contents




    changes in accounting rules;
    our success in implementing cost reductions measures;
    the length of particular product development cycles; and
    liabilities arising as a result of Qimondas insolvency.    Our results of
    operations and financial condition can be adversely impacted by
    changes in exchange rates.
  Operating and Financial Review 
    Quantitative and Qualitative Disclosures about Market
    Risks
  If we fail to
    maintain effective internal controls, we may not be able to
    report financial results accurately or on a timely basis, or to
    detect fraud, which could have a material adverse effect on our
    business or share price.
    We are exposed
    to various tax risks, and several factors could have an adverse
    effect on our tax burden.
    (Körperschaftsteuergesetz)
 60




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Our deferred
    tax assets are subject to regular reassessment, which may result
    in additional valuation allowances.
    Environmental
    laws and regulations may expose us to liability and increase our
    costs.
         61




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We may face
    significant liabilities as a result of the insolvency of
    Qimonda.
            A sale or
    closure of the ALTIS facility may result in us incurring
    material additional costs and charges.
   62




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Our business
    and financial condition could be adversely affected by current
    or future litigation.
      We are a
    subject of investigations in several jurisdictions in connection
    with pricing practices in the Dynamic Random Access Memory
    (DRAM) industry, and are a defendant in civil
    antitrust claims in connection with these matters.
           63




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Purported
    class action lawsuits have been filed against us alleging
    securities fraud.
    We are the
    subject of an investigation by the European Commission in
    connection with alleged violations of competition laws in the
    Chip Card & Security segment.
    We might be
    faced with product liability or warranty claims.
    Risk related to
    our shares
  Our share
    price is subject to significant fluctuations.
   64




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BUSINESS Overview            Corporate and
    Commercial Developments
  
    On July 16, 2009, we launched a rights issue for up to
    337 million shares with a subscription price
    of 2.15 per share. On August 5 and August 11,
    2009, we completed the rights issue and issued approximately
    323 million shares to our then existing shareholders and
    approximately 14 million new shares, representing
    approximately 1.3 percent of our total share capital, to a
    financial investor, respectively. The capital increase raised
    approximately 725 million in gross proceeds.
    On July 7, 2009, we entered into an asset purchase
    agreement to sell our Wireline Communications business to
    Lantiq, affiliates of Golden Gate Private Equity Inc. The
    majority of the purchase price was paid at closing on
    November 6, 2009 in the amount of 223 million,
    with up to an additional 20 million of the
    purchase price being payable 9 months after the closing
    date. We sold the Wireline Communications business in order to
    focus on the further development of our main business, our
    strategy and strong position in the key areas of energy
    efficiency, security and communications, while at the same time
    further improving our balance sheet and strengthening our
    liquidity position.
    On May 26, 2009, we, through our subsidiary, Infineon
    Technologies Holding B.V., issued a nominal amount
    of 196 million guaranteed subordinated
    convertible notes due 2014 at a discount of 7.2 percent.
    In the 2009 fiscal year, we repurchased and redeemed a total
    of 215 million in nominal amount of our
    guaranteed subordinated exchangeable notes due 2010 that were
    issued by our subsidiary Infineon Technologies Investment B.V.
    and 152 million in nominal amount of our
    guaranteed subordinated convertible notes due 2010 that were
    issued by our subsidiary Infineon Technologies 65




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Holding B.V. for an aggregate of 285 million in
    cash, including transaction costs of 3 million.
    All notes repurchased were subsequently cancelled.  
    On September 29, 2009, we redeemed the remaining
    outstanding balance of a nominal amount of
    19.35 million of our subordinated exchangeable notes
    due 2010 at par.  
    In April 2009, we voluntarily delisted our ADSs from the New
    York Stock Exchange and our ADSs began trading over-the-counter
    on the OTCQX International market.
    On January 23, 2009, Qimonda filed for insolvency and
    formal insolvency proceedings were opened in the local registry
    court in Munich on April 1, 2009. Infineon deconsolidated
    Qimonda during the second quarter of the 2009 fiscal year.  
    We, together with 17 European partner companies, formed the
    technology consortium SmartPM (Smart Power Management in Home
    and Health) to significantly increase the energy efficiency of
    home appliances, power supplies and healthcare and medical
    equipment by 2012.  
    We, BMW Forschung und Technik GmbH, Continental AG, Daimler AG
    and Bosch had formed the Radar on Chip for Cars
    (RoCC) technology cooperation project. The aim of the three-year
    project is to significantly increase driving safety by making
    highly reliable radar systems available in all vehicle classes.
    The Hirose plant of the car manufacturer Toyota awarded us the
    Best of Excellent Quality Award 2009 for our
    extraordinary product quality. This is the first time that a
    non-Japanese company was honored with such an award and we are
    the only recipient of the award in 2009.
    We and Nokia entered into a collaboration for Enhanced Data rate
    for GSM Evolution (EDGE) technology. We will supply
    our
    XMMtm

    2130 EDGE platform to Nokia, enabling the mobile device
    manufacturer to bring a new breed of internet capable devices to
    the market.
    We signed a collaboration contract with Bosch under which we
    will license to Bosch certain manufacturing processes for power
    semiconductors. Additionally, the contract includes a
    second-source agreement. In addition to Boschs own
    semiconductor manufacturing in Reutlingen, we will produce
    components developed on the basis of these processes and will
    supply Bosch with these components.  
    We announced that we had sold more than 100 million of our
    chips for entry-level handset models, often referred to as
    Ultra Low Cost telephones. The
    X-GOLDtm

    101
    (E-GOLDtmvoice)

    mobile communications chip is the second generation of our
    highly integrated baseband chips for GSM/GPRS handsets. We also
    unveiled our third-generation ultra-low-cost (ULC) mobile
    communications chip, the new
    X-GOLDtm

    110.  
    We announced that Bosch will use a chip from our
    RASICtm

    (Radar System IC) product family in its new LRR3 radar
    sensor system (third-generation Long Range Radar).
    We announced that our 16-bit security microcontroller family SLE
    78 was selected as the winner of the 2008 Sesame Award in the
    category of Best Hardware.
    We announced a strategic technology collaboration with Micron
    for the development of high-density subscriber identity module
    (HD-SIM) cards with storage capacities above 128 megabytes.
    HD-SIMs are ideal for delivering expanded storage and greater
    services while improving the operators processes.
    Autoliv  the worlds largest supplier of
    automotive safety systems  selected us as the sole
    supplier of power semiconductors for its next-generation
    seatbelt pretension systems, called Active Seatbelts.
    Autolivs Active Seatbelts use a small motor device
    containing the Infineon
    NovalithICtm

    power chip, which enables additional safety and comfort features
    in cars. 66




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Technical and
    Product Developments
  
    We expanded our application kit portfolio to simplify and
    accelerate the design of energy-efficient motor drives based on
    our 8-bit and 16-bit microcontrollers. The new kits are built
    around members of our 8-bit XC800 and 16-bit XE166 family
    supporting advanced motor control techniques like Field Oriented
    Control (FOC) and Power Factor Control (PFC).
    We expanded our product portfolio for automotive infotainment
    applications by introducing a single-chip linear voltage
    regulator with integrated diagnosis and car radio system
    protection functions. The integration of the functions improves
    the reliability of car radios.
    We launched the next-generation 600V
    CoolMOStm

    C6 series of high-performance MOSFETs (metal-oxide semiconductor
    field-effect transistors). With the 600V
    CoolMOStm

    C6 series, energy conversion applications such as Power Factor
    Correction (PFC) or Pulse Width Modulation (PWM) stages can be
    made significantly more energy efficient.
    We introduced our new lamp ballast controller that integrates
    Power Factor Correction (PFC), lamp controller, and high-voltage
    half-bridge driver functions into a single, compact,
    surface-mounted package. Typical applications for the ICB2FL01G
    product are electronic ballasts for compact fluorescent lamps,
    linear fluorescent T5 and T8 lamps, dimmable fluorescent lamps
    and emergency lighting.
    We announced production availability of our
    OptiMOStm

    3 75V power MOSFET family for energy efficient power conversion
    applications. The new devices feature industry leading on-state
    resistance and Figure of Merit (FOM) characteristics.
    We launched the worlds smallest transient voltage
    suppression (TVS) diode for the protection of antennas in the
    latest electronic equipment. Applications include GPS, mobile
    TV, FM radio, and Remote Keyless Entry (RKE) and Tire Pressure
    Monitoring Systems (TPMS) in vehicles.
    We announced the further expansion of our RFID (Radio Frequency
    Identification) product portfolio. Our new RFID chip PJM
    Light (Phase Jitter Modulation) provides a memory capacity
    of one kilobit and privacy features designed to prevent
    unauthorized access to the protected data.
    We introduced two new RF-chips for LTE (Long-Term-Evolution) and
    3G. The
    SMARTitm

    LU is a single-chip 65nm CMOS RF transceiver providing 2G/3G/LTE
    functionality with a DigRF digital baseband interface for data
    rates of up to 150 Mbps in LTE Networks. The
    SMARTitm

    UEmicro is optimized for low-cost 3G designs.
    We and Seiko Epson Corporation developed the next generation of
    advanced global positioning system (GPS) technology. The new GPS
    single-chip design, the
    XPOSYStm,

    is optimized for mobile devices for the consumer market;
    especially cellular phones with GPS navigation.
    We presented our latest single-chip VDSL/ADSL solutions for next
    generation telecom networks. The
    XWAYtm

    xRX200 family offers high integration, with a more than
    50 percent smaller footprint compared to existing
    solutions, and
    best-in-class
    energy efficiency, with more than 50 percent lower power
    consumption compared to similar single-chip solutions.
    We introduced a new family of single-chip WLAN integrated
    circuits (ICs). The new
    XWAYtm

    WAVE100 ICs provide a high-performance and cost-effective
    solution for wireless network access points that are compliant
    with the 802.11n draft standard for data rates up to 150Mbit/s
    and the 802.11 b/g standard. Industry
    Background   67




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
    Volatility:  The market for
    semiconductors has historically been volatile. Supply and demand
    have fluctuated cyclically and have caused pronounced
    fluctuations in prices and margins.
    Cyclicality:  The industrys
    cyclicality results from a complex set of factors, including, in
    particular, fluctuations in demand for the end products that use
    semiconductors and fluctuations in the manufacturing capacity
    available to produce semiconductors. We attempt to mitigate the
    impact of cyclicality by investing in manufacturing capacities
    throughout the cycle and entering into alliances and foundry
    manufacturing arrangements that provide flexibility in
    responding to changes in the cycle.
    Seasonality:  Our sales are affected by
    seasonal and cyclical influences, with sales historically
    strongest in our fourth fiscal quarter.
    Product Life Cycles:  Our business is
    affected by the product life cycles determined by our customers
    as a response to innovative technical solutions. The product
    life cycle prior to the start of volume production can range
    from several months to more than one year, or even several years
    for automotive products. Due to this lengthy cycle, we may
    experience significant delays from the time we incur expenses
    for R&D, marketing efforts, and investments in inventory,
    to the time we generate corresponding revenue, if any.
    Substantial Capital and R&D
    Expenditures:  Semiconductor manufacturing is
    very capital-intensive. The manufacturing capacities that are
    essential to maintain a competitive cost position require large
    capital investments. A high percentage of the cost of operating
    a fab is fixed; therefore, increases or decreases in capacity
    utilization can have a significant effect on profitability. To
    reduce total costs, we intend to share the costs of our R&D
    and manufacturing facilities with third parties, either by
    establishing alliances or through the use of foundry facilities
    for manufacturing.
    Price Declines and Competition:  Our
    products generally have a certain degree of application
    specification. Sales prices per unit are volatile and generally
    decline over time due to technological developments and
    competitive pressure. We aim to offset the effects of declining
    unit sales prices on total net sales by optimizing product mix,
    by increasing unit sales volume and by continually reducing
    per-unit
    production costs.  Operating and Financial Review  The
    Semiconductor Industry and Factors that Impact Our
    Business
 Strategy    
    Build on our leadership position in key markets, 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, in particular, driven by 68




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high energy costs, a shift towards renewable energy generation,
    and the need for ever longer battery life in mobile devices.  
    Strengthen our leadership position in security
    solutions.We seek to benefit from growth in
    electronic and mobile communication and the growing desire to
    access data anywhere and at any time, which drives demand for
    data protection and data integrity such as secure authentication
    and identification of users. We intend to leverage our know-how
    to address applications in new areas, and believe we are well
    positioned to benefit from future trends, such as the transition
    to
    e-Passports,
    e-Health
    cards and RFID ICs in logistics.
    Provide the technology to be connected every day and
    everywhere.We seek to continue to profit
    from our key strengths in areas such as RF and mixed signal
    technologies employed, in particular, in our wireless business.
    In order to benefit from the ever-increasing need for mobility
    and communication in all aspects of day-to-day life, we intend
    to grow our broad customer base and to focus on the most
    promising solutions for future profitable growth, such as
    cellular phone platforms. In the wireless market, these include,
    in particular, highly integrated, cost efficient single-chip
    solutions and highly integrated cellular phone platforms for
    wireless high speed data transfer in HSPA-enabled phones and
    smart phones.     69




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Products and
    Applications  Principal
    Products, Applications and Customers
    SignificantCustomersin the 2009Segment

Principal Products

Principal Applications

Fiscal YearAutomotive

Power semiconductors (discretes, ICs and modules), sensors and
    microcontrollers (8-bit, 16-bit, 32-bit) with and without
    embedded memory, silicon discretes

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

Avnet, Bosch, Continental, DelphiIndustrial & Multimarket

Power semiconductors (discretes, ICs and modules), silicon
    discretes, ASIC solutions including secure ASICs

Power management & supplies, lighting, drives, renewable
    energy, power generation and distribution, industrial control,
    RF and protection devices for multimarket applications, ASICs
    (for example, for game consoles, hearing aids, computer
    peripherals)

Avnet, Delta, Siemens, WPG HoldingsChip Card & Security

Chip card and security ICs

Security memory ICs and security microcontroller ICs for
    identification documents, payment cards, SIM cards, prepaid
    telecom cards, access and transportation cards, Pay TV and
    platform security products for computers and networks (for
    example, Trusted Platform Modules), RFID ICs for object
    identification

Gemalto, Giesecke & Devrient, Oberthur Card Systems, U.S.
    Government Printing OfficeWireless Solutions

Baseband ICs, RF transceivers, power management ICs, single chip
    ICs integrating these components, mobile phone platform
    solutions including software, tuner ICs, RF-power transistors

Mobile telephone solutions for major standards (GSM, GPRS, EDGE,
    UMTS, HSPA, LTE), RF connectivity solutions (for example,
    Bluetooth, GPS), cellular base stations

Hon Hai Precision, LG Electronics, Nokia, Samsung   Automotive
     70




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
    semiconductors for powertrain applications, which perform, for
    example, engine and transmission control and enable hybrid
    powertrains;
    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.            Industrial &
    Multimarket
     71




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
    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 and LED drivers);
    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 and metering systems;
    power generation, especially in the fields of renewable energy
    and power distribution systems; and
    other industrial applications such as medical equipment.    
    radio frequency (RF) devices (diodes, transistors, Monolithic
    Microwave Integrated Circuits (MMICs), CMOS based RF switches,
    Small Scale Integrated Circuits (SSICs));
    protection devices such as Transient Voltage Suppressor diodes
    (TVS diodes) and High Performance Active and Passive Integration
    (HIPAC) devices offering Electro Static Discharge/Electro
    Magnetic Interference (ESD/EMI) protection and high integration
    in advanced applications (for example, in mobile communication
    devices);
    High Reliability Discretes (bipolar transistors and diodes) for
    use in space and avionic applications;
    Silicon MEMS Microphone (SMM): acoustical sensors based on
    Micro-Electro-Mechanical System (MEMS) semiconductor technology
    (for use in mobile phone applications, for example); and
    audio frequency (AF) discretes (general purpose diodes and
    transistors, switching diodes, digital transistors).    
    products for computer and gaming peripherals;
    secure ASICs and ASSPs for authentication or copy protection
    applications, taking advantage of our security know-how; and
    customer designs manufactured by us on a foundry basis. 72




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Chip
    Card & Security
        
    contact-based and contactless security microcontroller ICs for
    identification documents (for example, passports, national
    identification cards and health cards), payment cards, SIM cards
    and Pay-TV applications;
    security memory ICs in prepaid telecom cards, access and
    transportation cards;
    Trusted Platform Module (TPM) products
    (hardware-based security for trusted computing) in computers and
    networks; and
    RFID ICs for object identification (for example, in logistics).  Wireless
    Solutions
    RF-power
     73




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
    Global System for Mobile Communication (GSM), 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, among others, General
    Packet Radio Service (GPRS) and EDGE. 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;
    Universal Mobile Telecommunications System (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 High-Speed Packet Access standard (HSPA)
    that supports data rates of up to 7.2 Mbps;
    Digital Video Broadcasting (DVB) and other digital
    and analog television standards. We offer tuner ICs for
    stationary, portable and mobile television receivers for the
    analog (PAL, NTSC, SECAM) and digital (DVB-C/T/H, ISDB-T, ATSC,
    DAB, T-DMB, CMMB) 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
    XPOSYStm,

    our next generation of single-chip advanced GPS receiver for
    mobile telephones, smart phones and PDAs with competitive
    superiority in terms of sensitivity, power consumption and
    footprint;
    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
    BlueMoontm

    UniCellular, a fast and energy-efficient Bluetooth-chip which
    supports the Bluetooth enhanced data rate (EDR)
    protocol; and
    Satellite Digital Audio Radio Service (SDARS), a
    satellite-based radio communication service through which audio
    programming is digitally transmitted by space-based satellites
    and terrestrial repeaters to fixed, mobile,
    and/or
    portable subscription consumer radios.  Wireline
    Communications
   Customers, Sales
    and Marketing  Customers
       74




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Customers by
    principal segment
  Automotive
    Industrial &
    Multimarket
      Chip
    Card & Security
    Wireless
    Solutions
   75




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Sales and
    Marketing
               Backlog  Standard
    Products
   76




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Non-Standard
    Products
   Competition      Key Competitors
    by Segment
  Automotive

Freescale, International Rectifier, Mitsubishi, ON
    Semiconductor, NEC, NXP, Renesas, STMicroelectronics, Texas
    InstrumentsIndustrial & Multimarket

Fairchild, Fuji Electric, International Rectifier, Mitsubishi,
    NXP, ON Semiconductor, Renesas, STMicroelectronics, Texas
    Instruments, Toshiba, VishayChip Card & Security

Atmel, NXP, Renesas, Samsung, STMicroelectronics, Texas
    InstrumentsWireless Solutions

Broadcom, Mediatek, Qualcomm, ST-Ericsson       
    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; 77




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
    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. Manufacturing    Front-end
        Back-end
    state-of-the-art and/or
 78




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Manufacturing
    Facilities
    Manufacturing
    Facilities
  Year ofcommencementof firstproduction line

Principal products or functionsFront-end facilities  wafer fabrication plantsDresden, Germany


1996


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


1963
(2)

Logic ICs and ASICs with embedded flash memoryKulim, Malaysia


2006


Power, smart power, ASICs and MCUs with embedded flash memoryRegensburg, Germany


1986


Power, smart power, sensors, mixed signalVillach, Austria


1979


Power, smart power and discretesWarstein, Germany


1965
(2)

High powerBack-end facilities  assembly and final testing
    plantsBatam, 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 non-power ICs, wafer testWarstein, Germany


1965
(2)(3)

High powerWuxi, China


1996


Discretes, chip card modulesMalacca, Malaysia


1973


Discretes, power packages, sensors, leaded and non-leaded logic
    IC   Notes
  (1)
    ALTIS, our joint venture with IBM.(2)
    The current main production line began operations in 1991.(3)
    Part of the Infineon Technologies Bipolar joint venture with
    Siemens.    Front-end
     79




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Back-end
       80




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Research and
    Development    Research and
    Development Expenditures
  For the years ended September 30,2007

2008

2009( in millions, except percentages)Expenditures (net of subsidies received)


621



606



468As a percentage of revenue


17
%


16
%


15
%   system-on-chip IP-blocks,
  system-on-chip
     81




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Locations
    Principal
    Research and Development
    Locations (1)
  Location

Areas of CompetenceAllentown, Pennsylvania, U.S.A.

IC, software and system development for wireless productsBangalore, India

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

Power mixed-signal semiconductors, chip card ICsDresden, Germany

Advanced technology developmentDuisburg, Germany

IC and system development for wireless products, RF IC
    developmentGraz, Austria

Contactless systems, automotive power systems, sensor productsLinz, Austria

RF IC and software development for wireless and sensor productsMorgan Hill, California, U.S.A.

RF IC development for high power applicationsMunich, Germany

Main product development site. Technology integration, CAD flow,
    library development, IC, software and system development for
    wireless products, microcontrollers, ASICs, 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 wireless and industrial
    products, package developmentSophia Antipolis, France

IC development for wireless products, library development, CAD
    flowTorrance, California, U.S.A.

Development of digital power ICsVillach, Austria

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

IC development for automotive and communication products     (1)

    On July 7, 2009, we entered into an asset purchase
    agreement to sell our Wireline Communications business, and the
    sale closed on November 6, 2009. The sale affected
    engineers in the principal research and development locations of
    Bangalore, India, Duisburg, Germany, Munich, Germany, Singapore
    and Villach, Austria, who were transferred to Lantiq but will
    continue using our facilities under lease and
    sub-lease
    agreements.   82




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Intellectual
    Property             83




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Strategic
    Alliances and Other Collaborations     Manufacturing joint ventures;
    Foundries
  Manufacturing
    joint ventures; Foundries
  Joint Venture
    with IBM (ALTIS)
      Manufacturing
    Agreement with UMC and TSMC
    Joint Venture
    with Siemens (Bipolar)
   84




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New
    collaborations announced in the 2009 fiscal year
    
    In the security and chip card segment, we entered into new
    collaborations with Intel. One agreement concerns the
    development of optimized chip solutions for high-density SIM
    cards in the 4- to 64-megabit memory capacity range, for which
    we are contributing our expertise in security hardware. Pursuant
    to a second agreement, we are providing our Trusted Platform
    Module professional package software to fully support
    Intels TPM1.2 hardware solutions. This package will enable
    PC designers to take advantage of a cost effective, flexible and
    reliable security solution for Intel vPro technology, Intel
    Centrino processor technology and other fundamental business
    platforms.
    We entered into a collaboration agreement with PGP Corporation
    to increase and enhance security options. Together, we will
    initially provide a combined solution towards Trusted Platform
    Module provisioning and management in conjunction with PGP Whole
    Disk Encryption.
    We signed a license agreement for differential power analysis
    countermeasures with Cryptography Research.
    Based on our background in confidential data storage, smart
    cards and security controllers, we expanded our cooperation with
    the German Federal Ministry of the Interior on certification and
    identity documents.
    We entered into a cooperation with IBM on the technology and
    manufacturing of security solutions for the US government,
    specifically passports.
    We expanded our cooperation with IMEC on innovative
    design-technology interfaces in future technology nodes.
    We signed a memorandum of understanding with the European
    Commission on its automotive safety initiative. This move adds
    momentum to eCall, an integrated, automatic accident alert
    system for automobiles. The system collects data from key safety
    components and transmits this data to an emergency call center
    along with location information supplied by a GPS navigation
    module.
    Our subsidiary, Comneon, and Sonus Networks joined forces in
    developing, testing and provisioning advanced consumer-ready
    mobile services, including
    IP-voice for
    mobile networks and Voice Call Continuity (VCC), a
    service that allows seamless roaming between operator controlled
    mobile and open WiFi networks.
    In order to strengthen our MEMS based business, we entered into
    a cooperation with Hosiden on the development of silicon-based
    microphones. Hosiden is contributing its competence in
    electro-mechanics and acoustics as well as its market expertise,
    while we are providing our rugged microphone MEMS technology.
    With respect to our CPE business, we entered into a cooperation
    with Jungo Ltd. to deliver production-ready carrier-grade
    reference designs for the multi-service residential gateway
    market. The partnership, currently based upon our ADSL2/2+ and
    VDSL solutions, enables customers to offer complete solutions
    for operator-specific products based on a pre-integrated,
    carrier-ready software platform from Jungo Ltd. 85




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##### Table of Contents



Acquisitions,
    Dispositions and Discontinued Operations    Sale of
    Infineon Technologies SensoNor AS
    Status of
    Qimonda
  Risk
    Factors  We may face significant liabilities as a
    result of the insolvency of Qimonda
  Status of
    ALTIS
  Risk Factors  A
    sale or closure of the ALTIS facility may result in us incurring
    material additional costs and charges.
  Joint Venture
    with LS Industrial Systems for molded power module
    products
  tm
 86




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##### Table of Contents



Divestiture of
    the Wireline Communications Business
   Employees  Operating and Financial Review 
    Employees.
  Tarifvertragsgesetz
  Betriebsverfassungsgesetz Sprecherausschuss
    Interessenausgleich Sozialplan
   87




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Legal
    Matters  Litigation and
    Investigations
    Provisions and
    the Potential Effects of these Lawsuits on our
    Business
         Environmental
    Protection and Sustainable Management     88




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##### Table of Contents



2 2
  Risk Factors  Environmental laws and
    regulations may expose us to liability and increase our
    costs.
  end-of-life
      sub-assemblies
   89




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##### 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, 2009Max Dietrich KleyChairman


69



2010


Lawyer

Chairman of the Supervisory Board of
    SGL Carbon AG, WiesbadenMember of the Supervisory Board of
    BASF SE, Ludwigshafen
    HeidelbergCement AG, Heidelberg
    Schott AG, Mainz (until September 30, 2009)Member of the Board of Directors of
    UniCredit S.p.A., Milan, Italy
    (until April 29, 2009)Gerd
    Schmidt(1)Deputy Chairman


55



2010


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


56



2010


Labor union clerk IG Metall, BerlinAlfred
    Eibl(1)


60



2010


Chairman of the Infineon Works Council Munich-CampeonPeter
    Gruber(1)Representative of Senior Management (since
    February 12, 2009)


48



2010


Senior Vice President Operations Finance, Infineon Technologies
    AG

Member of the Supervisory Board of
    Infineon Technologies Dresden
    GmbH, Dresden
    (since December 15, 2008)Member of the Partner Delegation of:
      Comneon GmbH, Nuremberg
      COMNEON Electronic Technology
      GmbH, Linz, AustriaMember of the Board of Directors of
    ALTIS Semiconductor S.N.C.,
      Essonnes, FranceInfineon Technologies Savan Ltd.,
      Netanya, Israel (inactive)
      Infineon Technologies (Kulim) Sdn.
      Bhd., Kulim, MalaysiaGerhard
    Hobbach(1)


47



2010


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


57



2010


Managing Director Institut für Demoskopie Allensbach GmbH,
    Allensbach

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


65



2010


Managing Director of Reinhard Mohn Verwaltungs GmbH,
    Gütersloh

Member of the Supervisory Board of:
      WestLB AG, Duesseldorf/Muenster
      Wintershall Holding AG, Kassel
      EVONIK Industries AG, EssenChairman of the Board of Administration of
      RTL Group S.A., LuxembourgMember of the Board of Administration of
      Compagnie Nationale à Portefeuille
      S.A., Loverval, BelgiumDr. Manfred Puffer (since July 30, 2009)


46



2010


Management Consultant 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, 2009Prof. Dr. rer. nat.
    Doris
    Schmitt-Landsiedel


56



2010


Professor at the Munich Technical University, MunichHorst
    Schuler(1)(since February 12, 2009)


57



2010


Deputy Chairman of the Infineon Central Works CouncilKerstin
    Schulzendorf(1)


47



2010


Member of the Works Council, Infineon DresdenDr. Eckart Sünner


65



2010


President and Chief Compliance Officer of BASF SE, Ludwigshafen

Member of the Supervisory Board of
      K+S AG, KasselAlexander
    Trüby(1)


39



2010


Member of the Works Council, Infineon Dresden

Member of the Supervisory Board of
      Infineon Technologies Dresden
      GmbH (since March 31, 2009)Arnaud de Weert
    (since February 1, 2009)


45



2010


President of Novelis Europe, Novelis AG, Zurich, Switzerland
    (until September 30, 2009)

Chairman of the Supervisory Board of
      Aluminium Norf GmbH, Neuss
      Novelis Deutschland GmbH,
      Goettingen (until September 30, 2009)Management Consultant (since October 1, 2009)Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer


65



2010


Management Consultant

Member of the Supervisory Board of
      Deutsche Messe AG, Hanover
      (until December 31, 2008)
      Leoni AG, Nuremberg
      SAP AG, WalldorfChairman of the Board of Administration of  Siemens Ltd., Seoul, Korea  (until January 31, 2009)Former members of the Supervisory BoardProf. Johannes Feldmayer
    (until February 18, 2009)


52






Management ConsultantJakob
    Hauser(1)(until February 12, 2009)


57






Chairman of the Works Council, Qimonda AG, MunichMichael
    Ruth(1)

    Representative of Senior Management (until February 12,
    2009)


49






Corporate Vice President Reporting, Planning and Controlling,
    Infineon Technologies AGProf. Dr. rer. nat.
    Martin Winterkorn (until January 31, 2009)


62






Chairman of the Management Board of: Volkswagen AG, Wolfsburg

Chairman of the Supervisory Board of
      Audi AG, Ingolstadt 
      Member of the Supervisory Board of 
      Salzgitter AG, Salzgitter
      FC Bayern München AG, Munich
      TÜV Süddeutschland Holding AG, MunichMember of the Board of Administration of
      SEAT S.A., Barcelona, SpainChairman of Board of Directors of:
      Scania AB, Södertälje, Sweden   (1)

    Employee representative 92




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##### Table of Contents



Committee

MembersExecutive Committee

Max Dietrich Kley (Chairman)
    Gerd Schmidt
    Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus WuchererInvestment, Finance and Audit Committee

Dr. Siegfried Luther (Chairman)
    Max Dietrich Kley
    Gerd SchmidtMediation Committee

Max Dietrich Kley (Chairman)
    Alfred Eibl
    Gerd Schmidt
    Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus WuchererNomination Committee

Max Dietrich Kley
    Prof. Dr. Renate Köcher
    Dr. Siegfried Luther
    Dr. Manfred Puffer
    Prof. Dr. rer. nat. Doris Schmitt-Landsiedel
    Dr. Eckart Sünner
    Arnaud de Weert
    Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus WuchererStrategy and Technology Committee

Prof. Dr.-Ing. Dr.-Ing. E.h. Klaus Wucherer 
    (Chairman)
    Wigand Cramer
    Alfred Eibl
    Gerhard Hobbach
    Prof. Dr. rer. nat. Doris Schmitt-Landsiedel
    Arnaud de Weert  93




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##### Table of Contents



Management Board
    Members  Memberships of Supervisory Boardsand comparable governingbodies of domestic and foreignTerm



companies during the fiscal yearName

Age

expires

Position

ended September 30, 2009Peter Bauer

49

September 30, 2011

Spokesman of the Management Board, 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 North
           America Corp.,
    Wilmington,
         Delaware, USA
      Infineon Technologies Japan K.K.,
         Tokyo, JapanProf. Dr. Hermann Eul

50

August 31, 2012

Member of the Management Board and Executive Vice President

Member of the Supervisory Board of
      7 Layers AG, Ratingen
    Member of the Supervisory Board of
      Infineon Austria AG, Villach, Austria
         (since July 18, 2008)Dr. Reinhard Ploss

53

May 31, 2012

Member of the Management Board and Executive Vice President

Chairman of the Supervisory Board of
      Infineon Technologies Austria
         AG, Villach, Austria
      Infineon Technologies Dresden
         GmbH, Dresden, Germany
         (since February 13, 2009)
    Chairman of the Board of Directors of
      Infineon Technologies (Kulim)
         Sdn. Bhd., Kulim,
         Malaysia 
    Member of the Supervisory Board of
      Qimonda AG, MunichDr. Marco Schröter

46

March 31, 2013

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

Member of the Supervisory Board of
      Infineon Technologies Austria
         AG, Villach, Austria 
    Member of the Board of Directors of
      Infineon Technologies Asia
         Pacific Pte., Ltd.,  Singapore
      Infineon Technologies China Co., Ltd.,
        Shanghai, Peoples Republic of
    China
      Infineon Technologies North
         America Corp., Wilmington,
    Delaware, USA   Peter Bauer
  Dr. Marco Schröter
 94




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Prof. Dr. Hermann Eul
  Dr. Reinhard Ploss
     Corporate
    Governance  Overview of
    Corporate Governance Structure
  Vorstand Aufsichtsrat Hauptversammlung Satzung Geschäftsordnungen
     95




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Supervisory
    Board
  Leitende
    Angestellte
  (Mitbestimmungsgesetz) (Statusverfahren)
   96




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##### Table of Contents



(Bilanzrechtsmodernisierungsgesetz)
        
    to monitor our management;
    to appoint our Management Board and determine the Management
    Board members compensation;
    to approve decisions of our Management Board in relation to the
    following:  
    finance and investment planning, including the budget and the
    establishment of limits on indebtedness;
    any investment or disposition that exceeds 10 percent of
    our total investment budget; and
    the granting of sureties, guarantees and loans to third parties
    outside the group, if the amount exceeds 5 percent of the
    share capital of our company;  
    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.     97




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##### Table of Contents




    monitoring our companys financial reporting system and
    preparing the decisions of the Supervisory Board regarding
    approval of our annual financial statements and the consolidated
    financial statements, including review of the financial
    statements, combined operating and financial reviews, the
    proposed application of earnings and the reports of our auditors;
    reviewing our interim financial statements 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;
    examining the effectiveness of our compliance, internal control,
    internal audit and risk management systems; 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.      Vice-Chairman,
      
    Compensation
  Management
    Board
    Mitbestimmungsgesetz
 98




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##### Table of Contents



(Prokurist)
    case-by-case
     Compensation    Compensation of
    the Management Board
  Compensation
    structure
   99




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##### Table of Contents




    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,
    referred to below as the 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 Supervisory
    Board in a two-phase process. In a first step, a target bonus
    amount is determined from a table agreed in the service
    agreements on the basis of the return on assets. The Supervisory
    Board 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 bonus
    dependent on the return on assets, Management Board contracts
    provide for a possible special bonus awarded in recognition of
    special business achievements.
    Infineon stock options.  Management
    Board members are eligible to receive stock options under the
    2006 Stock Option Plan approved by the Infineon
    Shareholders Annual General Meeting (the 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 Supervisory Board is
    responsible for all decisions on granting options to members of
    the Management Board. In the 2009 fiscal year, no options were
    granted to members of the Management Board. Further details of
    the Companys 2006 Stock Option Plan are described in
    note 32 to our consolidated financial statements for the
    year ended September 30, 2009 and are available in full
    text on the internet at www.infineon.com.    Compensation
    of the Management Board in the 2009 fiscal year
   100




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Non-performance-related compensationAnnual Base
    Salary(1)Amount paid inmonthly





Total cashManagement Board member

Fiscal year

installments

Annual Lump Sum

Other(2)

compensationPeter Bauer


2009



700,000



420,000



35,087



1,155,087(CEO as of June 1, 2008)


2008



533,333



533,333



22,948



1,089,614Prof. Dr. Hermann Eul


2009



450,000



360,000



13,590



823,5902008



450,000



450,000



14,457



914,457Dr. Reinhard Ploss


2009



350,000



280,000



10,616



640,6162008



350,000



350,000



20,859



720,859Dr. Marco Schröter


2009



500,000



400,000



85,815



985,815(as of April 1, 2008)


2008



250,000



250,000



84,757



584,757Total


2009



2,000,000



1,460,000



145,108



3,605,1082008



1,583,333



1,583,333



143,021



3,309,687   (1)
    Each in accordance with the duration of membership on the
    Management Board during the respective fiscal year.(2)
    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
    Dr. Schröter, the reimbursement of expenses for the
    maintenance of double residences.  Stock-based
    compensation
    Commitments to
    the Management Board upon termination of
    employment
  Allowances and
    pension entitlements in the 2009 fiscal year
   101




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##### Table of Contents



Expenses inPension



connection withentitlements



increase in pension(annual) as of



reserves inbeginning of

Maximum

fiscal year 2009Management Board member

pension period in 

amount in 

(IFRS) in Peter Bauer (CEO)


290,000



400,000



235,967Prof. Dr. Hermann Eul


205,000



270,000



202,178Dr. Reinhard Ploss


175,000



210,000



173,184Dr. Marco Schröter


255,000



350,000



174,963Total


925,000



1,230,000



786,292     Early
    termination of employment
  change-of-control (Wertpapiererwerbs-
    und Übernahmegesetz-WpHG)
     102




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##### Table of Contents



Fringe
    benefits and other awards in the 2009 fiscal year
  
    The members of the Management Board received no fringe benefits
    besides the elements listed under Other in the
    compensation table.
    We do not provide loans to the members of the Management Board.
    The members of the Management Board received no compensation or
    promise of compensation with regard to their activities on the
    Management Board from third parties in the 2009 fiscal year.
    We maintain directors and officers group liability
    insurance (D&O insurance). The D&O
    insurance policy covers personal liability in the event of
    claims made against members of the Management Board for
    indemnification of losses incurred in the exercise of their
    duties. According to the existing contracts with the Management
    Board members, the D&O insurance provides for a deductible
    of 25 percent of such members fixed annual base salary
    (which is compliant with the deductible provisions as outlined
    in Section 93(2)3 of the German Stock Corporation Act in
    connection with Section 23(1) of the introductory
    provisions to the German Stock Corporation Act).
    We have entered into a restitution agreement with each member of
    the Management Board. According to the restitution agreements,
    we cover all costs incurred in connection with proceedings
    brought against members of the Management Board by courts,
    government authorities, regulatory bodies or parliamentary
    committees due to the exercise of their duties, to the extent
    legally permitted. The agreements do not cover, in particular,
    any restitution of costs incurred due to an infringement of
    their duties as management board members pursuant to
    Section 93(2) of the German Stock Corporation Act.  Payments to
    former members of the Management Board in the 2009 fiscal
    year
      Compensation of
    the Supervisory Board
  Compensation
    structure
    
    Fixed compensationof 25,000 per year and member.
    A variable elementin the form of 1,500 share
    appreciation rightsper 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 Annual General Meeting.
    These share appreciation rights, however, do not entitle the
    holder to purchase shares but only to a settlement in cash. The
    basic principles of our 2006 Stock Option Plan are described in
    note 32 to our consolidated financial statements for the
    year ended September 30, 2009 and are available in full
    text on the internet at www.infineon.com.  vice-chairman
 103




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##### Table of Contents



Compensation
    of the Supervisory Board in the 2009 fiscal year
    Additionalcompensation forBase compensation


special functions


Total paymentSupervisory Board member

in 


in 


in Max Dietrich Kley


25,000



25,000



50,000Wigand Cramer


25,000



8,333
(1)


33,333Alfred Eibl


25,000



12,500



37,500Prof. Johannes Feldmayer


10,417
(2)






10,417Peter Gruber


16,667
(1)






16,667Jakob Hauser


8,333
(3)


4,167
(3)


12,500Gerhard Hobbach


25,000



8,333
(1)


33,333Prof. Dr. Renate Köcher


25,000







25,000Dr. Siegfried Luther


25,000



12,500



37,500Michael Ruth


8,333
(3)






8,333Manfred Puffer


4,167
(5)






4,167Gerd Schmidt


25,000



12,500



37,500Prof. Dr. Doris
    Schmitt-Landsiedel


25,000



12,500



37,500Horst Schuler


16,667
(1)






16,667Kerstin Schulzendorf


25,000







25,000Dr. Eckart Sünner


25,000







25,000Alexander Trüby


25,000



4,167
(3)


29,167Arnaud de Weert


16,667
(6)


8,333
(1)


25,000Prof. Dr. Martin Winterkorn


8,333
(4)


4,167
(4)


12,500Prof. Dr.-Ing. Klaus Wucherer


25,000



12,500



37,500Total


389,584



125,000



514,584   (1)
    Prorated from appointment on February 12, 2009.(2)
    Prorated up to retirement from office on February 18, 2009.(3)
    Prorated up to retirement from office on February 12, 2009.(4)
    Prorated up to retirement from office on January 31, 2009.(5)
    Prorated from appointment on July 30, 2009.(6)
    Prorated from appointment on February 1, 2009.  Other
     104




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PRINCIPAL
    SHAREHOLDERS        Shares OwnedPercentage relatingto the number ofAs of September 30, 2009




shares at the dateShareholder

Number


of notificationDodge &
Cox(1)


106,771,627



9.95
%Capital
Group(2)


36,995,392



4.95
%Odey Asset
Management
LLP(3)


23,687,180



3.16
%   Notes
  (1)
    Based on a notification to Infineon by Dodge & Cox
    Investment Managers on August 6, 2009 pursuant to the
    requirements of the German Securities Trading Act. As the
    notification was received prior to the effectiveness of the
    second step of the capital increase completed on August 11,
    2009, the number of shares and percentage ownership may vary
    after the capital increase. The business address of the
    shareholder is 555 California Street, 40th Floor,
    San Francisco, California 94104, U.S.A.(2)
    Based on a notification to Infineon by the shareholder on
    June 14, 2006 pursuant to the requirements of the German
    Securities Trading Act. As the notification was received prior
    to the first step of the capital increase completed on
    August 5, 2009, the number of shares and percentage
    ownership may vary after the capital increase. The business
    address of the shareholder is 333 South Hope Street, Los
    Angeles, CA
    90071-1406,
    U.S.A.(3)
    Based on a notification to Infineon by the shareholder on
    May 6, 2009 pursuant to the requirements of the German
    Securities Trading Act. As the notification was received prior
    to the first step of the capital increase completed on
    August 5, 2009, the number of shares and percentage
    ownership may vary after the capital increase. The business
    address of the shareholder is 12 Upper Grosvenor Street, London,
    W1K 2ND, UK.  (Wertpapierhandelsgesetz)
       105




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RELATED PARTY
    TRANSACTIONS    mark-up.
  Qimonda
        Major Shareholders and Related Party
    Transactions  Related Party Transactions Form 20-F no. 001-32972).
 106




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##### Table of Contents



ARTICLES OF
    ASSOCIATION    Equity
    
    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.
    During the 2008 fiscal year, our share capital increased by
    26,900 as a result of the exercise of 13,450 employee
    stock options. After these exercises our share capital consisted
    of 1,499,484,170.
    On August 5, 2009, we increased our share capital by
    645,653,928 by issuing 322,826,964 shares resulting
    from the Authorized Capital 2007 (registered in the Commercial
    Register as Authorized Capital 2007/I) resolved on
    February 15, 2007 and part of the Authorized Capital 2009/I
    resolved on February 12, 2009. The new shares were offered
    to our shareholders for subscription at a ratio of four new
    shares for every nine existing shares held. After the execution
    of the capital increase, our share capital consisted of
    2,145,138,098.
    On August 11, 2009, we further increased our share capital
    by 28,346,072 by issuing 14,173,036 shares resulting
    from the Authorized Capital 2009/I resolved on February 12,
    2009. The new shares were issued to Admiral Participations
    (Luxembourg) S.a.r.l. After the execution of the capital
    increase, our share capital consisted of 2,173,484,170.    Authorized
    Capital
    II/2004
 107




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##### Table of Contents



Conditional
    Capital
    
    Conditional Capital I (registered in the Commercial Register as
    Conditional Capital 1999/I) pursuant to
    Section 4(4) of the Articles of Association in an aggregate
    nominal amount of up to 34.6 million that may be used
    to issue up to 17.3 million new registered shares in
    connection with our 2001 Long-Term Incentive Plan;
    Conditional Capital III (registered in the Commercial
    Register as Conditional Capital 2001/I) pursuant to
    Section 4(6) of the Articles of Association in an aggregate
    nominal amount of up to 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 Plans;
    Conditional Capital 2002 (registered in the Commercial Register
    as Conditional Capital 2007/II) pursuant to
    Section 4(7) of the Articles of Association in an aggregate
    nominal amount of up to 152 million that may be used
    to issue up to 76 million new registered shares upon
    conversion of convertible bonds issued in June 2003;
    Conditional Capital 2007 (registered in the Commercial Register
    as Conditional Capital 2007/I) pursuant to
    Section 4(5) of the Articles of Association in an aggregate
    nominal amount of 149.9 million that may be used to
    issue up to 74.95 million new registered shares upon
    conversion of debt securities, which we may issue at any time
    prior to February 14, 2012;*
    Conditional Capital 2008 (registered in the Commercial Register
    as Conditional Capital 2008/I) pursuant to
    Section 4(8) of the Articles of Association in an aggregate
    nominal amount of 149.9 million that may be used to
    issue up to 74.95 million new registered shares upon
    conversion of debt securities, which we may issue at any time
    prior to February 13, 2013;*
    Conditional Capital 2009/I pursuant to Section 4(9) of the
    Articles of Association is an aggregate nominal amount of
    149.9 million that may be used to issue up to
    74.95 million new registered shares upon conversion of
    convertible bonds issued in May 2009.  *
    Due to the issuance of convertible bonds in May 2009, which are
    covered by the Conditional Capital 2009/I, other debt securities
    to be converted into our shares may no longer be issued under
    authorizations existing as of September 30, 2009.
    Accordingly, shares may no longer be issued from Conditional
    Capitals 2007 and 2008.    Subscription
    Rights
  three-quarters
 108




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Shareholders
    Meetings and Voting Rights
    (elektronischer Bundesanzeiger)
      (Textform)
      
    changing the objects and purposes provision in the Articles of
    Association;
    approving authorized and conditional capital increases; 109




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
    excluding preemptive rights of shareholders to subscribe for new
    shares;
    dissolving the company;
    merging into, or consolidating with, another stock corporation;
    transferring all or virtually all of the companys
    assets; and
    changing the companys corporate form.    Dividend
    Rights
            Liquidation
    Rights
    Shareholders
    Other Rights and Obligations
   110




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##### Table of Contents



Disclosure
    Requirement
    Repurchase of
    Our Own Shares
    Corporate
    Purpose of Our Company
      Registration
    of Our Company with the Commercial Register
  Aktiengesellschaft
     111




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ADDITIONAL
    INFORMATION Organizational
    Structure    Principal
    Subsidiaries as of September 30, 2009
  Corporate name

Registered office

Principal activityALTIS Semiconductor
    S.N.C(1)

Essonnes, France

ProductionComneon GmbH

Nuremberg, Germany

Research and DevelopmentInfineon Technologies Asia Pacific Pte. Ltd.

Singapore

Production, distributionInfineon Technologies Austria AG

Villach, Austria

Production and developmentInfineon Technologies Bipolar GmbH & Co.
    KG(2)

Warstein, Germany

Production and developmentInfineon Technologies Center of Competence (Shanghai) Co. Ltd.

Shanghai, Peoples Republic of China

Research and DevelopmentInfineon Technologies China Co. Ltd.

Shanghai, Peoples Republic of China

HoldingInfineon Technologies Dresden GmbH

Dresden, Germany

ProductionInfineon Technologies Finance GmbH

Neubiberg, Germany

Financial servicesInfineon Technologies France S.A.S.

Saint Denis, France

Distribution  and developmentInfineon Technologies Holding B.V.

Rotterdam,
    The Netherlands

HoldingInfineon Technologies Industrial Power, Inc.

Delaware, U.S.A.

SalesInfineon Technologies Investment B.V.

Rotterdam,
    The Netherlands

HoldingInfineon Technologies Japan K.K.

Tokyo, Japan

DistributionInfineon Technologies North America Corp.

Delaware, U.S.A.

Research, development and distributionInfineon Technologies (Advanced Logic) Sdn. Bhd.

Malacca, Malaysia

ProductionInfineon Technologies (Kulim) Sdn. Bhd.

Kulim, Malaysia

ProductionInfineon Technologies (Malaysia) Sdn. Bhd.

Malacca, Malaysia

ProductionInfineon Technologies (Wuxi) Co., Ltd.

Wuxi, Peoples Republic of China

ProductionInfineon Technologies (Xian) Co., Ltd.

Xian, Peoples Republic of China

Research and Development   Notes
  (1)
    50 percent interest plus one share held by Infineon.(2)
    60 percent held by Infineon.   Dividend
    Policy  Aktiengesetz Bilanzgewinn Bilanzverlust
 112




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Significant
    Changes  Form 20-F, Form 20-F.
 Market
    Information  General
  over-the-counter
  Trading on the
    Frankfurt Stock Exchange
  (1)
  Price per share in EuroHigh


LowFiscal year ended September 30, 2005


8.05



5.75Fiscal year ended September 30, 2006


8.90



6.80Fiscal year ended September 30, 2007


12.02



8.28Fiscal year ended September 30, 2008


10.69



3.27Fiscal year ended September 30, 2009


4.00



0.35October 2007 through December 2007


10.69



6.82January 2008 through March 2008


7.27



3.65April 2008 through June 2008


6.36



4.09July 2008 through September 30, 2008


5.59



3.27October 2008 through December 2008


3.68



0.58January 2009 through March 2009


1.07



0.35April 2009 through June 2009


2.42



0.76July 2009 through September 30, 2009


4.00



2.17June 2009


2.42



1.96July 2009


3.13



2.17August 2009


3.67



2.74September 2009


4.00



3.46October 2009


4.02



3.05November 2009


3.50



3.06December
2009(2)


3.31



3.29   (1)
    On July 20, 2009, our shares began trading ex-rights, which
    rights related to the right to subscribe for shares in the
    rights offering we commenced on such date. The closing sales
    prices presented in this table are adjusted to reflect the price
    of our shares
    ex-rights.(2)
    Up to and including December 4, 2009. 113




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Trading on the
    New York Stock Exchange and OTCQX International  over-the-counter (1) :
  Price per ADS inU.S. dollarsHigh


LowFiscal year ended September 30, 2005


10.86



7.77Fiscal year ended September 30, 2006


11.72



8.28Fiscal year ended September 30, 2007


17.27



10.88Fiscal year ended September 30, 2008


15.84



4.85Fiscal year ended September 30, 2009


5.82



0.43October 2007 through December 2007


15.84



10.44January 2008 through March 2008


10.98



5.86April 2008 through June 2008


10.13



6.66July 2008 through September 30, 2008


8.31



4.85October 2008 through December 2008


5.31



0.81January 2009 through March 2009


1.49



0.43April 2009 through June 2009


3.47



1.03July 2009 through September 30, 2009


5.82



3.08June 2009


3.47



2.77July 2009


4.90



3.08August 2009


5.22



3.90September 2009


5.82



4.86October 2009


5.95



4.38November 2009


5.20



4.48December
2009(2)


4.93



4.85   (1)
    On July 20, 2009, our shares began trading ex-rights, which
    rights related to the right to subscribe for shares in the
    rights offering we commenced on such date. The closing sales
    prices presented in this table are adjusted to reflect the price
    of our ADSs
    ex-rights.(2)
    Up to and including December 4, 2009.    114




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

Average2005


1.27272006


1.23642007


1.34152008


1.50672009


1.3552     Recent high and
    low exchange rates of the U.S. dollar per Euro
  High


LowApril 2009


1.3458



1.2903May 2009


1.4126



1.3267June 2009


1.4270



1.3784July 2009


1.4279



1.3852August 2009


1.4416



1.4075September 2009


1.4795



1.4235    Taxation  German
    Taxation
   115




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Taxation of
    the Company
          Non-deductible
  Taxation of
    Dividends
    Bundeszentralamt für Steuern,
  Withholding
    Tax Refund for U.S. Shareholders
   116




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Bundeszentralamt für Steuern, 20007-1998. 19176-6052.
  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 117




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(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  (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.    mark-to-market pass-through
     118




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Taxation of
    Dividends
  non-United non-United non-United non-United
      Taxation of
    Sales or Other Taxable Dispositions
   119




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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.php.
     Change of Control
    Provisions     120




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Management 
    Compensation  Compensation of the Management
    Board  Commitments to the Management Board upon
    termination of employment
 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;
    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. 121




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page F-2 Form 20-F.
  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.
  Audit-Related Fees.
 122




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Tax Fees.
  pre-approved
 Exemptions from
    the Listing Standards for Audit Committees   Material
    Contracts  Business  Strategic Alliances and Other
    Collaborations Related Party Transactions
  Real Estate
    Leasing Contract with MoTo Object CAMPEON GmbH & Co.
    KG
    Backstop
    Arrangement
   123




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Description of the
    Offering  Backstop Arrangement Form F-3 no. 333-160601).
  Divestiture of
    Wireline Communications Business
  Business  Acquisitions, Dispositions and
    Discontinued Operations  Divestiture of the Wireline
    Communications Business.
 124




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GLOSSARY  200-millimeter manufacturing, 300-millimeter manufacturing
    
    The size refers to the diameter of the wafers being processed in
    a front-end fab.2G
    
    2G is short for second-generation wireless telephone technology.
    Subsequent to the first generation (analog), 2G digital signals
    offer improved overall sound quality and numerous data services.
    Second generation mobile communications in Europe is also
    referred to as GSM.3G
    
    See UMTS.x-nanometer technology
    
    The size refers to the structure 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.AC/DC, DC/DC
    
    Electrical current appears as alternating current (AC) or as
    direct current (DC). In alternating current the movement of
    electric charge periodically reverses direction, whereas in
    direct current the movement of electric charge is only in one
    direction. AC/DC refers to the conversion from alternating
    current to direct current. DC/DC refers to the change in voltage
    from one direct current to another one.ADSL, ADSL2, ADSL2+
    
    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. There are different ADSL standards deployed
    differing in the downstream and upstream rates.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 a 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. 125




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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.CAT-iq
    
    Cordless Advanced Technology  internet and quality.
    CAT-iq was created by the DECT forum, and allows standard
    cordless DECT phones to be used for VoIP. It is a technology
    made to bring together broadband internet and telephony. This
    convergence is also part of the fixed mobile
    convergence.Chip cards
    
    Cards that contain an IC. Frequently used for telephone cards,
    debit cards, SIM cards, social cards, identification cards and
    Pay-TV cards.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 a 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.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.Discrete semiconductors
    
    Semiconductor devices that involve only a single device like a
    transistor or a diode.DigRF
    
    A digital interface intended for the cellular market. The DigRF
    standard specifies a digital serial interface between the RF
    transceiver and the baseband chip, which replaces the analog
    interface in previous generation mobile handset architectures.DSL
    
    See xDSL.ECC
    
    Error Correction code. An error-correcting code is an algorithm
    for expressing a sequence of numbers such that any errors which
    are introduced can be detected and corrected (within certain
    limitations) based on the remaining numbers. ECC is used in
    computer systems for data transfer between the CPU and the
    memory as well as in almost any kind of telecommunication
    systems.Embedded DRAM, Embedded flash
    
    A process technology that combines DRAM or flash, respectively,
    and logic functions on a single chip. 126




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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.)FDD/TDD mode
    
    Refers to the operating mode of wireless communications devices.
    Frequency-division duplexing (FDD) means that the transmitter
    and receiver operates at different carrier frequencies.
    Time-divison duplexing (TDD) is the application of time-division
    multiplexing to separate outward and return signals. TDD has a
    strong advantage in the case where the asymmetry of the uplink
    and downlink data speed is variable.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 manufacturer that makes chips for third parties.Gigabit (Gbit)
    
    Approximately one billion bits; precisely 2 to the power of 30
    bits.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.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.HSDPA, HSUPA, HSPA, HSxPA
    
    High-Speed Downlink Packet Access, High-Speed Uplink Packet
    Access. HSDPA and HSUPA are 3G (third generation) mobile
    telephony communications protocols in the High-Speed Packet
    Access (HSPA; sometimes referred to as HSxPA) family, which
    allows networks based on Universal Mobile Telecommunications
    System (see also UMTS) to have higher data transfer
    speeds and capacity. Current HSDPA deployments support down-link
    speeds of 1.8 Mbit/s, 3.6 Mbit/s, 7.2 Mbit/s and 14.4 Mbit/s.
    HSUPA deployments support up-link speeds of up to 5.76 Mbit/s.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. 127




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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 a digital 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.LDMOS
    
    Laterally Diffused MOS transistor. LDMOS transistors are widely
    used in RF/microwave power amplifiers for base-stations where
    the requirement is for high output power.LTE
    
    Long-term evolution (LTE) is the last step towards the
    4th

    generation (4G) of radio technologies designed to increase the
    capacity and speed of mobile telephone networks.MCU
    
    Microcontroller Unit. An MCU is a single chip that contains a
    processor, RAM, ROM, clock and I/O control unit. Hundreds of
    millions of MCUs are used in myriad devices ranging from
    automobiles, to industrial applications and consumer electronics.Megabit (Mbit)
    
    Approximately one million bits; precisely 2 to the power of 20
    bits.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 (m)
    
    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.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 or
    sub-function
    in a larger assembly such as the radio subsystem of a cell
    phone. They often contain an entire
    system-on-a-chip.MOSFET
    
    Metal-Oxide-Substrate Field Effect Transistor. A traditional
    metal-oxide-substrate
    (MOS) structure is obtained by depositing a layer of silicon
    dioxide
    (SiO2;
    referred to as oxide) and a layer of metal (polycrystalline
    silicon is commonly used instead of metal) on top of the wafer
    base material (referred to as substrate). The MOSFET is a device
    used to amplify or switch electronic signals. It is by far the
    most common field-effect transistor in both digital and analog
    circuits.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 and 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.Non-volatile memory
    
    A memory storage device whose contents are preserved when its
    power is off. Most common types are NAND flash and NOR flash. 128




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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.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.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. Radio frequency radiation is a
    subset of electromagnetic radiation. A transceiver is a device
    that has both a transmitter and a receiver in a single package.
    In mobile telecommunications RF transceivers are used to handle
    electromagnetic waves with frequencies in the lower Gigahertz
    range.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.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.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. 129




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SLIC
    
    Subscriber line interface circuit. A circuit in a telephone
    company switch to which a customers telephone line is
    connected.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.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.VoIP
    
    Voice Over Internet Protocol. The routing of voice conversations
    over the Internet or any other
    IP-based
    network.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.WSTS
    
    World Semiconductor Trade Statistics (WSTS) is a non-profit
    mutual benefit corporation which provides services for the world
    semiconductor industry including management of the collection
    and publication of trade net shipments and semiconductor
    industry forecasts.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 ADSL
    and VDSL.Yield
    
    When used in connection with manufacturing, the ratio of the
    number of usable products to the total number of produced
    products. 130




---



##### 



INFINEON
    TECHNOLOGIES AG AND SUBSIDIARIES
 INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
 Prepared in accordance with
    IFRS
   
 PageReport of Independent Registered Public Accounting Firm


F-2Consolidated Statements of Operations for the
    years ended September 30, 2007, 2008 and 2009


F-3Consolidated Balance Sheets as of
    September 30, 2008 and 2009


F-4Consolidated Statements of Income and Expense
    recognized in Equity for the years ended September 30,
    2007, 2008 and 2009


F-5Consolidated Statements of Cash Flows for the
    years ended September 30, 2007, 2008 and 2009


F-6Consolidated Statements of Shareholders
    Equity for the years ended September 30, 2007, 2008 and
    2009


F-7Notes to the Consolidated Financial Statements


F-7   F-1




---



##### Table of Contents



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




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
 Consolidated Statements of Operations
 For the years ended September 30, 2007, 2008 and
    2009
 (in millions, except for per share data)
   September 30,


September 30,


September 30,


September 30,Notes

2007


2008


2009


2009( millions)


( millions)


( millions)


($ millions)Revenue




3,660



3,903



3,027



4,428Cost of goods sold




(2,469
)


(2,581
)


(2,368
)


(3,464
)Gross profit




1,191



1,322



659



964Research and development expenses




(621
)


(606
)


(468
)


(685
)Selling, general and administrative expenses




(449
)


(517
)


(392
)


(573
)Other operating income

8


37



120



29



42Other operating expense

8


(57
)


(365
)


(48
)


(70
)Operating income (loss)




101



(46
)


(220
)


(322
)Financial income

9


107



58



101



148Financial expense

10


(242
)


(181
)


(156
)


(228
)Income from investments accounted for using the equity method

19


1



4



7



10Loss from continuing operations before income taxes




(33
)


(165
)


(268
)


(392
)Income tax benefit (expense)

11


2



(39
)


(5
)


(7
)Loss from continuing operations




(31
)


(204
)


(273
)


(399
)Loss from discontinued operations, net of income taxes

5


(339
)


(3,543
)


(398
)


(583
)Net loss




(370
)


(3,747
)


(671
)


(982
)Attributable to:Minority interests




(23
)


(812
)


(48
)


(70
)Shareholders of Infineon Technologies AG




(347
)


(2,935
)


(623
)


(912
)Basic and diluted earnings (loss) per share attributable to
    shareholders of Infineon Technologies AG (in Euro):Basic and diluted loss per share from continuing operations

12


(0.06
)


(0.23
)


(0.32
)


(0.47
)Basic and diluted loss per share from discontinued operations

12


(0.37
)


(3.38
)


(0.41
)


(0.60
)Basic and diluted loss per share

12


(0.43
)


(3.61
)


(0.73
)


(1.07
)   See accompanying notes to the
    consolidated financial statements.
 F-3




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
 Consolidated Balance Sheets
 September 30, 2008 and 2009
  September 30,


September 30,


September 30,Notes

2008


2009


2009( millions)


( millions)


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




749



1,414



2,069Available-for-sale
    financial assets

13


134



93



136Trade and other receivables

14


799



514



752Inventories

15


665



460



673Income tax receivable




29



11



16Other current financial assets

16


19



26



38Other current assets

17


124



114



167Assets classified as held for disposal

5


2,129



112



163Total current assets




4,648



2,744



4,014Property, plant and equipment

18


1,310



928



1,358Goodwill and other intangible assets

22


443



369



540Investments accounted for using the equity method

19


20



27



40Deferred tax assets

11


400



396



579Other financial assets

20


144



124



181Other assets

21


17



18



27Total assets




6,982



4,606



6,739Liabilities and equity:Current liabilities:Short-term debt and current maturities of long-term debt

27


207



521



762Trade and other payables

23


506



393



575Current provisions

24


424



436



638Income tax payable




87



102



149Other current financial liabilities

25


63



50



73Other current liabilities

26


263



147



215Liabilities associated with assets classified as held for
    disposal

5


2,123



9



14Total current liabilities




3,673



1,658



2,426Long-term debt

27


963



329



481Pension plans and similar commitments

35


43



94



139Deferred tax liabilities

11


19



13



19Long-term provisions

24


27



89



130Other financial liabilities

28


20



5



6Other liabilities

29


76



85



125Total liabilities




4,821



2,273



3,326Equity:Shareholders equity:

30Ordinary share capital




1,499



2,173



3,179Additional paid-in capital




6,008



6,048



8,848Accumulated deficit




(5,252
)


(5,940
)


(8,690
)Other components of equity




(164
)


(8
)


(12
)Total equity attributable to shareholders of Infineon
    Technologies AG




2,091



2,273



3,325Minority interests




70



60



88Total equity




2,161



2,333



3,413Total liabilities and equity




6,982



4,606



6,739   See accompanying notes to the
    consolidated financial statements.
 F-4




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
 Consolidated Statements of Income and Expense
    recognized in Equity
 For the years ended September 30, 2007, 2008 and
    2009
  September 30,


September 30,


September 30,


September 30,2007


2008


2009


2009( millions)


( millions)


( millions)


($ millions)Net loss


(370
)


(3,747
)


(671
)


(982
)Currency translation effects


(124
)


(47
)


185



271Actuarial gains (losses) on pension plans and similar commitments


116



12



(66
)


(97
)Net change in fair value of
    available-for-sale
    financial assets


(11
)


5



4



6Net change in fair value of cash flow hedges


2



(2
)


8



12Net income (loss) recognized directly in equity, net of tax


(17
)


(32
)


131



192Total income and expense recognized in equity


(387
)


(3,779
)


(540
)


(790
)Attributable to:Minority interests


(40
)


(820
)


(8
)


(12
)Shareholders of Infineon Technologies AG


(347
)


(2,959
)


(532
)


(778
)   See accompanying notes to the
    consolidated financial statements.
 F-5




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
 Consolidated Statements of Cash Flows
 For the years ended September 30, 2007, 2008 and
    2009
  September 30,


September 30,


September 30,


September 30,2007


2008


2009


2009( millions)


( millions)


( millions)


($ millions)Net loss


(370
)


(3,747
)


(671
)


(982
)Less: net loss from discontinued operations, net of income taxes


339



3,543



398



583Adjustments to reconcile net loss to cash provided by (used in)
    operating activities:Net cash provided by (used in) operating activitiesDepreciation and amortization


616



552



513



751Provision for (recovery of) doubtful accounts


(13
)


3



(2
)


(3
)Losses (gains) on sales of current
    available-for-sale
    financial assets


(7
)


1



3



4Losses (gains) on sales of businesses and interests in
    subsidiaries


(19
)


(80
)


16



23Losses (gains) on disposals of property, plant, and equipment


(8
)


10



1



1Income from investments accounted for using the equity method






(4
)


(7
)


(10
)Impairment charges


42



137



3



4Stock-based compensation


12



5



2



3Deferred income taxes


(30
)


19



(6
)


(9
)Changes in operating assets and liabilities:Trade and other receivables


(42
)


31



137



201Inventories


(69
)


(48
)


152



222Other current assets


(64
)


(12
)


(23
)


(34
)Trade and other payables


(99
)


(71
)


(104
)


(152
)Provisions


23



53



(111
)


(162
)Other current liabilities


57



99



(44
)


(64
)Other assets and liabilities


7



88



23



34Interest received


39



39



21



31Interest paid


(93
)


(62
)


(49
)


(72
)Income tax received (paid)


(80
)


(16
)


16



23Net cash provided by operating activities from continuing
    operations


241



540



268



392Net cash provided by (used in) operating activities from
    discontinued operations


1,010



(624
)


(380
)


(556
)Net cash provided by (used in) operating activities


1,251



(84
)


(112
)


(164
)Cash flows from investing activities:Purchases of
    available-for-sale
    financial assets


(75
)


(574
)


(31
)


(45
)Proceeds from sales of
    available-for-sale
    financial assets


341



601



64



94Proceeds from sales of businesses and interests in subsidiaries


243



121



4



6Business acquisitions, net of cash acquired






(353
)






Purchases of intangible assets, and other assets


(34
)


(149
)


(51
)


(75
)Purchases of property, plant and equipment


(492
)


(308
)


(103
)


(151
)Proceeds from sales of property, plant and equipment, and other
    assets


25



10



103



151Net cash provided by (used in) investing activities from
    continuing operations


8



(652
)


(14
)


(20
)Net cash provided by (used in) investing activities from
    discontinued operations


(925
)


(10
)


27



39Net cash provided by (used in) investing activities


(917
)


(662
)


13



19Cash flows from financing activities:Net change in short-term debt






(68
)






Net change in related party financial receivables and payables


347



(5
)


(1
)


(2
)Proceeds from issuance of long-term debt


245



149



182



266Principal repayments of long-term debt


(744
)


(226
)


(455
)


(666
)Change in restricted cash


1







(7
)


(10
)Proceeds from issuance of ordinary shares


23







680



995Dividend payments to minority interests


(71
)


(80
)


(3
)


(4
)Capital contribution


(15
)






(5
)


(7
)Net cash provided by (used in) financing activities from
    continuing operations


(214
)


(230
)


391



572Net cash provided by (used in) financing activities from
    discontinued operations


(311
)


343



(40
)


(58
)Net cash provided by (used in) financing activities


(525
)


113



351



514Net increase (decrease) in cash and cash equivalents


(191
)


(633
)


252



369Effect of foreign exchange rate changes on cash and cash
    equivalents


(40
)


(6
)


(8
)


(12
)Cash and cash equivalents at beginning of period


2,040



1,809



1,170



1,712Cash and cash equivalents at end of period


1,809



1,170



1,414



2,069Less: Cash and cash equivalents at end of period classified as
    held for disposal


736



421







Cash and cash equivalents at end of period


1,073



749



1,414



2,069   See accompanying notes to the
    consolidated financial statements.
 F-6




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries

Notes to the Consolidated Financial Statements Consolidated
    Changes in Equity

For the years ended September 30, 2007, 2008 and
    2009

(in millions of euro, except for share data) Foreign


Unrealized


Unrealized


Total EquityIssued


Additional





Currency


Gain (Loss)


Gain (Loss) on


Attributable toOrdinary shares


paid-in


Accumulated


Translation


on


Cash Flow


Shareholders


Minority


TotalShares


Amount


Capital


Deficit


Adjustment


Securities


Hedge


of Infineon AG


Interests


EquityBalance as of October 1, 2006


747,609,294



1,495



5,947



(2,095
)






5



(20
)


5,332



764



6,096Total income and expense recognized in equity














(233
)


(106
)


(11
)


3



(347
)


(40
)


(387
)Issuance of ordinary shares:Exercise of stock options


2,119,341



4



15



















19







19Share-based compensation










17



















17







17Deferred compensation, net










4



















4







4Other changes in equity










19



















19



236



255Balance as of September 30, 2007


749,728,635



1,499



6,002



(2,328
)


(106
)


(6
)


(17
)


5,044



960



6,004Total income and expense recognized in equity














(2,924
)


(36
)


3



(2
)


(2,959
)


(820
)


(3,779
)Issuance of ordinary shares:Exercise of stock options


13,450



































Share-based compensation










8



















8







8Other changes in equity










(2
)


















(2
)


(70
)


(72
)Balance as of September 30, 2008


749,742,085



1,499



6,008



(5,252
)


(142
)


(3
)


(19
)


2,091



70



2,161Total income and expense recognized in equity














(688
)


145



4



7



(532
)


(8
)


(540
)Issuance of ordinary shares:Proceeds from public offering


337,000,000



674



6



















680







680Share-based compensation










3



















3







3Other changes in equity










31



















31



(2
)


29Balance as of September 30, 2009


1,086,742,085



2,173



6,048



(5,940
)


3



1



(12
)


2,273



60



2,333  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
       F-8




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   2.
    Summary of
    Significant Accounting Policies    Basis of
    Consolidation
    Investmentsaccounted forConsolidated


using theentities


equity method


TotalSeptember 30, 2008


73



9



82Additions










Disposals


(33
)


(5
)


(38
)September 30, 2009


40



4



44     Consolidated
    Subsidiaries
  Consolidation  Special Purpose
    Entities
      Equity Method
    Investments
    (a)
    Associated
    Companies   F-9




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   (b)
    Joint
    Ventures              Reporting and
    Foreign Currency
       F-10




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Annual averageExchange rate

exchange rateSeptember 29,

September 30,Currency:

2008

2009

2008

2009U.S. dollar


1.4349



1.4549



1.5052



1.3593Japanese yen


152.3000



130.9100



161.6773



128.8580   Segment
    Reporting
  Operating Segments
  Revenue
    Recognition
    Revenue
    Revenue
    F-11




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
       case-by-case
    License
    Income
        Research and
    Development Costs
     F-12




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Grants
    Share-based
    Compensation
    Non-market
    Financial
    Instruments
  Financial Instruments:
    Presentation
    Financial
    Assets
  available-for-sale.
     F-13




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         Available-for-sale available-for-sale
  Available-for-sale
  available-for-sale available-for-sale
  available-for-sale available-for-sale
    Financial
    Liabilities
        Derivative
    financial instruments
   F-14




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
           Inventories
    Current and
    Deferred Income Taxes
    Income Taxes
     F-15




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Discontinued
    Operations
    Assets
    classified as held for disposal and liabilities associated with
    assets classified as held for disposal
    Property,
    Plant and Equipment
    YearsBuildings


10-25Technical equipment and machinery


3-10Other plant and office equipment


1-10   Leases
  Leases
  Recoverability
    of Non-Financial Assets
  Goodwill and
    Other Intangible Assets
   F-16




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         5-year
          Other long-lived
    assets
   F-17




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
       Pension Plans
    and Similar Commitments
              Provisions
   F-18




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Standards and
    Interpretations Issued but Not Yet Adopted
  Customer Loyalty
    Programmes
  Presentation of Financial Statements
  Business Combinations, Consolidated and Separate
    Financial Statements
        Share-based
    Payment
  (Amendments to IFRS 7 Financial
    Instruments: Disclosures)
 F-19




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Share-based
    Payment
  3.
    Management
    Estimates and Judgments    Revenue
    Recognition
        Recoverability
    of Non-Financial Assets
   F-20




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
       Valuation of
    Inventory
      Realization of
    Deferred Tax Assets
      Purchase
    Accounting
   F-21




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Pension Plan
    Accounting
  projected-unit-credit
  Provisions
      Trade and
    Other Receivables
    4.
    Acquisitions  Consolidation  Special
    Purpose Entities
   F-22




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
        F-23




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2008


2008LSI


PrimarionOctober 2007


April 2008Acquisition Date

Wireless


Industrial &Segment

Solutions


Multimarket( in millions)Other current assets


19



1Property, plant and equipment


8



1Intangible assets:Technology


42



13Customer relationships


73



Other


6



Goodwill


160



18Other non-current assets






3Total assets acquired


308



36Current liabilities


(1
)


(4
)Total liabilities assumed


(1
)


(4
)Net assets acquired


307



32In-process research & development


14



Cash paid (purchase consideration)


321



32       5.
    Disposals and
    Discontinued Operations  Polymer
    Optical Fiber
   F-24




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   High Power
    Bipolar Business
    Hard Disk
    Drive Business
    BAW
    Business
    SensoNor
    Business
    Sale of Molded
    Module Assets
   F-25




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     ALTIS
  Consolidated and Separate Financial
    Statements
  Qimonda 
    discontinued operations
    Non-current Assets
    Held for Sale and Discontinued Operations
  Consolidated and Separate
    Financial Statements,
 F-26




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
           
    the realization of accumulated foreign currency translation
    losses of 88 million which were directly recorded in
    equity, and not included in assets and liabilities held for
    disposal as of September 30, 2008, primarily from
    Qimondas sale of its interest in Inotera Memories Inc.
    (Inotera) to Micron Technology, Inc.
    (Micron),
    the realization of accumulated foreign currency translation
    losses which were directly recorded in equity related to the
    deconsolidation of Qimonda totaling
    100 million, and
    charges for valuation allowances of 227 in connection with
    Qimondas insolvency (see below).    
    The Company is a named defendant in certain pending antitrust
    and securities law claims. Qimonda is required to indemnify
    Infineon, in whole or in part, for such claims, including any
    related expenses. As a result of Qimondas insolvency,
    however, the Company expects that Qimonda will not be able to
    indemnify it for these claims. For more information on these
    pending antitrust and securities law claims and their potential
    impact on the Company, see note 38 (Commitments
    and Contingencies  Litigation and Government
    Inquiries  Antitrust Litigation,
     Other Government Litigation and,
     Securities Litigation).
    The Company is the named defendant in a lawsuit in Delaware in
    which the plaintiffs are seeking to hold the Company liable for
    the payment of severance and other benefits allegedly due by
    Qimondas North American subsidiaries in connection with
    the termination of employment related to Qimondas
    insolvency. For more information on this suit, see note 38
    (Commitments and Contingencies  Litigation
    and Government Inquiries  Qimonda Employment
    Litigation).
    The Company faces potential liabilities arising from its former
    participation in Qimonda Dresden. Before the carve-out of the
    Qimonda business, the Company was a general partner of Qimonda
    Dresden, and as such may in certain circumstances, as a matter
    of law, be held liable for certain liabilities of Qimonda
    Dresden that originated prior to the carve-out. These include,
    among others, the potential repayment of governmental subsidies
    as well as employee-related claims, including F-27




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   salaries and social security contributions. The Company is in
    negotiations with the Free State of Saxony and the Qimonda
    insolvency administrator regarding these matters. The Company
    has recorded a provision in connection with these matters, but
    disclosure of the amount of the provision could seriously
    prejudice the Companys negotiations regarding these
    matters.  
    The Company and its subsidiary Infineon Technologies Dresden
    GmbH (Infineon Dresden) are subject to lawsuits by
    approximately 70 former Infineon employees who were transferred
    to Qimonda or Qimonda Dresden as part of the carve-out and who
    seek to be re-employed by the Company. No reasonable estimated
    amount can be attributed at this time to the potential outcome
    of any such claims.          Sale of
    Wireline Communications Business  discontinued
    operations
   F-28




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
       Assets and
    liabilities classified as held for disposal
      September 30, 2008( in millions)Cash and cash equivalents


421Trade and other receivables


255Inventories


289Other current assets


376Property, plant and equipment


2,059Goodwill and other intangible assets


76Investments accounted for using the equity method


14Deferred tax assets


59Other assets


55Subtotal


3,604Write-down


(1,475
)Total assets classified as held for disposal


2,129 F-29




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   September 30, 2008( in millions)Short-term debt and current maturities of long-term debt


346Trade and other payables


592Current provisions


220Other current liabilities


300Long-term debt


427Pension plans and similar commitments


22Deferred tax liabilities


16Long-term provisions


25Other liabilities


175Total liabilities associated with assets held for disposal


2,123Amounts recognized directly in equity relating to assets and
    liabilities classified as held for disposal


(158
)     September 30, 2009( in millions)Inventories


43Other current assets


2Property, plant and equipment


9Goodwill and other intangible assets


58Total assets classified as held for disposal


112Current provisions


6Other current liabilities


2Pension plans and similar commitments


1Total liabilities associated with assets held for disposal


9  F-30




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Loss from
    discontinued operations, net of income taxes
    2007


2008


2009( in millions)Qimonda(1)Revenue


3,608



1,785



314Costs and expenses


(3,956
)


(3,773
)


(779
)Reversal (write-down) of measurement to fair value less costs to
    sell






(1,475
)


460Expenses resulting from Qimondas application to open
    insolvency proceedings










(227
)Losses resulting from the realization from accumulated losses
    related to unrecognized currency translation effects primarily
    upon deconsolidation and Qimondas sale of Inotera










(188
)Loss before tax


(348
)


(3,463
)


(420
)Income tax benefits (expense)


21



(96
)


Qimondas share of discontinued operations, net of income
    taxes


(327
)


(3,559
)


(420
)Wireline Communications BusinessRevenue


414



418



333Costs and expenses


(424
)


(400
)


(309
)Profit (loss) before tax


(10
)


18



24Income tax expense


(2
)


(2
)


(2
)Wireline Communications share of discontinued operations,
    net of income taxes


(12
)


16



22Loss from discontinued operations, net of income taxes


(339
)


(3,543
)


(398
)   (1)
    
    No further information concerning
    Qimondas condensed consolidated statements of operations
    is available for the period from January 1, 2009 to
    January 23, 2009, the date of the application by Qimonda to
    commence insolvency proceedings. As disclosed above, due to the
    write down of Qimondas net assets to zero as of
    September 30, 2008, the operating losses of Qimonda for the
    period from October 1, 2008 to January 23, 2009 did
    not affect the consolidated net income of the Company, but
    instead were eliminated via an offsetting partial reversal of
    previously recorded impairments. Therefore, while the amount of
    revenue and costs and expenses in the table above exclude
    amounts for the period from January 1, 2009 to
    January 23, 2009, Qimondas share of the loss from
    discontinued operations, net of income taxes of
    420 million is unaffected.  6.
    Licenses   F-31




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     7.
    Grants    2007


2008


2009( in millions)Included in the consolidated statements of operations:Research and development


87



59



50Cost of sales


19



19



15Selling, general and administrative










1Total


106



78



66     8.
    Supplemental
    Operating Cost Information    2007


2008


2009( in millions)Raw materials, supplies and purchased goods


753



792



731Purchased services


751



787



710Total


1,504



1,579



1,441     2007


2008


2009( in millions)Wages and salaries


1,287



1,451



974Social levies


233



240



200Pension expense


12







(13
)Total


1,532



1,691



1,161  F-32




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   (1) :
  2007


2008


2009Germany


10,553



10,085



9,379Other Europe


5,604



5,280



4,726North America


540



845



729Asia/Pacific


12,905



13,094



11,763Japan


151



161



143Other


21







Infineon


29,774



29,465



26,740Qimonda(2)


12,775



12,990



2,770Total


42,549



42,455



29,510   (1)
    
    Approximately 860 employees are to
    be transferred to Lantiq upon closing of the sale of the
    Wireline Communications business.(2)
    
    The average number of employees in
    the 2009 fiscal year is derived from the number of employees in
    the first quarter of 11,079, and zero in the second, third and
    fourth quarter as a result of the deconsolidation of Qimonda in
    the second quarter when Qimonda filed for insolvency.    2007


2008


2009( in millions)Gains from sales of businesses and interests in subsidiaries


19



80



1Reversal of impairments and long lived assets










2Other


18



40



26Total


37



120



29     2007


2008


2009( in millions)Losses from sales of businesses and interests in subsidiaries










17Goodwill and intangible assets impairment charges


5



8



3Long-lived asset impairment charges


4



122



Restructuring


45



188



(20
)Other


3



47



48Total


57



365



48    F-33




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         9.
    Financial
    Income    2007


2008


2009( in millions)Interest income


47



56



84Valuation changes and gains on sales


60



2



Other financial income










17Total


107



58



101     10.
    Financial
    Expense    2007


2008


2009( in millions)Interest expense


147



150



126Losses on sales of
    available-for-sale
    financial assets


54



23



28Other financial expense


41



8



2Total


242



181



156    F-34




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     11.
    Income Tax
    (Benefit) Expense    2007


2008


2009( in millions)Germany


(215
)


(266
)


(315
)Foreign


182



101



47Total loss from continuing operations before income taxes


(33
)


(165
)


(268
)     2007


2008


2009( in millions)Current taxes:Germany


24



3



1Foreign


5



18



1129



21



12Deferred taxes:Germany


(39
)


54



(8
)Foreign


8



(36
)


1(31
)


18



(7
)Income tax (benefit) expense


(2
)


39



5        F-35




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2007


2008


2009( in millions)Expected expense (benefit) for income taxes


(12
)


(46
)


(75
)Increase in available tax credits


(5
)


(103
)


(13
)Tax rate differential


(55
)


(7
)


(4
)Permanent differences. net


11



8



9Change in German tax rate


25







Increase in valuation allowance


25



183



88Other


9



4



Actual income tax (benefit) expense


(2
)


39



5     2008


2009( in millions)Deferred tax assets


400



396Deferred tax liabilities


(19
)


(13
)Deferred tax assets, net


381



383     2009( in millions)Deferred tax assets, net as of September 30, 2008


381Reclassification to discontinued operations


(1
)Purchase accounting adjustments


(4
)Deferred tax expense


7Deferred tax assets, net as of September 30, 2009


383  F-36




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2008


2009( in millions)Deferred tax assets:Intangible assets


38



58Property, plant and equipment


152



123Deferred income


4



8Net operating loss and tax credit carry-forwards


1,199



1,298Other items


224



213Gross deferred tax assets


1,617



1,700Valuation allowance


(1,027
)


(1,170
)Deferred tax assets


590



530Deferred tax liabilities:Intangible assets


(23
)


(22
)Property, plant and equipment


(24
)


(6
)Accounts receivable


(23
)


Accrued liabilities and pensions


(126
)


(112
)Other items


(13
)


(7
)Deferred tax liabilities


(209
)


(147
)Deferred tax assets, net


381



383      F-37




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     12.
    Earnings (Loss)
    Per Share      2007


2008


2009Numerator ( in millions):Loss from continuing operations


(31
)


(204
)


(273
)Less: Portion attributable to minority interests


(14
)


15



Loss from continuing operations attributable to shareholders of
    Infineon Technologies AG


(45
)


(189
)


(273
)Loss from discontinued operations, net of income taxes


(339
)


(3,543
)


(398
)Less: Portion attributable to minority interests


37



797



48Loss from discontinued operations, net of income taxes
    attributable to shareholders of Infineon Technologies AG


(302
)


(2,746
)


(350
)Net loss attributable to shareholders of Infineon Technologies AG


(347
)


(2,935
)


(623
)Denominator (shares in millions):Weighted-average shares outstanding  basic and
    diluted(1)


812.2



813.3



854.5Basic and diluted loss per share (in ):Loss from continuing operations attributable to shareholders of
    Infineon Technologies AG


(0.06
)


(0.23
)


(0.32
)Loss from discontinued operations, net of income taxes
    attributable to shareholders of Infineon Technologies AG


(0.37
)


(3.38
)


(0.41
)Net loss attributable to shareholders of Infineon Technologies AG


(0.43
)


(3.61
)


(0.73
)   (1)
    
    Weighted-average shares
    outstanding  basic and diluted  for all
    periods have been adjusted in accordance with IAS 33.27 as
    a result of the capital increase in August 2009.   F-38




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     13.
    Available-for-sale
    Financial Assets  available-for-sale other-than-temporary
    2008


2009Fair


Unrealized


Unrealized





Fair


Unrealized


UnrealizedCost


value


gains


losses


Cost


value


gains


losses( in millions)Foreign government securities


5



7



2



















Fixed term securities


144



140



1



(5
)


103



105



2



Other debt securities


















1



1







Total debt securities


149



147



3



(5
)


104



106



2



Equity securities


2



2











1



1







Total


151



149



3



(5
)


105



107



2



Reflected as follows:Available-for-sale
    financial assets


139



134







(5
)


93



93







Other financial assets (note 20)


12



15



3







12



14



2



Total


151



149



3



(5
)


105



107



2



       2007


2008


2009( in millions)Realized gains


7







Realized losses






(1
)


(3
)Realized gains (losses), net


7



(1
)


(3
)    F-39




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Cost


Fair value( in millions)Less than 1 year


45



47Between 1 and 5 years






More than 5 years


59



59Total debt securities


104



106     14.
    Trade and Other
    Receivables    2008


2009( in millions)Third party  trade


590



508Related parties  trade


28



3Trade accounts receivable, gross


618



511Allowance for doubtful accounts


(29
)


(62
)Trade accounts receivable, net


589



449Grants receivable (note 7)


28



30License fees receivable


10



7Third party  financial and other receivables


17



18Receivables from German banks deposit protection fund


121



1Related parties  financial and other receivables


22



Employee receivables


8



6Other receivables


4



3Total


799



514   available-for-sale
 F-40




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2008


2009( in millions)Allowance for doubtful accounts at beginning of year


38



29Usage of allowance, net


(2
)


(13
)Current years allowance






46Reclassification in held for disposal


(7
)


Allowance for doubtful accounts at end of year


29



62     Thereof

Of which not impairedneither

but past due as of reporting dateimpaired

Past due

Past due

Past due

Past due

Past dueCarrying

nor past

0-30

31-60

61-180

181-360

> 360amount

due

days

days

days

days

days( in millions)Third party  trade, net of allowances as of
    September 30, 2008


561



537



22



2











Third party  trade, net of allowances as of
    September 30, 2009


446



429



12







1



4



     15.
    Inventories    2008


2009( in millions)Raw materials and supplies


59



47Work-in-process


372



259Finished goods


234



154Total Inventories


665



460   16.
    Other Current
    Financial Assets   F-41




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   17.
    Other Current
    Assets    2008


2009( in millions)VAT and other tax receivables


67



49Prepaid expenses


43



49Other


14



16Total other current assets


124



114   18.
    Property, Plant
    and Equipment    OtherTechnical


plant andLand and


equipment


office


Constructionbuildings


and machinery


equipment


in progress


Total( in millions)Cost:September 30, 2007


1,426



8,854



2,209



382



12,871Additions


19



188



55



50



312Acquisitions through business combinations






1



8







9Disposals


(19
)


(136
)


(107
)


(1
)


(263
)Reclassifications


7



115



13



(135
)


Transfers(1)


(673
)


(4,202
)


(792
)


(232
)


(5,899
)Foreign currency effects


1



6



(2
)






5September 30, 2008


761



4,826



1,384



64



7,035Additions


9



54



23



18



104Disposals


(12
)


(167
)


(74
)






(253
)Reclassifications


5



58



(4
)


(59
)


Transfers(1)


1



(2
)


(28
)






(29
)Foreign currency effects


(1
)


(3
)


(1
)


(1
)


(6
)September 30, 2009


763



4,766



1,300



22



6,851 F-42




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   OtherTechnical


plant andLand and


equipment


office


Constructionbuildings


and machinery


equipment


in progress


Total( in millions)Accumulated depreciation and impairment:September 30, 2007


(767
)


(6,478
)


(1,981
)






(9,226
)Depreciation


(28
)


(365
)


(103
)






(496
)Disposals


19



126



104







249Reclassifications






(2
)


2







Transfers(1)


276



2,786



716







3,778Impairments






(23
)










(23
)Foreign currency effects






(7
)










(7
)September 30, 2008


(500
)


(3,963
)


(1,262
)






(5,725
)Depreciation


(30
)


(356
)


(81
)






(467
)Disposals


6



160



73







239Reclassifications


1



(12
)


11







Transfers(1)


(1
)






25







24Reversal of impairments






2











2Foreign currency effects


1



2



1







4September 30, 2009


(523
)


(4,167
)


(1,233
)






(5,923
)Book value at September 30, 2008


261



863



122



64



1,310Book value at September 30, 2009


240



599



67



22



928   (1)
    
    In the year ended
    September 30, 2008, transfers relate primarily to assets of
    the Qimonda disposal group that were classified as held for
    disposal, and assets of the ALTIS disposal group that were
    reclassified into held and used. In the year ended
    September 30, 2009, transfers relate primarily to assets of
    the Wireline Communications business that were classified as
    held for disposal. F-43




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
    19.
    Investments
    Accounted for Using the Equity Method      2008


2009( in millions)Balance at beginning of year


627



20Additions


23



Disposals


(7
)


Dividends received






Equity in earnings


4



7Reclassifications






Reclassification
to held for
disposal(1)


(627
)


Foreign currency effects






Balance at end of year


20



27   (1)
    
    Reclassification relates to the
    investment in Inotera Memories Inc., which was reclassified in
    held for disposal.    2007


2008


2009( in millions)Revenue


6



95



118Gross profit


3



20



25Net income


1



6



11   2008


2009( in millions)Current assets


58



67Non-current assets


11



16Current liabilities


(28
)


(24
)Non-current liabilities


(6
)


(13
)Total equity


35



46  F-44




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   20.
    Other Financial
    Assets    2008


2009( in millions)Available-for-sale
    financial assets (note 13)


15



14Long-term receivables


6



5Investments in other equity investments


15



12Related parties  financial and other receivables


20



Financial assets designated at fair value


11



9Restricted cash


77



84Total


144



124   21.
    Other
    Assets    2008


2009( in millions)Prepaid expenses


14



17Other


3



1Total


17



18  F-45




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   22.
    Goodwill and
    Other Intangible Assets    Internallydeveloped


Otherintangible


IntangibleGoodwill


assets


assets


Total( in millions)Cost:September 30, 2007


117



212



439



768Additions  internally developed






44







44Additions  from business combinations


171







148



319Additions  other










14



14In-process R&D










(14
)


(14
)Disposals






(11
)






(11
)Transfers(1)


(64
)


(76
)


(114
)


(254
)Foreign currency effects


1







1



2September 30, 2008


225



169



474



868Additions  internally developed






47







47Additions  from business combinations


(6
)










(6
)Additions  other










8



8Disposals










(33
)


(33
)Transfers(1)


(38
)


(52
)


(49
)


(139
)September 30, 2009


181



164



400



745Accumulated amortization:September 30, 2007






(110
)


(324
)


(434
)Amortization






(29
)


(46
)


(75
)Disposals






8



2



10Transfers(1)






45



34



79Impairment charges










(5
)


(5
)Foreign currency effects














September 30, 2008






(86
)


(339
)


(425
)Amortization






(32
)


(32
)


(64
)Disposals










33



33Transfers(1)






41



41



82Impairment charges






(2
)


(1
)


(3
)Foreign currency effects










1



1September 30, 2009






(79
)


(297
)


(376
)Carrying value as of September 30, 2008


225



83



135



443Carrying value as of September 30, 2009


181



85



103



369   (1)
    
    In the year ended
    September 30, 2008, transfers relate primarily to assets of
    the Qimonda disposal group that were classified as held for
    disposal, and assets of the ALTIS disposal group that were
    reclassified into held and used. In the year ended
    September 30, 2009, transfers relate primarily to assets of
    the Wireline Communications business that were classified as
    held for disposal. F-46




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
      23.
    Trade and Other
    Payables    2008


2009( in millions)Third party  trade


473



371Related parties  trade


15



13Trade payables


488



384Related parties  financial and other payables


6



5Other


12



4Total


506



393   24.
    Provisions    2008


2009( in millions)Personnel costs


347



187Warranties and licenses


32



72Asset retirement obligations


13



10Post-retirement benefits


3



3Other


56



253Total


451



525       clean-up
     F-47




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Warranties





Asset


Post-Personnel


and


Antitrust


retirement


retirementcosts


licenses


settlement


obligations


benefits


Other


Total( in millions)Balance as of September 30, 2008


347



32







13



3



56



451Additions


120



50















233



403Reclassification to held for disposal


(5
)


















(1
)


(6
)Usage


(211
)


(4
)






(3
)






(32
)


(250
)Reversals


(64
)


(6
)














(3
)


(73
)Balance as of September 30, 2009


187



72







10



3



253



525     2008


2009( in millions)Current


424



436Non-current


27



89Total


451



525   25.
    Other Current
    Financial Liabilities    2008


2009( in millions)Financial instruments (note 36)


25



15Interest


16



18Settlement for anti-trust related matters (note 38)


20



17Other


2



Total


63



50  F-48




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   26.
    Other Current
    Liabilities    2008


2009( in millions)Deferred income


26



24VAT and other taxes payable


13



19Payroll obligations to employees


198



79Deferred government grants (note 7)


13



15Current portion of pension obligations (note 35)


1



Other


12



10Total


263



147     27.
    Debt    2008


2009( in millions)Short-term debt and current maturities of long-term debt:Loans payable to banks, weighted average rate 1.85%


139



51Convertible subordinated notes, 5.0%, due 2010






425Current portion of long-term debt


68



45Total short-term debt and current maturities


207



521Long-term debt:Convertible subordinated notes, 7.5%, due 2014






145Exchangeable subordinated notes, 1,375%, due 2010


193



Convertible subordinated notes, 5.0%, due 2010


531



Loans payable to banks:Unsecured term loans, weighted average rate 2.59%, due
    2009-2013


217



164Secured term loans, weighted average rate 2.45%, due 2013


2



Notes payable to governmental entity, due 2010


20



20Total long-term debt


963



329      F-49




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
       pari passu
 F-50




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Freiverkehr)
        Nature of financial



As of September 30, 2009institution

Purpose/

AggregateTerm

commitment

intended use

facility


Drawn


Available( in millions)Short-term

firm commitment

general corporate purposes, working capital, guarantees


108



51



57Short-term

no firm commitment

working capital, cash management


114







114Long-term(1)

firm commitment

project finance


269



229



40Total






491



280



211   (1)

    Including current maturities.   F-51




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Fiscal year ending September 30,

Amount( in millions)2010


5212011


782012


662013


402014


145Total


850   28.
    Other Financial
    Liabilities    2008


2009( in millions)Settlement for antitrust related matters (note 38)


17



Other


3



5Total


20



5   29.
    Other
    Liabilities    2008


2009( in millions)Deferred income (note 26)


43



53Deferred government grants (note 7)


9



6Deferred compensation


11



10Other


13



16Total


76



85   30.
    Equity  Ordinary Share
    Capital
   F-52




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Additional-Paid-in-Capital
    Authorized and
    Conditional Share Capital
    Conditional
    Capital
    
    Conditional Capital I (registered in the Commercial Register as
    Conditional Capital 1999/I) pursuant to
    Section 4(4) of the Articles of Association in an aggregate
    nominal amount of up to 34.6 million that may be used
    to issue up to 17.3 million new registered shares in
    connection with the Companys 2001 Long-Term Incentive Plan;
    Conditional Capital III (registered in the Commercial
    Register as Conditional Capital 2001/I) pursuant to
    Section 4(6) of the Articles of Association in an aggregate
    nominal amount of up to 29 million that may be used
    to issue up to 14.5 million new registered shares in
    connection with the Companys 2001 and 2006 Long-Term
    Incentive Plans;
    Conditional Capital 2002 (registered in the Commercial Register
    as Conditional Capital 2007/II) pursuant to
    Section 4(7) of the Articles of Association in an aggregate
    nominal amount of up to 152 million that may be used
    to issue up to 76 million new registered shares upon
    conversion of debt securities issued in June 2003;
    Conditional Capital 2007 (registered in the Commercial Register
    as Conditional Capital 2007/I) pursuant to
    Section 4(5) of the Articles of Association in an aggregate
    nominal amount of 149.9 million that may be used to
    issue up to 74.95 million new registered shares upon
    conversion of debt securities, which the Company may issue at
    any time prior to February 14, 2012;*
    Conditional Capital 2008 (registered in the Commercial Register
    as Conditional Capital 2008/I) pursuant to
    Section 4(8) of the Articles of Association in an aggregate
    nominal amount of 149.9 million that may be used to
    issue up to 74.95 million new registered shares upon
    conversion of debt securities, which the Company may issue at
    any time prior to February 13, 2013;*
    Conditional Capital 2009/I pursuant to Section 4(9) of the
    Articles of Association in an aggregate nominal amount of
    149.9 million that may be used to issue up to
    74.95 million new registered shares upon conversion of
    convertible bonds issued in May 2009.  *
    Due to the issuance of the convertible bonds in May 2009 which
    are covered by the Conditional Capital 2009/I, additional debt
    securities convertible into shares of the Company may not be
    issued under authorizations existing as of September 30,
    2009. Accordingly, shares may not be issued from Conditional
    Capitals 2007 and 2008. F-53




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
    Other
    Components of Equity
    2008








20092007








Tax








TaxPretax


Tax effect


Net


Pretax


effect


Net


Pretax


effect


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


(4
)






(4
)


2







2



(15
)






(15
)Reclassification adjustment for losses (gains) included in net
    income or loss


(7
)






(7
)


1







1



19







19Net unrealized (losses) gains


(11
)






(11
)


3







3



4







4Unrealized gains (losses) on cash flow hedges


3







3



(2
)






(2
)


7







7Foreign currency translation adjustment


(106
)






(106
)


(36
)






(36
)


145







145Other components of equity


(114
)






(114
)


(35
)






(35
)


156







156   Dividends
  Aktiengesetz Bilanzgewinn
  Bilanzverlust
    Minority
    Interests
     F-54




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     31.
    Capital
    Management      short-term long-term debt-to-EBITDA
    short-term long-term debt-to-EBITDA short-term long-term debt-to-EBITDA
 F-55




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     32.
    Share-based
    Compensation             F-56




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Weighted-Weighted-


averageNumber of


average


remaining life


Aggregatedoptions


exercise price


(in years)


intrinsic valueOutstanding at September 30, 2007


39.4



16.17



2.99



66Granted






Exercised






Forfeited and expired


(6.2
)


37.44Outstanding at September 30, 2008


33.2



12.30



2.28



Vested and expected to vest, net of estimated forfeitures at
    September 30, 2008


30.6



12.32



2.28



Exercisable at September 30, 2008


26.5



12.89



1.83



Outstanding at September 30, 2008


33.2



12.30



2.28



Granted


2.6Exercised






Forfeited and expired


(12.1
)


16.28Outstanding at September 30, 2009


23.7



9.18



2.23



3.0Vested and expected to vest, net of estimated forfeitures at
    September 30, 2009


23.1



9.22



2.18



2.7Exercisable at September 30, 2009


17.6



9.74



1.51



     Outstanding


ExercisableWeighted-average


Weighted-





Weighted-Number of


remaining life


average


Number of


averageRange of exercise prices

options


(in years)


exercise price


options


exercise priceUnder 5


2.7



5.68



2.72







5  10


14.3



1.79



8.72



12.9



8.7810  15


6.7



1.83



12.67



4.7



12.40Total


23.7



2.24



9.18



17.6



9.74    F-57




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Weighted-Weighted-


averageNumber of


average grant


remaining life


Aggregatedoptions


date fair value


(in years)


intrinsic valueUnvested at September 30, 2007


13.6



3.50



4.77



35Granted






Vested


(6.5
)


4.04Forfeited


(0.4
)


3.23Unvested at September 30, 2008


6.7



2.96



4.05



Unvested options expected to vest


4.1



3.30



4.03



Unvested at September 30, 2008


6.7



2.96



4.05



Granted


2.6



0.71Vested


(2.9
)


3.54Forfeited


(0.4
)


2.99Unvested at September 30, 2009


6.0



1.70



4.33



3.0Unvested options expected to vest


5.5



1.69



4.34



2.7        F-58




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2007


2009Weighted-average assumptions:Risk-free interest rate


3.91%



1.88%Expected volatility, underlying shares


40%



67%Expected volatility, SOX index


36%



36%Forfeiture rate, per year


3.40%



3.40%Dividend yield


0%



0%Expected life in years


3.09



3.20Weighted-average fair value per option at grant date in 


2.03



0.71     Share-Based
    Compensation Expense
    2007


2008


2009( in millions)Compensation expense recognized:Cost of goods sold


2



1



Selling, general and administrative expenses


6



3



2Research and development expenses


4



1



Total share-based compensation expense


12



5



2Share-based compensation effect on basic and diluted loss per
    shares in 


(0.02
)


(0.01
)


     33.
    Supplemental Cash
    Flow Information  2007

2008

2009( in millions)Non-cash investing activities:Molstanda (note 4)


(41
)






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


76







  F-59




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   34.
    Related
    Parties  mark-up.
          Remuneration
    of Management
           F-60




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   35.
    Employee
    Benefits      2008


2009Domestic


Foreign


Domestic


Foreignplans


plans


plans


plans( in millions)Change in defined benefit obligation:Present value of defined benefit obligation at beginning of year


(398
)


(77
)


(297
)


(79
)Current service cost


(16
)


(3
)


(10
)


(2
)Interest cost


(18
)


(4
)


(19
)


(4
)Actuarial gains (losses)


69



(1
)


(46
)


2Divestitures














10New plan created and plan amendments


1



(1
)






Curtailments










4



3Benefits paid


5



2



8



3Plan transfers to Qimonda


7











Present value of defined benefit obligation reclassified as held
    for disposal


53



2



11



1Foreign currency effects






3







2Present value of defined benefit obligation at end of year


(297
)


(79
)


(349
)


(64
)Change in fair value of plan assets:Fair value at beginning of year


368



41



298



35Expected return on plan assets


22



3



21



2Actuarial losses


(63
)


(5
)


(14
)


(4
)Divestitures














(6
)Contributions


10



3



8



3Benefits paid


(5
)


(2
)


(8
)


(3
)Plan transfers to Qimonda


(7
)










Fair value plan assets reclassified as held for disposal


(27
)


(1
)


(11
)


Foreign currency effects






(4
)






(2
)Fair value of plan assets at end of year


298



35



294



25  F-61




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2008


2009Domestic


Foreign


Domestic


Foreignplans


plans


plans


plans( in millions)Present value of funded obligations


(297
)


(79
)


(349
)


(64
)Fair value of plan assets


298



35



294



25Funded status


1



(44
)


(55
)


(39
)Asset ceiling














Asset (liability) recognized


1



(44
)


(55
)


(39
)     2008


2009Domestic


Foreign


Domestic


Foreignplans


plans


plans


plans( in millions)Pension assets


1











Current portion pension liabilities






(1
)






Pension liabilities






(43
)


(55
)


(39
)Asset (liability) recognized


1



(44
)


(55
)


(39
)     2008


2009Domestic


Foreign


Domestic


Foreignplans


plans


plans


plans( in millions)Differences between expected and actual developments:of fair value of the obligation


4



(1
)


(1
)


3of fair value of plan assets


(63
)


(5
)


(14
)


(4
)       2008


2009Domestic


Foreign


Domestic


Foreignplans


plans


plans


plansDiscount rate


6.8%



6.1%



5.8%



5.3%Rate of salary increase


2.5%



2.8%



2.0%



1.9%Projected future pension increases


2.0%



2.9%



2.0%



1.4%Expected return on plan assets


6.5%



7.0%



7.1%



7.2%  F-62




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Investment
    Strategies
    Expected
    Long-term Rate of Return on Plan Assets
      Plan Asset
    Allocation
    2008


2009


Targeted allocationDomestic


Foreign


Domestic


Foreign


Domestic


Foreignplans


plans


plans


plans


plans


plansEquity securities


30%



47%



31%



37%



36%



47%Debt securities


36%



16%



28%



17%



31%



16%Other


34%



37%



41%



46%



33%



37%Total


100%



100%



100%



100%



100%



100%    F-63




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2007


2008


2009Domestic


Foreign


Domestic


Foreign


Domestic


Foreignplans


plans


plans


plans


plans


plans( in millions)Service cost


(22
)


(4
)


(16
)


(3
)


(10
)


(2
)Interest cost


(19
)


(4
)


(18
)


(4
)


(19
)


(4
)Expected return on plan assets


17



3



22



3



21



2Amortization of unrecognized prior service (cost) benefit


(1
)






1











Curtailment gain recognized






1











4



3Net periodic pension cost


(25
)


(4
)


(11
)


(4
)


(4
)


(1
)              F-64




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   36.
    Additional
    Disclosures on Financial Instruments    Categories of financial assetsAt fairvaluethroughCarrying


profit or


Designated cash


Available


Loans andFinancial assets:

amount


loss


flow hedges


for sale


receivables


Fair value( in millions)Balance September 30, 2008Current assets:Cash and cash equivalents


749















749



749Available-for-sale
    financial assets


134











134







134Trade and other receivables


799















799



799Other current financial assets


19



19















19Non-current assets:Other financial assets


144











29



115



144Total


1,845



19







163



1,663



1,845Balance September 30, 2009Current assets:Cash and cash equivalents


1,414















1,414



1,414Available-for-sale
    financial assets


93











93







93Trade and other receivables


514















514



514Other current financial assets


26



25



1











26Non-current assets:Other financial assets


124











26



98



124Total


2,171



25



1



119



2,026



2,171  F-65




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Categories of financial liabilitiesAt fair





Othervalue


Designated


financialthrough


cash flow


liabilitiesCarrying


profit or


hedges at


(amortized


LeaseFinancial liabilities:

amount


loss


fair value


cost)


liabilities


Fair value( in millions)Balance September 30, 2008Current liabilities:Short-term debt and current maturities of long-term debt


207











207







207Trade and other payables


507











507







507Other current financial liabilities


63



20



5



38







63Non-current liabilities:Long-term debt


963











963







967Other financial liabilities


20











20







20Total


1,760



20



5



1,735







1,764Balance September 30, 2009Current liabilities:Short-term debt and current maturities of long-term debt


521











521







506Trade and other payables


393











393







393Other current financial liabilities


50



15







35







50Non-current liabilities:Long-term debt


329











329







317Other financial liabilities


5











5







5Total


1,298



15







1,283







1,271  F-66




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Financial assets andfinancial receivablesat fair value throughprofit or lossDesignatedas at fairAvailable-





valuefor-sale





throughfinancial


Loans and


profit or


Held for


Other


Cash flowNet gains (losses) on financial instruments

assets


receivables


loss


trading


liabilities


hedges


Total( in millions)Fiscal year 2008:Total removed from equity and recognized in profit or loss


(2
)


















(2
)


(4
)Fair value gain (loss) recognized directly in equity


1























1Net gains (losses) recognized in equity


(1
)


















(2
)


(3
)Interest revenue


9



46



2







(147
)


(2
)


(92
)Net foreign exchange gain (loss)






(10
)






15



10







15Fair value gain (loss)


(3
)






(10
)


(12
)










(25
)Impairment loss (reversal)


(6
)


(3
)


















(9
)Total recognized in profit or loss






33



(8
)


3



(137
)


(2
)


(111
)Total net gain (loss)


(1
)


33



(8
)


3



(137
)


(4
)


(114
)Fiscal year 2009:Total removed from equity and recognized in profit or loss


4



















7



11Fair value gain (loss) recognized directly in equity


























Net gains (losses) recognized in equity


4



















7



11Interest revenue


61



22











(124
)


(2
)


(43
)Net foreign exchange gain (loss)






3







(16
)


2







(11
)Fair value gain (loss)


(23
)






(4
)


17











(10
)Impairment loss (reversal)






(18
)


















(18
)Total recognized in profit or loss


38



7



(4
)


1



(122
)


(2
)


(82
)Total net gain (loss)


42



7



(4
)


1



(122
)


5



(71
)   Derivative
    Financial Instruments and Hedging Activities
   F-67




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
       2008


2009Notional


Fair


Notional


Fairamount


value


amount


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


213



(5
)


390



8Japanese yen


5







4



Singapore dollar


10







2



Malaysian ringgit


3











Forward contracts purchased:U.S. dollar


157



(4
)


78



(5
)Japanese yen


1







5



Singapore dollar


29







16



Great Britain pound


9







4



Malaysian ringgit


52







41



(2
)Norwegian krone


2











Currency options sold:U.S. dollar


177



(5
)






Currency options purchased:U.S. dollar


163



1







Interest rate swaps


500



(1
)


500



16Other


77



(1
)


13



(6
)Fair value, net






(15
)






11    F-68




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Fair
    Value
    37.
    Financial Risk
    Management    Market
    Risk
      Foreign Exchange
    Risk
         F-69




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         Profit or Loss

EquitySeptember 30, 2008

+10%

−10%

+10%

−10%( in millions)EUR/USD


2



(3
)


11



(15
)EUR/MYR


(5
)


6







EUR/YEN


(1
)


1







EUR/SGD


(1
)


1







   Profit or Loss

EquitySeptember 30, 2009

+10%

−10%

+10%

−10%( in millions)EUR/USD


4



(5
)


11



(13
)EUR/MYR


(2
)


3







EUR/YEN














EUR/SGD














   Interest Rate
    Risk
          available-for-sale
 F-70




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
       Other Price
    Risk
        Credit
    Risk
    available-for-sale available-for-sale
  Liquidity
    Risk
     F-71




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Contractualcash flows


2010


2011


2012


2013


2014


Thereafter( in millions)Non derivative financial liabilities


6







3



1



1



1



Derivative financial liabilities:Cash outflow


301



280



21















Cash
inflow(1)


(294
)


(274
)


(20
)














Total


13



6



4



1



1



1



   (1)

    Cash inflows of derivates financial liabilities are also
    included when the instruments is gross settled in order to show
    all contractual cash flows.  38.
    Commitments and
    Contingencies  Litigation and
    Government Inquiries
  U.S. Department
    of Justice Matter
    Antitrust
    Litigation
   F-72




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
                F-73




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         Other Government
    Inquiries
        Securities
    Litigation
   F-74




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
       Patent
    Litigation
  and/or
   F-75




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
           Qimonda
    Employment Litigation
      Provisions and
    the Potential Effect of these Matters
   F-76




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
           Qimonda
    Matters
   F-77




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   Contractual
    Commitments
  (1)
  Payments due by periodLess than














AfterTotal


1 year


1-2 years


2-3 years


3-4 years


4-5 years


5 years( in millions)Contractual CommitmentsOperating lease payments


740



69



65



60



57



56



433Unconditional purchase commitments tangible assets


35



35



















Unconditional purchase commitments intangible assets


1



1



















Unconditional purchase commitments other


531



404



85



28



12



2



Future interest payments


110



43



19



17



15



15



1Total Commitments


1,417



552



169



105



84



73



434   (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.      Other
    Contingencies
  (1) :
  Expirations by periodTotal


Less than 1 year


1-2 years


2-3 years


3-4 years


4-5 years


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


81



10



8







5



2



56Contingent
government
grants(3)


37



8



14



4



5



6



Total contingencies


118



18



22



4



10



8



56  F-78




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   (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.          39.
    Operating Segment
    and Geographic Information   F-79




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     Automotive
    Industrial &
    Multimarket
    Chip
    Card & Security
    Wireless
    Solutions
      work-in-process work-in-process
   F-80




---



##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
         2007


2008


2009( in millions)Revenue:Automotive


1,267



1,257



839Industrial & Multimarket


1,188



1,171



905Chip Card & Security


438



465



341Wireless
Solutions(1)


637



941



917Other
Operating
Segments(2)


343



171



17Corporate and
Eliminations(3)


(213
)


(102
)


8Total


3,660



3,903



3,027   (1)
    Includes revenues of 30 million,
    10 million and 1 million for the fiscal
    years ended September 30, 2007, 2008 and 2009,
    respectively, from sales of wireless communication applications
    to Qimonda.(2)
    Includes revenues of 189 million and
    79 million for the fiscal years ended
    September 30, 2007 and 2008, respectively, from sales of
    wafers from Infineons 200-millimeter facility in Dresden
    to Qimonda under a foundry agreement.(3)
    Includes the elimination of revenues of 219 million,
    89 million and 1 million for the fiscal
    years ended September 30, 2007, 2008 and 2009,
    respectively, since these sales were not part of the Qimonda
    disposal plan.  2007


2008


2009( in millions)Segment Result:Automotive


122



105



(117
)Industrial & Multimarket


127



134



35Chip Card & Security


20



52



(4
)Wireless Solutions


(126
)


(18
)


(36
)Other Operating Segments


(6
)


(12
)


(13
)Corporate and Eliminations


7



(24
)


(32
)Total


144



237



(167
)  F-81




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2007


2008


2009( in millions)Total Segment Result


144



237



(167
)Adjusted:Asset impairments, net


(5
)


(132
)


Restructuring charges, and other related closure cost, net


(45
)


(188
)


20Share-based compensation expense


(12
)


(5
)


(2
)Acquisition-related amortization and losses


(3
)


(25
)


(23
)Gains (losses) on sales of assets, businesses, or interests in
    subsidiaries


28



70



(18
)Other expense, net


(6
)


(3
)


(30
)Operating income (loss)


101



(46
)


(220
)Financial Income


107



58



101Financial Expense


(242
)


(181
)


(156
)Income from investment accounted for using the equity method, net


1



4



7Loss from continuing operations before income taxes


(33
)


(165
)


(268
)   2007


2008


2009( in millions)Depreciation and amortization:Automotive


229



147



126Industrial & Multimarket


208



174



137Chip Card & Security


53



53



53Wireless Solutions


67



115



152Other Operating Segments


59



63



45Corporate and Eliminations










Total


616



552



513     F-82




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
   2008


2009( in millions)Inventories:Automotive


147



71Industrial & Multimarket


140



109Chip Card & Security


46



30Wireless Solutions


116



95Other Operating Segments


2



Corporate and Eliminations


164



155Subtotal


615



460Wireline Communications


50



Total


665



460     2008


2009( in millions)Goodwill:Automotive






Industrial & Multimarket


12



19Chip Card & Security






Wireless Solutions


160



160Other Operating Segments






Corporate and Eliminations


2



2Subtotal


174



181Wireline Communications


51



Total


225



181    F-83




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##### Table of Contents



Infineon
    Technologies AG and Subsidiaries
     2007


2008


2009( in millions)Revenue:Germany


794



820



545Other Europe


807



754



543North America


530



483



409Asia/Pacific


1,289



1,597



1,358Japan


203



191



143Other


37



58



29Total


3,660



3,903



3,027   2008


2009( in millions)Property, plant and equipment; goodwill and other intangible
    assets:Germany


831



641Other Europe


325



239North America


36



6Asia/Pacific


559



409Japan


2



2Total


1,753



1,297       40.
    Events after the
    Balance Sheet Date   F-84




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##### Table of Contents



Signatures
  Form 20-F
  Infineon Technologies AG




---



##### 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 February 2008) (English
    translation)

20-F

1.1

December 29, 2008

001-150001.2

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

20-F

1.2

December 29, 2008

001-150001.3

Rules of Procedure for the Supervisory Board (as of November
    2009) (English translation)

Filed herewith.1.4

Rules of Procedure for the Investment Finance and Audit
    Committee of the Supervisory Board (as of November 2009)
    (English translation)

Filed herewith.2

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.4.9

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

F-1



February 18, 2000

333-115084.20

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, 2003

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()

Amendment No. 3, dated as of June 30, 2009, to
    Shareholder Agreement of ALTIS Semiconductor between Infineon
    Technologies Holding France and IBM XXI SAS dated as of
    June 24, 1999.

F-3

10.3

July 16, 2009

333-1606014.25.3()

Amendment No. 4, dated as of August 26, 2009, to
    Shareholder Agreement of ALTIS Semiconductor between Infineon
    Technologies Holding France and IBM XXI SAS dated as of
    June 24, 1999.

Filed herewith.4.25.4

Amendment No. 5, dated as of November 30, 2009, to
    Shareholder Agreement of ALTIS Semiconductor between Infineon
    Technologies Holding France and IBM XXI SAS dated as of
    June 24, 1999.

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 4, 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 4, 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 reference4.30

Terms and Conditions of New Guaranteed

F-3

10.4

July 16, 2009

333-160601Subordinated Convertible Notes due 2014 issued on May 26, 2009
    by Infineon Technologies Holding B.V.4.31()

Asset Purchase Agreement, dated as of July 7, 2009, by and
    between Infineon Technologies AG and Wireline Holdings S.à
    r.l.

F-3

10.2

July 16, 2009

333-1606014.31.1()

First Amendment Agreement, dated as of November 6, 2009, to
    the Asset Purchase Agreement, dated as of July 7, 2009, by
    and between Infineon Technologies AG and Wireline Holdings
    S.à r.l.

Filed herewith.4.32

Investment Agreement, dated July 10, 2009, between Infineon
    Technologies AG and Admiral Participations (Luxembourg) S.à
    r.l.

F-3

10.1

July 16, 2009

333-1606018

List of Significant Subsidiaries and Associated Companies of
    Infineon

See 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 AG Wirtschaftsprüfungsgesellschaft

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